Morning Update

Greece Concerns and Jobless Claims Stymie Sentiment

After yesterday almost wiped away the solid losses in the previous day’s session, stocks are back in the red on resurfacing concerns in the Eurozone about Greece, after sentiment took a blow from another increase in weekly initial jobless claims, and as Federal Reserve Chairman Ben Bernanke is set to conclude his semi-annual monetary policy testimony before Congress. The soured sentiment is outweighing a jump in headline durable goods orders and a $12 billion acquisition of bottler Coca-Cola Enterprises’ North American operations by Dow member Coca-Cola. Treasuries are higher amid the aforementioned uneasiness. In other equity news, Kohl’s Corp exceeded analysts’ profit expectations. Overseas, Asia finished mostly lower, and Europe is in the red as traders are also digesting a plethora of economic data.

As of 8:50 a.m. ET, the March S&P 500 Index Globex future is 11 points below fair value, the Nasdaq 100 Index is 13 points below fair value, and the DJIA is 91 points below fair value. Crude oil is down $1.18 at $78.82 per barrel, and the Bloomberg gold spot price is down $2.93 at $1,094.83 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—is up 0.2% at 81.02.

Dow member Coca-Cola Co. (KO $55) announced that it has reached an agreement to acquire its largest bottler Coca-Cola Enterprises’ (CCE $19) North American operations in a deal valued at about $12.2 billion in cash and including debt. Also CCE agreed in principle to purchase KO’s bottling operations in Norway and Sweden, and acquiring the right to buy the German bottling business.

Kohl’s Corp. (KSS $52) reported 4Q EPS of $1.40, three cents above the consensus estimate of Wall Street analysts, with revenues increasing 8.5% year-over-year (y/y) to $5.7 billion, inline with the Street’s forecast. The retailer said its same-store sales—sales at stores open at least a year—rose 4.5% y/y.

Durables mixed, jobless claims rise again

Durable goods orders jumped by 3.0% in January, versus the 1.5% rise that had been forecast, and December’s 0.3% increase in orders was upwardly revised to a gain of 1.9%. Ex-transportation, orders were down 0.6%, compared to the 1.0% growth forecast, but December’s figure was favorably revised from a 0.9% increase to a 2.0% advance. Monthly orders data of goods intended to last at least three years can be very volatile as large orders for items such as airplanes and military equipment have a tendency to distort the data. Nondefense capital goods ex-aircraft, considered a good proxy for business spending, fell 2.9%.

Weekly initial jobless claims rose by 22,000 to 496,000, versus last week's figure which was revised upward by 1,000 to 474,000, and compared to the consensus, which called for claims to decline to 460,000. The four-week moving average, considered a smoother look at the trend in claims, increased by 6,000 to 473,750, and continuing claims rose by 6,000 to 4,617,000, compared to the 4,570,000 forecast. Treasuries are higher after the durable goods and employment reports.

Also, Federal Reserve Chairman Ben Bernanke will conclude his two-day semi-annual monetary policy report before Congress this morning, providing testimony before the Senate Banking Committee. The Fed Chief is not expected to provide any different testimony compared to yesterday’s report in front of the House. Bernanke reiterated that, “The FOMC continues to anticipate that economic conditions--including low rates of resource utilization, subdued inflation trends, and stable inflation expectations--are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” Bernanke also maintained that the Fed continues to anticipate that its MBS purchases program will be completed by the end of March, and that in light of substantial improvements in the functioning of most financial markets, it is winding down the special liquidity facilities it created during the crisis.

However, traders may pay attention to the Q&A session after his prepared remarks for any new details on the timing of the Fed’s monetary policy exit strategy. The Street may also be interested in any comments regarding the Fed’s role in the financial markets or on the topic of financial regulation, which has garnered attention of lawmakers in the wake of the financial crisis.

Europe seeing red as Greece concerns resurface to overshadow financial reports

Stocks in Europe are lower in afternoon action, as strength in financials on a couple of upbeat reports in the group is being offset by worries about the debt problems in Greece. The resurfacing worries about the debt-ridden Greek nation came courtesy of yesterday’s warning by Standard & Poor’s, saying that it could downgrade Greece’s debt rating by one or two notches within a month, exacerbated by Moody’s Investors Service saying that its ratings on the nation hinge on the success of the country’s fiscal reform plans. Greece’s Athex Composite Index is trading 2.3% lower. However, shares of French banking firm Credit Agricole (CRARY $7) are higher after it offered reassuring comments regarding its financial structure, while a narrower-than-expected loss from Royal Bank of Scotland (RBS $11) is boosting the UK firm, helping the financial sector gain ground across the pond. In other equity news, chemicals firm BASF (BASFY $55) is nicely higher after it swung to a profit in the 4Q and said it expects earnings before interest and taxes to be “significantly higher” in 2010.

The economic front is providing a plethora of reports for traders to chew on, headlined by an unexpected deterioration in Eurozone economic confidence for February, a surprisingly sharp drop in 4Q UK total business investment, while Germany’s unemployment change increased by a smaller amount than expected. In other economic news across the pond, Sweden’s consumer confidence improved and its producer prices rose more than anticipated, Switzerland’s employment level in 4Q ticked lower, Italy’s business confidence improved by a larger amount than forecasted, Spain’s producer prices rose more than forecasted, and France’s producer prices increased more than expected and its consumer confidence unexpectedly deteriorated.

Britain’s FTSE 100 Index is 0.7% lower, France’s CAC-40 Index is down 0.8%, Germany’s DAX Index is declining 0.5%, Spain’s IBEX 35 Index is off 0.7%, Switzerland’s Swiss Market Index is down by 0.4%, Italy’s FTSE MIB Index is 1.2% in the red, while Sweden’s OMX Stockholm 30 Index is up 0.1%.

Economic data and Greece concerns weigh on Asia

Stocks in Asia were mostly lower amid resurfacing concerns about Greece and as some economic data flared up concern about the global economic recovery. Japan’s Nikkei 225 Index declined about 1.0% on the aforementioned uneasiness, which sparked some flight-to-safety buying of the Japanese yen, exacerbating sentiment in the region as a stronger yen dampens the outlook for revenues of export issues in the export-reliant nation. Meanwhile, South Korea’s Kospi Index fell 1.6% to lead the decline in the Asia/Pacific region, bogged down by a report that showed the nation’s economy posted the first current account deficit since January 2009. A 1.4% drop in Taiwan’s Taiex Index also helped pace the decline in the region after separate reports showed the nation’s export orders and industrial production increased by smaller amounts than economists expected. Meanwhile, stocks in China faired relatively well, with Hong Kong’s Hang Seng Index dipping 0.3%, but a report showed its imports outpaced exports, which led to a larger-than-expected trade deficit, while the Shanghai Composite Index posted a solid 1.3% advance.

Elsewhere, Australia’s S&P/ASX 200 Index fell 1.2% as an 18% drop in shares of freight and logistics firm Toll Holdings (THKUF $7), after it reported first-half profits that fell over 30%, overshadowed a report that showed the country’s Leading Index rose in December after declining in November. Rounding out the day, India’s BSE Sensex 30 Index finished flat, as the nation’s annual Economic Survey noted that its economy posted a “remarkable from the global recession,” forecasting that India’s growth could exceed 8% in the coming financial year.