New Quarter but Same Headwinds Remain
After posting the worst quarterly performance since the US financial crisis, stocks are down in early trading as 4Q is poised to begin in the red, amid the backdrop of growing global economic concerns and lingering uncertainty regarding a default by Greece. Eurozone debt worries are hamstringing sentiment following data that showed Greece will miss its deficit targets amid a deeper-than-expected recession. However, traders are waiting for a key report on the health of the US manufacturing sector in the form of the ISM Manufacturing Index, which could impact today's action after the opening bell. Treasuries are higher amid the weakness in stocks, also ahead of a read on construction spending. In equity news, Arch Coal Inc lowered its earnings outlook on lost coal production, while the CEO of Chinese internet company Alibaba Group Holding Ltd, which is the parent of Alibaba.com, said he is "interested" in buying Yahoo Inc. Overseas, Asian stocks came under pressure with Chinese and South Korean markets closed for holidays, while European stocks are under solid pressure amid the aforementioned concerns toward Greece.
As of 8:52 a.m. ET, the December S&P 500 Index Globex future is 8 points below fair value, the Nasdaq 100 Index is 20 below fair value, and the DJIA is 70 points below fair value. WTI crude oil is declining $1.44 to $77.76 per barrel, and the Bloomberg gold spot price is up $34.78 at $1,658.57 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is up 0.3% at 79.03.
Arch Coal Inc. (ACI $15) lowered its full-year adjusted earnings guidance from a previous range of $1.75-2.15 per share, to between $1.00-1.40 per share, with analysts surveyed by Reuters expecting the coal producer to post 2011 EPS of $1.97. ACI said the reduction in earnings guidance resulted largely from lost metallurgical coal production at the Mountain Laurel complex, which during 3Q encountered unfavorable geologic conditions, and its longwall facility was idled for nearly 45 days following a roof fall in August.
In M&A news, Jack Ma, the CEO of Chinese internet company Alibaba Group Holding Ltd, which is the parent of Alibaba.com (ALBIY $5), said he is "interested" in buying Yahoo Inc. (YHOO $13) and was approached by private-equity firms and others about a potential takeover deal. However, Ma noted that talks have been hampered by political concerns as opposed to financial ones. Both companies have declined to comment on the news.
Manufacturing data likely to dominate economic day
Treasuries are higher in morning action as there are no US economic reports scheduled to be released before the opening bell, with the yield on the 2-year note unchanged at 0.24%, the yield on the 10-year note decreasing 4 bps to 1.88%, and the 30-year bond rate 6 bps lower at 2.85%.
However, shortly after the regular trading session begins, the focus will be on the manufacturing sector with the release of the ISM Manufacturing Index, forecasted to decline slightly from 50.6 in August to 50.3 for September, as well as construction spending, expected to decline 0.2% month-over-month (m/m) in August after falling 1.3% in July.
For the rest of the week, particular attention will be paid to the US jobs market, as the US consumer is still the biggest component of the largest economy globally. Measures of the jobs market will include the ADP Employment Change and the leading indicator of weekly jobless claims, on Wednesday and Thursday, respectively, as well as the employment components of the ISM reports. These reports will lead up to Friday's nonfarm payroll report, expected to grow by 50,000 jobs in September, after August payrolls were unchanged, as no net new jobs were reported. Meanwhile, private-sector payrolls are projected to increase 90,000, after advancing by 17,000 in August. The unemployment rate is forecasted to remain at 9.1% and average hourly earnings are anticipated to rise 0.2% m/m, after falling 0.1% in August.
Other reports on the US economic calendar for this week include: factory orders, the ISM Non-Manufacturing Index, MBA mortgage applications, wholesale inventories and consumer credit, as well as retail same-store sales results for September.
Greek concerns continue to weigh on Europe
The equity markets in Europe are under solid pressure in afternoon action, led by weakness in financials, on lingering worries about a potential default by Greece. These concerns are coming courtesy of Greece's government draft budget figures showing that the troubled nation will miss its deficit targets, despite its efforts to reduce spending to qualify for bailout funds from the eurozone. The data comes as eurozone lenders just concluded their review of the austerity progress made by Greece as they try to determine if the nation will get its next installment of bailout aid by mid-October, when Greek cash is expected to run out. Greece said the missed deficit target was due to a deeper-than-expected recession in the nation's economic growth.
