Jobless Claims Lift Equities Above the Flame
The US equity markets have moved into positive territory in early action, courtesy of a favorable reading on initial jobless claims, which is helping ease some of the soured sentiment that came from yesterday’s unexpected drop in the ADP employment report, ahead of tomorrow’s key labor report. Treasuries pared some morning gains and are mixed, with the next report on the US economic calendar being the afternoon release of consumer credit. Meanwhile, the nation’s retail same-store sales reports are pouring in and the results are mixed thus far, with Target Corp missing expectations, while Macy’s Inc easily topped the Street’s forecast. In earnings news, PepsiCo Inc matched analysts’ profit expectations, while Marriott International Inc missed expectations. Overseas, Asia was nearly unchanged in a lackluster session, while stocks in Europe have overcome early losses and are higher following expected unchanged interest rate decisions from the Bank of England and the European Central Bank.
As of 8:51 a.m. ET, the December S&P 500 Index Globex future is 7 points above fair value, the Nasdaq 100 Index is at 11 points above value, while the DJIA is 55 points above fair value. Crude oil is up $0.84 at $84.07 per barrel, and the Bloomberg gold spot price is up $8.40 at $1,357.45 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—is down 0.4% at 77.07.
The nation’s retailers are reporting September same-store sales—sales at stores open at least a year—headlined by Target Corp. (TGT $54), which posted a 1.3% gain in sales year-over-year (y/y), shy of the 1.9% gain that analysts surveyed by Reuters were expecting. The company said sales were near the low end of its expectations, but it is pleased with its back-to-school and back-to-college categories and it continues to see strong performance in grocery, beauty and healthcare. TGT said in October it expects to build on its strong guest traffic trends with the launch of its Redcard Rewards program, which it believes will help it gain market share and profitability in the upcoming holiday season.
Meanwhile, department store Macy’s Inc. (M $24) announced that it achieved a 4.8% y/y increase in its September same-store sales, above the 3.3% growth that was anticipated. The company said the back-to-school season has been one of its most successful in years.
Inside the mall, Gap Inc. (GPS $19) posted a 2% decline in same-store sales for September compared to last year, and versus the flat reading that analysts were expecting.
Outside of the retail sales reports pouring in, PepsiCo Inc. (PEP $68) reported 3Q EPS ex-items of $1.22, which matched the Street’s forecast, while revenues jumped 40% y/y to $15.5 billion, topping the $15.3 billion that analysts were expecting. PEP lowered the high end of its full-year EPS outlook.
Also, Marriott International Inc. (MAR $38) announced 3Q EPS of $0.22, one penny below the Street’s expectations, and revenues increased 7% y/y to $2.6 billion, below the $2.7 billion that was forecasted by analysts.
Weekly jobless claims fall, consumer credit due out in the afternoon
The week’s focus on the employment sector continues, with the release of weekly initial jobless claims, which fell by 11,000 to 445,000, versus last week's figure which was upwardly revised by 3,000 to 456,000, and compared to the consensus estimate of economists surveyed by Bloomberg, which called for claims to come in at 455,000. The four-week moving average, considered a smoother look at the trend in claims, declined by 3,000 to 455,750, and continuing claims dropped by 48,000 to 4,462,000, compared to the 4,450,000 that was anticipated by economists. Treasuries are mixed after paring gains on the employment report.
In the final hour of trading, the economic calendar will yield the release of consumer credit, forecasted to decline by $3.5 billion in August, after falling by $3.6 billion in July.
Europe modestly higher as traders grapple with data and central bank announcements
Stocks in Europe are slightly higher in afternoon action as a disappointing UK housing report is being offset by some favorable manufacturing reports, and traders are digesting monetary policy announcements from the Bank of England and the European Central Bank. Both the BoE and ECB kept their benchmark interest rates unchanged at 0.5% and 1.0%, respectively, as widely expected. The BoE did not announce any additions to its asset purchase program and the focus is on the customary press conference by ECB President Jean-Claude Trichet for any comments or signals regarding the timing of any new stimulus efforts or changes to the central bank’s current policy stance.
Meanwhile, other reports on the European economic calendar are shaping the direction in the equity markets across the pond and deserve a mention, with the largest drop in UK home prices, per Bloomberg, since at least 1983 being offset by some favorable manufacturing data. Stocks in Europe have overcome early weakness from caution ahead of the aforementioned announcements from the BoE and ECB and the disappointing UK housing data, after reports showed industrial production in Germany—Europe’s largest economy—and the UK exceeded economists’ expectations.
On the equity front, shares of Renault SA (RNSDF $49) are sharply higher after France’s second-largest automaker sold a sizeable chunk of its stake in Swedish truck maker Volvo AB (VOLVF $14) for 3 billion euros ($4.2 billion) in order to trim debt.
The UK FTSE 100 Index is 0.1% higher, France’s CAC-40 Index is up 0.3%, Germany’s DAX Index is advancing 0.2%, and Sweden’s OMX Stockholm 30 Index is unchanged.
Asia flat ahead of global data
Stocks in Asia were nearly unchanged in a lackluster session as traders lacked some conviction ahead of tomorrow’s US labor report and before key central bank monetary policy announcements in Europe. Japan’s Nikkei 225 Index dipped 0.1% following reports that showed the nation’s Leading Index deteriorated from 100 in July to 99.1 in August, and the pace of growth in Japanese machine tool orders decelerated y/y in September. The Japanese yen’s strength, which hit a new 15-year high versus the US dollar and continues to dampen the outlook for profits of export issues, despite the Bank of Japan’s unexpected monetary policy easing on Tuesday, added to the uninspired sentiment in Japanese action. Meanwhile, although Australian stocks finished with a modest gain as the S&P/ASX 200 Index inched 0.1% higher, the markets erased early losses following a report that showed the nation’s employment change rose by 49,500 in September, more than double the 20,000 forecast of economists, as full-time employment picked up while part-time employment declined. Elsewhere, Taiwan’s Taiex Index was unchanged after the nation reported an unexpected narrowing of its trade surplus, and Hong Kong’s Hang Seng Index was also flat, while markets in mainland China remained closed for a holiday, expected to return to action tomorrow. Finally, South Korea’s Kospi Index declined 0.2%, following a solid decline in shares of Samsung Electronics Co. Ltd. (SSNLF $656) after the world’s largest memory chip maker, per Reuters, offered disappointing 3Q earnings guidance.
No comments:
Post a Comment