Following a plethora of US economic data, the equity markets are under some pressure in early action of the final trading session before the Christmas holiday. US durable goods orders came in below expectations, jobless claims roughly matched economists' forecasts, while personal income and spending figures were mixed. Treasuries are mixed in an abbreviated trading session as traders digest the data, while reports on consumer sentiment and regional manufacturing activity are due out later this morning. In equity news, Bed Bath & Beyond Inc topped the Street's earnings expectations, while Micron Technology Inc missed analysts' profit projections. Overseas, Asia was mixed as Japanese markets were closed and cash-crunch concerns pressured China, while European markets are diverging amid the lack of any major economic data.
As of 8:53 a.m. ET, the March S&P 500 Index Globex future is 2 points below fair value, the Nasdaq 100 Index is 4 points below fair value, while the DJIA is 9 points below fair value. Crude oil is $0.03 lower at $90.45 per barrel, and the Bloomberg gold spot price is down $7.75 at $1,377.61 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is up 0.1% at 80.74.
Bed Bath & Beyond Inc. (BBBY $48) reported 3Q EPS of $0.74, above the $0.66 that analysts surveyed by Reuters had anticipated, with revenues increasing 11.1% year-over-year (y/y) to $2.2 billion, exceeding the $2.1 billion that the Street had forecasted. The retailer said its same-store sales-sales at stores open at least a year-rose 7.0% y/y. BBBY issued 4Q EPS guidance that was slightly below analysts' expectations, while its full-year EPS outlook was roughly inline with forecasts. Moreover, the company announced that its Board of Directors authorized an additional $2 billion stock repurchase program.
Micron Technology Inc. (MU $8) announced fiscal 1Q EPS of $0.15, below the $0.29 that the Street had estimated, and although revenues rose 35% y/y to $2.3 billion, the figure came up short of the $2.4 billion that analysts were anticipating. The memory chip maker said its DRAM-chips used in PCs, laptops, and video game consoles-revenues fell 19% quarter-over-quarter (q/q) in 1Q due to a solid decline in prices, which was partially offset by an increase in unit sales volume. Also, the company said its NAND Flash-memory chips used in mobile devices and digital cameras-revenues were up "slightly" q/q on a solid increase in unit sales volume, partially offset by a decline in prices.
Host of data to ring in the holiday
Durable goods orders fell more than expected, falling 1.3% month-over-month (m/m) in November, compared to the 0.5% decrease that was expected by economists surveyed by Bloomberg, but October's figure was favorably revised from a 3.3% drop to a decline of 3.1%. However, ex-transportation, orders rose, increasing by 2.4%, compared to the expectation of a 1.8% gain, and October was adjusted from a 2.7% decrease to a drop of 1.9%. Meanwhile,
orders for non-defense capital goods excluding aircraft, considered a good proxy for business spending grew by 2.6% in November, compared to the 3.1% increase that was anticipated, and after declining by a favorably revised 3.6% in October.
Moreover, weekly initial jobless claims dipped by 3,000 to 420,000, versus last week's figure which was upwardly revised by 3,000 to 423,000, matching the level that economists expected. The four-week moving average, considered a smoother look at the trend in claims, rose by 2,500 to 426,000, and continuing claims dropped by 103,000 to 4,064,000, below the forecast of economists, which called for continuing claims to come in at 4,100,000.
Elsewhere, personal income rose 0.3% in November, versus the expectation of economists, which called for a 0.2% gain, and October's 0.5% increase was revised to a gain of 0.4%. Personal spending was 0.4% higher in November, compared to expectations of a 0.5% advance, but October's 0.4% rise was revised to a 0.7% increase. The savings rate moved lower to 5.3% in November, after a downwardly revised 5.4% for October.
Also, the PCE Price Index, which is released with the income and spending data, was up 1.0% y/y in November, below expectations calling for a 1.1% advance, after October's 1.3% increase was revised to a 1.2% gain. The core PCE Price Index, which excludes food and energy, was 0.1% higher m/m, matching economists' expectations, while y/y core prices moved 0.8% higher, below the consensus 0.9% estimate.
Treasuries are mixed following the plethora of data, with the yields on the 2-year and 10-year notes up 1 bp to 0.64% and 3.35%, respectively, while the 30-year bond yield is down 1 bp to 4.43%. Please note that all US markets will be closed tomorrow and the bond markets will close early today.
Later this morning, the US economic calendar will yield the final University of Michigan Consumer Sentiment Index reading for December, expected to rise to 74.5 from the initial reading of 74.2 and November's 71.6, and the Dallas Fed Manufacturing Activity Index, which is expected to rise to 17.0 for December.
European market diverge in thin pre-holiday trading
Stocks in Europe are mixed in lackluster afternoon action, with volume light in the last session before the Christmas holiday. Materials are being bogged down by some profit taking on the heels of the recent upward momentum in commodity issues, while healthcare stocks are the best performers on the day. There are some individual equity moves that deserve a mention, with shares of SAS AB (SASDY $6) jumping amid reports that the Swedish air carrier is being
targeted for a takeover by Deutsche Lufthansa AG (DLAKY $22), but neither firm has commented on the reports. Moreover, shares of Aixtron AG (AIXG $33) are nicely higher amid speculation that the maker of LED screens won a major order from China, though the company did not confirm the reports.
Meanwhile, the economic front across the pond is relatively light to add to the subdued session, but France reported much better-than-expected consumer spending, while separately revealing that its producer prices rose at a rate that matched economists' expectations.
The UK FTSE 100 Index is 0.2% higher, France's CAC-40 Index is down 0.4%, Germany's DAX Index is flat, and Sweden's OMX Stockholm 30 Index is declining 0.3%.
Asia mixed as China slides of cash crunch concerns
The equity markets in Asia finished mixed in another subdued session ahead of the Christmas holiday weekend and as Japanese markets were closed today for a holiday. Chinese markets posted the largest moves among the major markets, with the Shanghai Composite Index declining 0.8% and Hong Kong's Hang Seng Index falling 0.6%. Chinese markets found pressure on concerns about a cash shortage in the nation's banking system, which caused its benchmark money-market rate to jump to a three-year high, per Bloomberg. However, resource-related issues showed some strength amid the recent run-up in commodity prices, helping limit losses in the region and supporting a 0.4% advance in Australia's S&P/ASX 200 Index, which also benefitted from a rise in shares of Riversdale Mining Ltd. (RFLMF $17) after it received a takeover offer from Rio Tinto (RIO $71) for A$3.9 billion ($3.9 billion). Elsewhere, South Korea's Kospi Index finished flat after a muted reaction to some tough comments from North Korea toward South Korea and Taiwan's Taiex Index rose 0.4% after a report showed the nation's industrial production grew more than economists anticipated. Rounding out the day, New Zealand's NZX 50 Index increased 0.3% even after its 3Q GDP unexpectedly fell q/q.
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