Market Outlook
Friday, September 10, 2010

10:00… Wholesale Trade

10:30… ECRI Leading Index

Also the following companies are reporting their quarterly earnings:-

Brady Corp. (BRC) and

lululemon athletica inc. (LULU)

Concern about Deutsche Bank weighed on sentiment in Europe, while investors are awaiting U.S. President Barack Obama's news conference for any comments on the economy.

Wholesale Trade

Before the market opens, a government report is expected to show that wholesale inventories rose 0.4% in July, after a 0.1% increase the month before.

Obama's News Conference

President Barack Obama's news conference later this morning where the subject is expected to focus solely on the economy could influence stocks. The president is expected to speak around 11 a.m. ET a day after he gave a campaign-like speech in Cleveland, Ohio arguing that the policies his administration put into place have only begun to work.

There are a few further points to the mornings trading which need to be considered:-

• The Dow Jones Industrial Average (DJIA) cheered a decline in weekly jobless claims and overlooked a need to raise capital among European banks on Thursday, allowing the blue-chip barometer to challenge resistance at its 200-day moving average. While the Dow was unable to make that final push and close above this key trendline, Wall Street appears ready to make a second attempt this morning. While the DJIA is currently challenging resistance in the 10,450 region, traders should keep an eye out for support in the 10,350 area, should things go south.

• The S&P 500 Index’s(SPX): levels to watch include support near 1,100 and resistance at 1,110.

• The U.S. Dollar Index is trading fractionally lower, off 0.10% at 82.60.

• Benchmark crude futures: Despite selling off on Thursday in the wake of a surprise rise in weekly U.S. petroleum supplies, crude futures are bouncing back this morning. The most active contract has gained $1.55 to trade at $75.80 per barrel in electronic trading.

• Gold futures haven't been as lucky, with the lead contract up a mere 10 cents at $1,251 an ounce in London.

• Bond: The yield on the 10-year Treasury note fell to 2.75% from 2.76% late Thursday.

• Equity option activity on the Chicago Board Options Exchange (CBOE) saw 924,348 call contracts traded on Thursday, compared to 564,057 put contracts.

• On the sentiment front, there’s an interesting development in the Association for Individual Investors' weekly survey. Specifically, the bullish percentage jumped from 30.80% last week to 43.87% this week. This bullish reading represents the highest percentage since the week of April 15, or just before the SPX and DJIA set their highs for 2010.

European Concerns

European share markets slipped in early trading. The CAC 40 in France was down 0.3%, the DAX in Germany fell 0.4%, and Britain's FTSE 100 lost 0.2%.

• In Europe, at midday, London -0.1%. Paris -0.3%. Frankfurt -0.4%.

The dollar fell against the euro and the British pound, but gained versus the Japanese yen.

Asian Concerns

Earlier in Asia, markets ended higher after the Japanese government unveiled a $10.9 billion stimulus package aimed at boosting employment, consumer spending and corporate investment.

Japan's benchmark Nikkei index rallied 1.5%, and the Hang Seng in Hong Kong gained 0.4%. The Shanghai Composite ended 0.3% lower.

• In Asia, Japan +1.6%. Hong Kong +0.4%. China +0.3%. India closed.

As of 6:25 a.m, in New York, the Dow Jones Industrial Average futures were up 10 points, or 0.1%, to 10348, the S&P 500 index futures rose 1.9 points to 1099.50 and the Nasdaq 100 futures were up 5.5 points to 1888.75.

• Futures: S&P +0.3%. Euro +0.3% vs. dollar. Crude +2.24% to $75.91. Gold +0.04% to $1251.40.

• Technology shares will be in the spotlight after chipmakers National Semiconductor (NSM) and Texas Instruments Inc (TXN) issued quarterly financial targets that stoked investor worries about a sluggish economy.

• Shares of National Semiconductor traded in Frankfurt (NSM.F) were down 6.7 percent, while Texas Instrments shares traded in Frankfurt (TXN.F) were down 0.4 percent.

• Smith & Wesson's (SWHC) second-quarter forecast fell short of estimates as the 158-year-old company saw demand for firearms soften after rising sharply last year, sending its shares down 10 percent. Its Frankfurt-traded shares (SMWS.F) were down 8.2 percent.

• Video game publishers will be in focus after data showed U.S. retail sales of video game equipment and software fell 10 percent in August, according to research group NPD, as the industry continued a months-long slump.

• BP (BP.L) said it would delay the release of its third quarter results by a week because of added complexities in its accounts due to the Gulf of Mexico oil spill.

• Nokia nabs new CEO, from Microsoft. Nokia (NOK) is surging in Europe this morning following the announcement that a new CEO has been named and will take charge effective Sept. 21. The new CEO will be Canada-born Stephen Elop, currently the head of Microsoft's (MSFT) business division. Rumors of the impending departure of current CEO Olli-Pekka Kallasvuo have been circulating since July. Analysts have mixed feelings about the choice of Elop, welcoming his software background while noting that Microsoft has its own problems in the mobile sphere. Investors are less picky, pushing Nokia stock +5% in early Europe trading.

• Hewlett-Packard Russia bribe probe widens. Hewlett-Packard (HPQ) disclosed that a probe by U.S. authorities of possible bribes the company paid in Russia is now wider than previously reported. The disclosure, in an SEC filing, pertains to a long-running German investigation of allegations that H-P, through a German subsidiary, paid bribes in Russia to secure a contract valued at €35M, or about $44.5M; The disclosure itself is a sign the investigation has entered a new phase.

• Apple eases apps. Apple (AAPL) will allow app developers for its iOS operating system for the iPhone, iPod Touch and iPad to use any code-authoring tools they prefer, rather than restricting them to Apple’s own tools, to write programs. Apple was feeling pressure from app developers who had to spend time and money to build separate versions of apps to work on both iOS and Google's (GOOG) Android smartphone platform. Adobe (ADBE) shares surged more than 12% Thursday, as Apple's new rules suggest that Adobe’s Flash and related tools may become viable for iOS.

• Steelworkers file complaint against China. The U.S. Steelworkers union formally requested a U.S. trade investigation into China's policies to support its green tech sector, in a case that could end up before the World Trade Organization. The petition accuses China's government of providing hundreds of billions of dollars in subsidies and other means of support to provide an unfair advantage to local firms. China’s manufacture of solar panels, wind power turbines and other clean energy products has turned the nation into the global leader in those markets.

Stocks ticked higher Thursday, as investors welcomed better-than-expected reports on weekly jobless claims and the nation's trade deficit. The three major indexes rallied going into September -- gaining momentum during five of the six previous sessions.

But trading volumes have been exceptionally low this week, with many market participants on vacation.

Baring any unexpected news, Friday's session is expected to be light as there is little market-moving economic data out and only a few minor company reporting earnings.