Tuesday has quite a few economic reports scheduled. The reports that are available are:-
Also the following companies are reporting their quarterly earnings:-
• Campbell Soup Company (CPB), Cracker Barrel Old Country Store Inc. (CBRL), Hormel Food Corp. (HRL), TiVO Inc. (TIVO), and Guess?, Inc. (GES).
Tuesday sees U.S. stock poised to open lower, as world markets reacted to an exchange of artillery fire between North and South Korea.
Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures fell ahead of the opening bell, following the global sell-off started by Asian markets and ongoing in European markets.
A revised reading on U.S. economic activity in the third quarter comes out before the market opens.
The government is expected to report that gross domestic product rose 2.4% for the quarter, according to economists surveyed by Briefing.com. That would be an improvement from the Commerce Department's initial estimate of 2%, issued last month.
New Home Sales
The National Association of Realtors is scheduled to report on October new home sales after the market opens. Economists expect the report to show sales fell to an annual rate of 4.42 million in the month, from 4.53 million in September.
Later in the afternoon, the Federal Reserve is due to release the minutes from its November 3 policy meeting of the central bank's open markets committee.
Notes of Importance
There are a few further points to the mornings trading which need to be considered:-
• The Dow Jones Industrial Average (DJIA) is headed sharply lower this morning, as Wall Street reels from reports of an exchange of fire between North and South Korea.
Look for the Dow to potentially test support at the 11,000 level today, with resistance remaining firm at the 11,200 level.
• The S&P 500 Index (SPX), the broad-market index, should hold support at the 1,175 level, with resistance holding at the 1,200 level.
• The U.S. Dollar Index :With hostilities between the Koreas boiling over once again, safe-haven buying has quickly become the theme of the morning. The U.S. dollar is benefiting from this flight to safety, with the U.S. Dollar Index rising 0.31% to 78.93 in premarket trading.
• Gold futures for December delivery rose $3.40 to $1,361.20 an ounce.
• Benchmark crude futures for January delivery slipped 42 cents to $81.32 a barrel.
• Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 2.78% from 2.81% late Friday.
• Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,339,851 call contracts traded on Monday, compared to 765,451 put contracts. The resultant single-session put/call ratio arrived at 0.57, while the 21-day moving average fell to 0.57.
Ireland begins two nervous weeks of political manoeuvring on Tuesday as the government dares the opposition to block an austerity budget on which a multi-billion euro EU/IMF bailout is riding. Irish Prime Minister Brian Cowen defied mounting pressure to quit on Monday, saying he would stay in office until parliament passed the budget, and then call an early election.
The cost of insuring Irish and Portuguese government debt against default rose on Tuesday as markets fretted over the impact of political uncertainty in Ireland on budget plans, while the premium that investors demand to hold Irish and other peripheral euro zone government bonds rather than German debt also gained ground.
Currencies: The dollar strengthened against the euro, the Japanese yen and the British pound.
European stocks were lower in morning trading. Britain's FTSE 100 dropped 0.6%, the DAX in Germany slipped 0.2% and France's CAC 40 lost 0.8%.
• In Europe at midday, London -0.6%. Paris -0.9%. Frankfurt -0.2%.
Earlier, Asian markets ended the session lower, after North Korea attacked a South Korean island. The Shanghai Composite lost 1.9% and the Hang Seng in Hong Kong dropped 2.7%. Japan's Nikkei was closed for a holiday.
• In Asia, Japan +0.9% to 10115. Hong Kong -2.7% to 22896. China -1.9% to 2828. India -1.3% to 19692.
As of 7 a.m. in New York, the Dow Jones Industrial Average futures were down 75 points to 11090, the S&P 500 futures fell 10 points to 1187.90 and the Nasdaq 100 futures lost 13.25 points to 2141.25.
• Futures at 7:00: Dow -0.65%. S&P -0.8%. Nasdaq -0.6%. Crude -0.5% to $81.35. Gold +0.4% to $1363.20.
