Wall Street looks as though it will extend its nascent two-day rally into Thursday, thanks to the support of Chinese central bankers and a generally considered successful Spanish bond sale. Though, the final direction of the day will inevitably be determined by Ben Bernanke’s 10:00 AM Congressional testimony. The SPDR S&P 500 was up 1% off the blocks on the collective data detailed below.
Relative stock tickers include Apple (Nasdaq: AAPL), Google (Nasdaq: GOOG), Facebook (NYSE: FB), Navistar (NYSE: NAV), lululemon (Nasdaq: LULU), Men’s Wearhouse (NYSE: MW), Nasdaq OMX Group (Nasdaq: NDAQ), J. M. Smucker (NYSE: SJM), Altera (Nasdaq: ALTR), Cherokee (Nasdaq: CHKE), Isle of Capri Casinos (Nasdaq: ISLE), Quicksilver (NYSE: ZQK), Benihana (Nasdaq: BNHN), Comverse Technology (Nasdaq: CMVT), Gold Reserve (NYSE: GRZ), JDA Software (Nasdaq: JDAS), Met-Pro (NYSE: MPR), New Frontier Media (Nasdaq: NOOF), Rentrak (Nasdaq: RENT), RF Industries (Nasdaq: RFIL), Titan Machinery (Nasdaq: TITN) and UTi Worldwide (Nasdaq: UTIW).
Wall Street Review
U.S. interests are looking higher today after China’s central bank cut its benchmark interest rates on loans and deposits by 0.25 percentage points, while moving to allow its rates to float more freely. It marks a switch in monetary policy for Asia’s emerging giant, after it raised interest rates five times over the last two years. The news led the Hang Seng Index up 0.85% and the NIKKEI 225 up 1.2%. The iShares FTSE China 25 Index ETF (NYSE: FXI) is up about 3% on the open.
European shares celebrated the expansionary Chinese effort while noting a successful Spanish bond offering. The deal helped ease concerns about Spain just two days after Spain’s Treasury Minister said the nation was having trouble accessing capital. Today’s offering found demand three times as high as the nation needed to sell the 10-year bonds offered, but Spain had to pay a price. The yield offered to investors rose to 6.044%, from 5.743% in April, which reflects the heightened risk tied to the latest Greek election and euro zone uncertainty. Still, European investors celebrated Spain’s qualified success, with Spain’s IBEX 35 Index up 1.3%, the DAX up 1.2%, and FTSE 100 up 1.4%. The Vanguard MSCI Europe ETF (NYSE: VGK) is likely heading higher Thursday as a result. Also, the Bank of England (BOE) held rates steady at 0.5% and kept its asset purchase program unchanged.
U.S. Economic Slate
The Labor Department reported Weekly Initial Jobless Claims in the pre-market. For the week ending June 2, jobless claims fell by 12,000 to 377K. The four-week moving average still increased slightly to 377,750, reflecting the latest deteriorating trend of the labor market.
The pivotal data point of the day will be found in the testimony of Federal Reserve Chairman Ben Bernanke at 10:00 AM. We’ll post the prepared statements for you at the Wall Street Greek blog. Yesterday, Janet Yellen indicated the Fed was willing to move in expansionary fashion if necessary. This supported the market which has seemingly assumed the Fed had a more positive view than it for the economy.
Bloomberg’s Consumer Comfort Index is up at 9:45 AM EDT. After several weeks of deterioration, which allowed us insight into what later developed in the Conference Board measure of consumers, last week’s review showed a bump up in confidence. We’ll at least be interested to see if that was just a blip or something more important given recent stock market activity and gasoline price movement.
The Quarterly Services Survey is up for 10 AM report. The lightly followed data point shouldn’t have any impact in the day’s trading, but is still worth a look if you have time. It’s especially important if you invest in the technology sector and if you are monitoring business spending.
At 10:30, catch the weekly Natural Gas Storage Report for news on the change in working gas in storage. Be sure to see our latest write-up on oil, just published Wednesday.
Monthly Consumer Credit will be accounted for at 3 PM EDT. Consumer credit outstanding soared by $21.4 billion in March, to $2.54 trillion. Economists are mostly looking for a $12.0 billion increase for April, which by the last recession’s standard is still pretty high.
Stocks in the News
Lululemon (Nasdaq: LULU) was down double-digits in the pre-market after it offered a softer outlook than investors had hoped for. Quarterly EPS jumped 39%, and at $0.32 exceeded analysts’ forecasts for $0.30. However, LULU’s current quarter forecast for EPS between $0.28 to $0.30 fell short of the analysts’ consensus for $0.33. With concern about the consumer rising, and with LULU’s P/E up above 40X, investors are taking some chips off the table today.
Men’s Wearhouse (NYSE: MW) was off near 20% in the pre-market after the company fell short on its results and produced a soft forward outlook to boot. MW’s EPS of $0.52 fell short of its own forecast for $0.53 to $0.54, and was under the Street’s $0.55 view. The company’s Q2 EPS forecast for $1.12 to $1.13 was deeply under Wall Street’s $1.22 consensus estimate.
Apple (Nasdaq: AAPL) moved to stop Samsung from selling its Galaxy S III smartphone in the U.S. Tuesday. Today, Samsung said it will vigorously defend itself against Apple’s court request for the Galaxy to be banned on IP infringement. The new Galaxy is already on sale in Europe and would precede the new iPhone in the U.S. if not stopped by this move. Apple is also reportedly planning to remove Google (Nasdaq: GOOG) maps from its products.
The Nasdaq OMX Group (Nasdaq: NDAQ) is offering a $40 million compensation plan for financial organizations due to its trouble handling volume related to the massive interest in the Facebook (NYSE: FB) IPO.
The J.M. Smucker Company (NYSE: SJM) was up fractionally in the pre-market after reporting a Street beating quarterly result. The nation’s largest coffee packager said higher pricing and acquisitions drove sales gains. Excluding “items” SJM earned $1.10 per share, ahead of analysts’ $0.99 consensus, based on Thomson Reuters I/B/E/S.
Navistar International (NYSE: NAV) was down sharply Thursday after shocking the market. The company reported a Q2 loss of $1.99 per share before warranty charges, versus analyst expectations for earnings of $0.69, based on Factset data. The company also cut its forward outlook and announced staffing changes, shaking up the perspective of the market.
The day’s earnings schedule highlights reports from Altera (Nasdaq: ALTR), Cherokee (Nasdaq: CHKE), Isle of Capri Casinos (Nasdaq: ISLE), Quicksilver (NYSE: ZQK), Benihana (Nasdaq: BNHN), Comverse Technology (Nasdaq: CMVT), Gold Reserve (NYSE: GRZ), JDA Software (Nasdaq: JDAS), Met-Pro (NYSE: MPR), New Frontier Media (Nasdaq: NOOF), Rentrak (Nasdaq: RENT), RF Industries (Nasdaq: RFIL), Titan Machinery (Nasdaq: TITN) and UTi Worldwide (Nasdaq: UTIW).
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