Morning Report: May 6, 2011

Ahead of the Bell: Dow futures are trading up 11 points and S&P futures are trading up 2 points.  Traders will be focusing on resource related companies once again as commodities continue to slide, silver, copper, and crude oil are all trading down.  Crude oil is currently trading at about $97 a barrel.  Also, Traders will be watching for developments in Europe following a strike by state employees in Portugal after the caretaker government accepted a 78 billion euros bailout plan to avert the country from going into bankruptcy.         

  • On the economic calendar today, the Labor Department will release its jobs report before the market opens.  Economists are forecasting monthly non-farm payroll employment in April to be 198,000 from a revised 194,000 in March.  The unemployment rate is expected to be 8.8 percent. Companies reporting earnings today include Constellation Energy Group, Northeast Utilities, Pepco Holdings, and The Washington Post Company.  The dollar is up against the major currencies.
  • Yesterday, the major averages were down significantly as crude oil fell below $100 a barrel and gold, silver and other commodities fell sharply ahead of the jobs report.  The dollar strengthened against the euro after the ECB said it will not raise interest rates next month.
  • On CNBC today, Former Federal Reserve Governor Larry Meyer talked about the state of the economy.  Meyer said the trend for the last three months is we have had lower growth and QE2 policy was very successful.  Meyer also said Bernanke and the Fed will not commit to more quantitative easing because the agency has to contain inflation.  Meyer pointed out, most central banks around the world are concerned about inflation.  Meyer went on to say the markets are reassessing how strong the is economy as commodities are lower, the economy is growing slowly but gaining momentum.  Meyer does not believe the perception that commodity markets are down because the economy is slowing down.   
  • Today is the one year anniversary of the Flash Crash.
  • Happy Friday, have a nice weekend and happy Mother’s Day.  Enjoy the Kentucky Derby on Saturday.

Thursday’s Close

DJIA down 139.41 pts/-1.10%/12,584.17

S&P down 12.22 pts/-0.91%/1,335.10

Nasdaq down 13.51 pts/-0.48%/2,814.72

Friday’s Futures

Dow Futures up 11.00 pts/+0.09%

S&P Futures up 2.30 pts/+0.15%

Nasdaq Fut up 2.75 pts/+0.12%

Overseas Markets

FTSE -0.24%

CAC 40 +0.09%

NIKKEI 225 -1.45%

HANG SENG -0.44%

Overseas:  World stock markets were down today.  European markets are down on lower commodity prices.  Asian markets were down on signs the recovery in the U.S. is slowing down. 

Economic Reports:  Employment Situation is expected to be 198,000 @8:30 a.m. & Productivity and Costs expected to be $5.0 billion @ 3:00 a.m.   

Top Headlines:    

  • Sony (SNE) CEO Howard Stringer has apologized for the security breach that compromised personal data from more than 100 million online gaming accounts.
  • The U.S. and China are expected to hold strategic talks next week in Washington.  The main topics of discussion will be the pace of the yuan reform and the U.S. debt levels.
  • The SEC has subpoenaed a unit of Credit Suisse Group AG (CS) seeking documents related to mortgage debt as part of a lawsuit by  MBIA Insurance Corp.
  • CVS Caremark Corporation (CVS) said it received a subpoena from the SEC relating to its Medicare Part D business and about transactions by senior management.

Commodities/Currency:

Gold:up $12.72 to $1,486.85

Oil:down $1.92 to $97.56



EUR/USD 1.4528 -0.0014

USD/JPY 80.3150  -0.0100

GBP/USD 1.6412 +0.0018

Volatility Index (VIX): As of the close of business Thursday, May 5, the VIX is up 1.12 pts to 18.20

Companies Reporting Quarterly Earnings:   

Constellation Energy Group (CEG): Q1 EPS of $0.63 beats by $0.33. Revenue of $3.57B (-0.5% Y/Y) misses by $0.55B.

Royal Bank of Scotland (RBS): Q1 loss of £528M, far worse than the -£14.4M consensus. 

Today’s Opening and Closing Bells:

China’s NetQin Mobile Inc. Celebrates IPO on the NYSE, CEO, Chairman and Co-Founder Dr. Henry Yu Lin will ring the opening bell.

FORTUNE Magazine is Celebrating the release of the Fortune 500 list -- 84% of the publicly traded companies are listed on the NYSE.  Managing Editor Andy Serwer, Jed Hartman, and Hank Gilman will ring the closing bell.