Campbell Soup Co. (CPB) reported a first-quarter profit of $279 million, or 82 cents per share. Sales for the quarter were $2.17 billion. Wall Street was expecting a profit of 83 cents per share on sales of $2.2 billion. Looking ahead CPB said it sees fiscal 2010 earnings growth of 2%-4%, and fiscal 2011 sales growth of 1%-3%. In a statement, the company said that it plans "to place greater focus on advertising and brand-building initiatives in our marketing efforts."
Hewlett-Packard (HPQ) reported a fourth-quarter profit of $2.5 billion, or $1.10 per share, on revenue of $33.3 billion. Adjusted income was $1.33 per share. Analysts had expected the company to post earnings of $1.27 per share on revenue of $32.7 billion. For the current quarter, HPQ said that it sees adjusted earnings of $1.28 to $1.30 per share on revenue of roughly $32.8 billion to $33 billion. Wall Street currently expects earnings of $1.22 per share on $32.72 billion in sales.
Brocade Communications Systems (BRCD) reported fourth-quarter non-GAAP earnings of $66 million, or 14 cents per share, on revenue of $550 million. Analysts were expecting earnings of 13 cents per share on revenue of $536.11 for the period. Looking ahead, the company said that it expects revenue for the current quarter to arrive in a range of $535 million to $550 million, below the current consensus estimate for revenue of $555.6 million.
Some Interesting News
• Dynegy dumps Blackstone, will explore options. Takeover target Dynegy (DYN) said it assumes shareholders will reject its merger agreement with Blackstone (BX), and that it plans to explore strategic options, including soliciting proposals from "potentially interested parties" such as large shareholders Seneca Capital and Carl Icahn, who had vehemently opposed the $5.00/share, $600M deal. Dynegy also said it will "carefully review its standalone restructuring alternatives." Premarket: DYN +2.1% (7:15 ET).
• Three raids as insider trading probe heats up. The FBI raided three large hedge funds yesterday, seizing documents from SAC Capital spin-offs Diamondback Capital and Level Global Investors, and from Loch Capital Management, as regulators accelerate their insider trading probe. Sources said the Justice Department is intent on taking down a dozen hedge fund firms in its attempt to shake up the industry, with some suggesting this could become "one of the most far-reaching insider-trading cases ever."
• Irish PM to dissolve government. Irish Prime Minister Brian Cowen said he would dissolve the government after the country passes its crucial 2011 budget in early December, paving the way for new elections that will almost certainly see Cowen voted out. The announcement came just a day after Ireland agreed to seek an estimated €80B ($110M) bailout from the EU and IMF, and adds the threat of political instability to the eurozone's financial crisis. EUR -0.5% vs. USD (7:00 ET).
• J. Crew in talks to go private. J. Crew (JCG) is nearing a deal to be taken private by a private-equity duo for $43.50/share in cash, or around $3B. The suitors, TPG Capital and Leonard Green & Partners, would divide ownership of the clothing retailer 75%-25%, with the larger stake going to TPG, a former owner of J. Crew. A deal could be announced as soon as today.
• North Korea fires rockets at South Korea. North Korea fired artillery rockets at the South Korean island of Yeonpyeong, killing two soldiers, and wounding 16 soldiers and three civilians. The news rattled markets, and temporarily boosted the dollar as a safe-haven buy; there was even some initial selling of yen, usually seen as a safe-haven currency as well, because of Japan's geographical proximity to the conflict. The dollar later pared its gains after South Korea and China appealed for calm, and as at least one major ratings agency said it was 'very unlikely' the attack would turn into full-scale hostilities. South Korea's Kospi index, which shut for the day just as reports of the shelling began to trickle in, closed -0.8% but will likely face pressure tomorrow on the news. As of 7:00 ET: South Korea's won -2.5% against the dollar on the forward market. USD +0.1% vs. JPY. London -0.6%. Paris -0.9%. S&P futures -0.8%.
