Morning Report: October 19, 2011

Ahead of the Bell: Dow futures are trading down 13 points and S&P futures are trading down 3 points following strong gains in the previous trading session on hopes the European debt crisis will be resolved. European leaders are preparing for a summit to stem the region’s debt crisis.  Moody’s downgraded Spain by one notch. Apple reported weaker than-expected 3rd quarter earnings results, the company blamed it on rumors about the new iPhone 4S which hurt demand.

  • On the economic calendar today, the Labor Department will release September Consumer Price Index before the market opens.  Economists are expecting an increase of 0.3% versus a rise of 0.4% in August. The Commerce Department will also release housing starts and permits for September before the market opens. Economists are forecasting 590K annualized rate for housing starts in September versus 571K in August.  Boston Federal Reserve Bank President, Eric Rosengren will be speaking to the Boston Fed's conference on the long term effects of the great recession.  Atlanta Federal Reserve Bank President, Dennis Lockhart will moderate a panel discussion on Latin American growth at Atlanta Fed's Americas Center. Federal Reserve Chairman, Ben Bernanke will be speaking to the Boston Fed Bank conference on the long term effects of the great recession. Atlanta Federal Reserve Bank President, Dennis Lockhart will make remarks to Georgia Tech College of Management in Atlanta. Companies reporting earnings include Abbott Laboratories, AMR Corp., Bank of New York Mellon, BlackRock, Morgan Stanley, Rockwood Hldgs, Rogers Corp., U.S. Bancorp, and United Tech Corp.  The dollar is down against the euro and the British pound up against the Japanese yen. Crude oil is currently trading at $88 a barrel.  Gold is trading at $1,651. 
  • Yesterday, stocks rose erasing early losses, after a report suggested that Germany and France agreed to boost the size of the European rescue fund, and Bank of America reported better-than-estimated results.
  • On CNBC today, former New Mexico Governor and Ambassador of the US to the United Nations, Bill Richardson, talked about the economy and jobs. Richardson said we need to focus on the economy and jobs right now. He believes President Obama’s jobs bill is the way to go and cites economist’s predictions that the bill will produce at least modest growth. Richardson also believes the stimulus helped states with jobs and unemployment and thinks the super committee will come up with a plan.  f they don’t a major pentagon budget will be affected, and he is not in favor of cutting the defense budget, especially with the need to take care of our vets, and the security issues in the US. Finally, Richardson thinks the defining moment will be after the elections. The American people will send a message to Washington to get their fiscal house in order, particularly on entitlements, taxes, and regulation.  Richardson does not believe much will be done between now and the elections.          
  • Happy Wednesday, have a nice day.  

Tuesday’s Close

DJIA up 180.05 pts/+1.58%/11,577.05

S&P up 24.52 pts/+2.04/1,225.38

Nasdaq up 42.51 pts/+1.63/2,657.43

Wednesday’s Futures

Dow Futures down 13.00 pts/-0.11%

S&P Futures down 3.50 pts/-0.25%

Nasdaq Fut down 19.58 pts/-0.81%

Overseas Markets

FTSE +1.24%

CAC 40 +1.13%

NIKKEI 225 +0.35%

HANG SENG +1.29%

Overseas:  World stock markets were up today. European and Asian markets were up on optimism the Euro zone debt crisis will be resolved at the upcoming summit of EU finance leaders.      

Economic Reports:  Consumer Price Index is expected to be 0.3% and Housing Starts expected to be 0.590 at 8:30 a.m.

Top Headlines:    

  • Alcatel-Lucent SA (ALU) said it received a $1.5 billion offer from Permira Advisers LLP for its Genesys business.
  • Bloomberg reports Numora Securities is close to a deal to acquire a China unit of GE Capital - General Electric (GE) to gain access to the main land.
  • Google Inc., (GOOG) and Samsung Electronic unveiled the first Smartphone running off the latest version of the Android operating system, which combines software used in tablets and smartphones.
  • Reports indicate a number of shareholders are considering voting against News Corp (NWS) CEO and Chairman Rupert Murdoch and other long standing directors. 
  • MBA reports mortgage applications were down 14.9% versus up 1.3% last week.     

Commodities/Currency:

Gold:down $6.10 to $1,651.85

Oil:down 0.03 to $88.31

EUR/USD 1.3843 +0.0108

USD/JPY 76.7750  -0.0140

GBP/USD 1.5800 +0.0095

Volatility Index (VIX): As of the close of business Tuesday, October 18, the VIX is down 1.67 at 31.72

Companies Reporting Quarterly Earnings:     

Morgan Stanley (MS): Q3 EPS of $1.14 beats by $0.82. Revenue of $9.9B (+45.6% Y/Y) beats by $2.5B.

U.S. Bancorp (USB): Q3 EPS of $0.64 beats by $0.02. Revenue of $4.8B (+4.5% Y/Y) beats by $90M.

United Technologies (UTX): Q3 EPS of $1.47 beats by $0.03. Revenue of $14.8B (+8.7% Y/Y) beats by $250M.

Comerica (CMA): Q3 EPS of $0.51 misses by $0.04.

St. Jude Medical (STJ): Q3 EPS of $0.78 beats by $0.02. Revenue of $1.38B (+12% Y/Y) beats by $10M.

Textron (TXT): Q3 EPS of $0.45 beats by $0.14. Revenue of $2.80B (+13.5% Y/Y) misses by $40M. Raises FY11 EPS outlook to $1.05-1.15 from an earlier $0.90-1.00.

Travellers (TRV): Q3 EPS of $0.79 misses by $0.15. Revenue of $6.41B (+3.4% Y/Y) beats by $830M.

Sensata Technologies (ST): Q3 EPS of $0.50 in-line. Revenue of $474.3M (+23.7% Y/Y) misses by $1.5M. Sees Q4 EPS of $0.46-0.50 and revenue of $460-480M.

Rockwood (ROC): Q3 EPS of $1.06 in-line. Revenue of $940.9M (+17.4% Y/Y) misses by $28M.

PNC Financial Services (PNC): Q3 EPS of $1.55 beats by $0.05. Revenue of $3.54B (-1.5% Y/Y) misses by $30M.

Knight Capital Group (KCG): Q3 EPS of $0.48 beats by $0.11. Revenue of $397.4M (+65.9% Y/Y) beats by $39.4M.

BlackRock (BLK): Q3 EPS of $2.83 beats by $0.13. Revenue of $2.23B (+6.4% Y/Y) misses by $60M.

Bank of New York Mellon (BK): Q3 EPS of $0.53 beats by $0.01. Revenue of $3.68B (+7.9% Y/Y) misses by $30M.

Apollo Group (APOL): FQ4 EPS of $1.02 beats by $0.08. Revenue of $1.12B (-10.9% Y/Y) beats by $20M. Sees FY12 revenue of $4.1-4.3B.

Today’s Opening and Closing Bells:

Stifel Financial Corp. Visits the New York Stock Exchange Chairman, President and CEO Ronald J. Kruszewski will ring the opening bell.

NuStar Energy (NS) to mark the company’s 10th anniversary as a public company on the NYSE.  Chairman Bill Greehey and CEO Curt Anastasio will ring the closing bell.