On the economic front, the eurozone PMI Manufacturing Index, a gauge of activity for September, was unexpectedly revised slightly higher, from 48.4 in the previous estimate to 48.5, compared to the unrevised forecast of economists. A reading below 50 depicts contraction and the slight improvement came as figures out of Germany and France were better than originally reported. Elsewhere, the UK PMI Manufacturing Index surprisingly improved to 51.1 in September, from an upwardly revised 49.4 in August, and compared to the deceleration to 48.5 that economists forecasted.
The UK FTSE 100 Index is down 1.7%, France's CAC-40 Index is declining 2.3%, Germany's DAX Index is dropping 2.7%, Switzerland's Swiss Market Index is decreasing 1.4%, and Greece's Athex Composite Index is falling 2.8%.
Asia falls is light trading as global economic concerns pressure sentiment
Stocks in Asia finished solidly lower in the first session of 4Q, as sentiment continued to be hampered by growing global economic growth concerns and the festering eurozone debt crisis. Japan's Nikkei 225 Index fell 1.8%, Australia's S&P/ASX 200 Index dropped 2.8%, while the Hong Kong Hang Seng Index led the way, tumbling 4.4%. However, trading was lighter than usual as the Shanghai and South Korean markets were closed for holidays. There were some key economic reports in the region that were released over the weekend, with Japan's 3Q Tankan Survey of Large Manufacturers, a read on business sentiment for the country's largest manufacturers, improving to 2 from -9 in 2Q, matching economists' expectations, with a reading above zero denoting that optimists outweighed pessimists. Despite the rebound in sentiment, the level remained below the 6 mark that was posted in 1Q, before the earthquake and tsunami hit the nation, per Bloomberg. Also, South Korea reported September trade figures late-Friday, with the nation's exports growing 19.6% year-over-year (y/y), above the 16.6% that economists expected, but a deceleration from the downwardly revised 25.9% growth seen in August. Moreover South Korea's imports rose more than expected, and the country's trade surplus grew by a smaller amount than anticipated.
After posting the worst quarterly performance since the US financial crisis, stocks are down in early trading as 4Q is poised to begin in the red, amid the backdrop of growing global economic concerns and lingering uncertainty regarding a default by Greece. Eurozone debt worries are hamstringing sentiment following data that showed Greece will miss its deficit targets amid a deeper-than-expected recession. However, traders are waiting for a key report on the health of the US manufacturing sector in the form of the ISM Manufacturing Index, which could impact today's action after the opening bell. Treasuries are higher amid the weakness in stocks, also ahead of a read on construction spending. In equity news, Arch Coal Inc lowered its earnings outlook on lost coal production, while the CEO of Chinese internet company Alibaba Group Holding Ltd, which is the parent of Alibaba.com, said he is "interested" in buying Yahoo Inc. Overseas, Asian stocks came under pressure with Chinese and South Korean markets closed for holidays, while European stocks are under solid pressure amid the aforementioned concerns toward Greece.
As of 8:52 a.m. ET, the December S&P 500 Index Globex future is 8 points below fair value, the Nasdaq 100 Index is 20 below fair value, and the DJIA is 70 points below fair value. WTI crude oil is declining $1.44 to $77.76 per barrel, and the Bloomberg gold spot price is up $34.78 at $1,658.57 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is up 0.3% at 79.03.
Arch Coal Inc. (ACI $15) lowered its full-year adjusted earnings guidance from a previous range of $1.75-2.15 per share, to between $1.00-1.40 per share, with analysts surveyed by Reuters expecting the coal producer to post 2011 EPS of $1.97. ACI said the reduction in earnings guidance resulted largely from lost metallurgical coal production at the Mountain Laurel complex, which during 3Q encountered unfavorable geologic conditions, and its longwall facility was idled for nearly 45 days following a roof fall in August.
In M&A news, Jack Ma, the CEO of Chinese internet company Alibaba Group Holding Ltd, which is the parent of Alibaba.com (ALBIY $5), said he is "interested" in buying Yahoo Inc. (YHOO $13) and was approached by private-equity firms and others about a potential takeover deal. However, Ma noted that talks have been hampered by political concerns as opposed to financial ones. Both companies have declined to comment on the news.