• Medtronic buys Ardian. Medtronic (MDT) agreed to buy privately-held Ardian, a developer of catheter-based therapies to relieve hypertension, for $800M in cash upfront, with commercial milestones set for the next five years. Medtronic, which considers renal denervation an 'exciting' growth market in medical devices, already held an 11% stake in Ardian. In after-hours trading, MDT +0.6% to $34.90.
• Massey Energy to review sale. Massey Energy (MEE) said it will begin a "formal review of strategic alternatives," including selling itself. Sources said several potential suitors have approached the firm with detailed bid offers, including and ArcelorMittal (MT) and Alpha Natural Resources (ANR), with the latter said to be comfortable with a bid in the $47-50/share range. Arch Coal (ACI), Consol Energy (CXS) and others are also said to be interested. Massey shares gained 1.7% in AH trading to $51.36.
• J&J recalls children's medication. Johnson & Johnson (JNJ) has recalled 4M packages of children's-strength Benadryl and 800K bottles of children's Motrin because of manufacturing problems, but stressed the products are safe for consumption. Even so, this latest quality control fumble will hurt J&J as it tries to regain consumer trust after a string of recalls.
• Thailand's PTT buys into Canadian oil sands. Thailand's PTT Exploration (PEXNY.PK) agreed to pay $2.3B for 40% of Statoil's (STO) Canadian oil sands project. Statoil will remain the majority owner and continue operating the project. The investment marks Thailand's first entry into Canada's oil sands, the largest source of crude oil outside the Middle East and the target of billions of dollars of investments by Asian state oil companies in recent years. Premarket: STO +1.3% (7:00 ET).
• H-P shines on earnings beat. Hewlett-Packard (HPQ) handily beat earnings expectations (see details below) on increased global sales and profit growth in the company's core PC business. Operating margins narrowed to 9.9% from 10.2%, but were up slightly on an adjusted basis. H-P also raised its guidance for the coming year to EPS of $5.16-5.26 on revenue of $132B-133.5B; analysts had expected $5.11 and $132.42B. New CEO Leo Apotheker, making his first public appearance since being appointed, gave little indication of his strategy for the company, other than to say he plans to invest more in the company's research and software. H-P's strong results suggest Cisco's (CSCO) troubles are company-specific, not industry-wide. Premarket: HPQ +1.85%, CSCO -0.5% (7:00 ET).
• BP comp fund should cover spill costs. Kenneth Feinberg, the administrator of BP's (BP) $20B oil spill compensation fund, said he has paid out $2B to 125,000 people and approved 'less than half' of the claims made. Though the fund will also be used for government clean-up costs and to cover lost-income claims, Feinberg said "based on what I’ve seen so far I’m cautiously optimistic that $20B is more than enough" to cover BP's spill-related expenses. Premarket: BP -0.7% (7:00 ET).
• NHTSA to review Honda claims. The National Highway Traffic Safety Administration will decide whether to open a full investigation into claims of possible sudden acceleration problems with Honda's (HMC) Accord hybrid. Around 25,000 vehicles would be affected by the probe.
• Lehman bankruptcy costs top $1B. Lehman Brothers (LEHMQ.PK) is dead, but its bankruptcy bill continues to grow. Law firms, consultants and other advisers working on unwinding the firm's operations and derivatives contracts were paid $40.6M in October, bringing the total bankruptcy bill to $1.02B so far.
Stocks ended mixed Monday, as weakness in the banking sector overshadowed news that Ireland would accept financial assistance.
Investors had been on edge recently about Ireland's long-term debt problems. But over the weekend the nation's prime minister formally requested substantial financial assistance from the European Union and the International Monetary Fund.
Shares of big banks came under pressure later Monday, after federal law enforcement officials searched the offices of three prominent hedge funds, in what is said to be a large-scale insider trading probe.
Trading could be choppy this week, with many market participants taking time off ahead of the Thanksgiving holiday. All U.S. markets will be closed Thursday.
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