Morning Report: October 6, 2011

Ahead of the Bell: Dow futures are trading up 68 points and S&P futures are trading up 6 points on optimism European finance ministers are making progress in their efforts to help recapitalize the regions banks and stem the financial crisis in the Euro zone. According to the European Commission President, Jose Barroso is proposing coordinated action to recapitalize banks.  

  • On the economic calendar today, the Labor Department will release its weekly initial jobless claims data before the market opens, with economists expecting claims to increase to a reading of 401K from last week's 391K claims. Companies reporting earnings include Constellation Brands. The dollar is up against the major currencies. Crude oil is currently trading at $80 a barrel. Gold is trading at $1,652.  
  • Yesterday, stocks were higher as economic data topped estimates and optimism grew that European leaders will recapitalize banks. German Chancellor, Angela Merkel said that Europe’s rescue fund will only be used as a last resort.
  • On CNBC today, Jim Paulsen, Chief Investment Strategist at Wells Capital Management, talked about economic growth and the markets. Paulsen believes the downturn in the markets was a result of the mid-July the Commerce Department report predicting the economy will grow less than anticipated rather than the headlines coming out of Europe which cause intraday volatility. Paulsen thinks it all comes down to whether the US will head into a recession and he does not see that happening, but there are two impacts that could affect the US right now: 1) the European contagion issue jumps the pond and spreads into the US (Paulsen doesn’t think this will happen); or 2) a further slowdown in growth (Paulsen believes this is a real concern). Paulsen remains optimistic despite these concerns, pointing out that in America we have many growth leaders in the economy and he anticipates growth will pick up. In Europe, he expects the debt issue to go on for years because they have not done anything about it aside from some political moves. In China, Paulsen believes the growth will continue indicated by strong ISM index data and their plans for moderating the recovery and orchestrating a soft landing.                              
  • Happy Thursday, have a nice day.  

Wednesday’s Close

DJIA up  131.24 pts/+1.21%/10,939.95

S&P up 20.08 pts/+1.79/1,144.03

Nasdaq up 55.69 pts/+2.32/2,460.51

Thursday’s Futures

Dow Futures up 68.00 pts/+0.59%

S&P Futures up 6.50 pts/+0.58%

Nasdaq Fut up 10.58 pts/+0.54%

Overseas Markets

FTSE +2.20%

CAC 40 +2.28%

NIKKEI 225 +1.66%

HANG SENG +5.67%

Overseas:  World stock markets were up today. European and Asian markets are up on reports the EU is looking to recapitalize the regions banks.      

Economic Reports:  Jobless Claims expected to be 410K at 8:30 a.m.

Top Headlines:    

  • Apple Inc. (AAPL) co-founder, Steve Jobs passed away yesterday. Jobs was regarded as pioneer and visionary in the technology industry, compared to the likes of Thomas Edison, Henry Ford, and Walt Disney.
  • Microsoft Corporation (MSFT), among others, is considering a bid for Yahoo (YHOO), after its unsuccessful bid in 2008. Yahoo has market value of about $20 billion.
  • Reports indicate a draft proposal of the Volcker rule gives banks the flexibility to hedge risk and puts stringent limits on such trading beyond US borders.
  • Reports indicate over 25 states are reviewing the proposed merger of Express Scripts (ESRX) and Medco Health (MHS) on claims the combination of the two companies will corner about 1/3 of the market.     

Commodities/Currency:

Gold:up $1.10 to $1,652.85

Oil:up $1.12 to $80.80

EUR/USD 1.3343 -0.0005

USD/JPY 76.6450  -0.1400

GBP/USD 1.5323 -0.0141

Volatility Index (VIX): As of the close of business Wednesday, October 5, the VIX is down 3.01 at 37.81

Companies Reporting Quarterly Earnings:     

None as of yet.

Today’s Opening and Closing Bells:

The Cast of USA’s longest running series on-air, PYSCH, to celebrate the series’ sixth season on the USA Network will ring the opening bell.

CEMIG visit the New York Stock Exchange to celebrate the 10th anniversary of its ADR listing (CIG). CEO Djalma Bastos de Morais will ring the closing bell.