Manufacturing data likely to dominate economic day
Treasuries are higher in morning action as there are no US economic reports scheduled to be released before the opening bell, with the yield on the 2-year note unchanged at 0.24%, the yield on the 10-year note decreasing 4 bps to 1.88%, and the 30-year bond rate 6 bps lower at 2.85%.
However, shortly after the regular trading session begins, the focus will be on the manufacturing sector with the release of the ISM Manufacturing Index, forecasted to decline slightly from 50.6 in August to 50.3 for September, as well as construction spending, expected to decline 0.2% month-over-month (m/m) in August after falling 1.3% in July.
For the rest of the week, particular attention will be paid to the US jobs market, as the US consumer is still the biggest component of the largest economy globally. Measures of the jobs market will include the ADP Employment Change and the leading indicator of weekly jobless claims, on Wednesday and Thursday, respectively, as well as the employment components of the ISM reports. These reports will lead up to Friday's nonfarm payroll report, expected to grow by 50,000 jobs in September, after August payrolls were unchanged, as no net new jobs were reported. Meanwhile, private-sector payrolls are projected to increase 90,000, after advancing by 17,000 in August. The unemployment rate is forecasted to remain at 9.1% and average hourly earnings are anticipated to rise 0.2% m/m, after falling 0.1% in August.
Other reports on the US economic calendar for this week include: factory orders, the ISM Non-Manufacturing Index, MBA mortgage applications, wholesale inventories and consumer credit, as well as retail same-store sales results for September.
Greek concerns continue to weigh on Europe
The equity markets in Europe are under solid pressure in afternoon action, led by weakness in financials, on lingering worries about a potential default by Greece. These concerns are coming courtesy of Greece's government draft budget figures showing that the troubled nation will miss its deficit targets, despite its efforts to reduce spending to qualify for bailout funds from the eurozone. The data comes as eurozone lenders just concluded their review of the austerity progress made by Greece as they try to determine if the nation will get its next installment of bailout aid by mid-October, when Greek cash is expected to run out. Greece said the missed deficit target was due to a deeper-than-expected recession in the nation's economic growth.
On the economic front, the eurozone PMI Manufacturing Index, a gauge of activity for September, was unexpectedly revised slightly higher, from 48.4 in the previous estimate to 48.5, compared to the unrevised forecast of economists. A reading below 50 depicts contraction and the slight improvement came as figures out of Germany and France were better than originally reported. Elsewhere, the UK PMI Manufacturing Index surprisingly improved to 51.1 in September, from an upwardly revised 49.4 in August, and compared to the deceleration to 48.5 that economists forecasted.
The UK FTSE 100 Index is down 1.7%, France's CAC-40 Index is declining 2.3%, Germany's DAX Index is dropping 2.7%, Switzerland's Swiss Market Index is decreasing 1.4%, and Greece's Athex Composite Index is falling 2.8%.
Asia falls is light trading as global economic concerns pressure sentiment
Stocks in Asia finished solidly lower in the first session of 4Q, as sentiment continued to be hampered by growing global economic growth concerns and the festering eurozone debt crisis. Japan's Nikkei 225 Index fell 1.8%, Australia's S&P/ASX 200 Index dropped 2.8%, while the Hong Kong Hang Seng Index led the way, tumbling 4.4%. However, trading was lighter than usual as the Shanghai and South Korean markets were closed for holidays. There were some key economic reports in the region that were released over the weekend, with Japan's 3Q Tankan Survey of Large Manufacturers, a read on business sentiment for the country's largest manufacturers, improving to 2 from -9 in 2Q, matching economists' expectations, with a reading above zero denoting that optimists outweighed pessimists. Despite the rebound in sentiment, the level remained below the 6 mark that was posted in 1Q, before the earthquake and tsunami hit the nation, per Bloomberg. Also, South Korea reported September trade figures late-Friday, with the nation's exports growing 19.6% year-over-year (y/y), above the 16.6% that economists expected, but a deceleration from the downwardly revised 25.9% growth seen in August. Moreover South Korea's imports rose more than expected, and the country's trade surplus grew by a smaller amount than anticipated.
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