Beyond the Numbers
Markets May Extend Quarterly Gains on Data, Eurozone Development
3/30/2012 9:21 AM
The major U.S. index futures are pointing to a higher opening on Friday, with sentiment remaining upbeat as the markets veer to the end of the first quarter, which witnessed a buoyant performance. The Eurozone finance ministers agreed earlier in the day to boost the size of the region’s bailout fund. The officials have agreed to raise the ceiling for lending by the European Stability Mechanism and the European Financial Stability Facility to 700 billion euros.
A domestic economic report released earlier in the day showed that consumer spending rose by more than expected, although personal income growth remained soft. The positive developments have lent some support to commodities, which experienced a sell-off in the previous session. If the results of a regional manufacturing survey and a consumer sentiment data, both due shortly after the markets open come in line with expectations, the markets may remain afloat and close out the quarter on a up note.
After moving notably lower in morning trading on Thursday, the major U.S. averages pared most of their losses over the course of the afternoon before ending mixed. The performance came amid the release of a report showing a decline in jobless claims, although claims came in above expectations. Another report that showed that the U.S. economy grew at an unrevised 3 percent pace in the fourth quarter.
The Dow Industrials ended up 19.61 points or 0.15 percent at 13,146, while the Nasdaq Composite Index slipped 9.60 points or 0.31 percent before closing at 3,095 and the S&P 500 Index closed 2.26 points or 0.16 percent lower at 1,403.
The breath among the Dow components was titled in favor of the decliners, with eighteen stocks closing lower and one end stock ending unchanged, while the remaining eleven index components advanced.
American Express (AXP), Bank of America (BAC), Disney (DIS) and JP Morgan Chase (JPM) retreated sharply in the session. On the other hand, Alcoa (AA), Caterpillar (CAT), Intel (INTC), Coca-Cola (KO) and United Technologies (UTX) were among the biggest gainers.
Finance and housing stocks declined in the session.
On the economic front, initial claims for unemployment benefits came in at 359,000 in the week ended March 24th compared to expectations for a reading of 350,000. The previous week’s reading was upwardly revised by a larger than usual 16,000 to 364,000. The four-week average increased to 365,000 from 355,000 in the previous week, reflecting revisions dating back to the past few years.
This should be just “The four-week moving average fell to 365,000 from the previous week's revised average of 368,500.”Currency, Commodity Markets
Crude oil futures are advancing $0.71 to $103.49 a barrel after slipping $2.63 to $102.78 a barrel on Thursday. Gold futures, which fell $5.60 to $1,654.90 an ounce in the previous session, are currently gaining $12.80 to $1,667.70 an ounce.
Among currencies, the U.S. dollar is trading at 82.21 yen compared to the 82.46 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3340 compared to yesterday’s $1.3302.Asia
The major Asian markets ended on a mixed note, as apprehensions concerning economic health kept sentiment subdued in the wake of some insipid economic readings.
The Japanese market retreated for the third straight session, as its key Nikkei 225 average languished below the unchanged line throughout the session before closing down 31.23 points or 0.31 percent at 10,084.
Fanuc, Credit Saison, Shinsei Bank, Sony, Showa Denko, Sumitomo Mitsui Trust Holdings, Tokyo Electric, Toto, Nomura Holdings and Mizuho Financial were among the worst decliners. Meanwhile, real estate and retail gained some ground.
Japan released a slew of data today. Core consumer prices rose at a 1 percent annual rate in February compared to a 1 percent drop expected by economists. Japan’s jobless rate eased to 4.5 percent in February from 4.6 percent in January. Meanwhile, average household spending rose 2.3 percent year-over-year compared to the 0.5 percent drop expected by economists.
A separate government report showed that Japanese industrial production fell 1.2 percent month-over-month, while economists had expected a 1.3 percent increase.
Australia’s All Ordinaries opened on a nervous note but launched into a rally, hitting the day’s high by the mid-session. Thereafter, the average declined steadily, closing down 2 points or 0.05 percent at 4,420. Energy stocks served as a drag, while material and consumer staple stocks saw moderate buying interest.
Hong Kong’s Hang Seng Index closed at 20,540, down 69.19 points or 0.34 percent. Meanwhile, India’s Sensex rose over 1.50 percent and China’s Shanghai Composite Index, Indonesia’s Jakarta Composite Index, Malaysia’s KLSE Composite Index, Singapore’s Straits Times Index and the Taiwanese Weighted Average Index all ended moderately higher. Europe
The European markets are trading higher, with the French CAC 40 Index and the German DAX Index rising about 1 percent each, while the U.K.’s FTSE 100 Index is gaining 0.59 percent.
In corporate news, Roche announced positive results from a Phase III trial of trastuzumab emtansine, a treatment for metastatic breast cancer being co-developed with ImmunoGen (IMGN). The treatment combines ImmunoGen’s cancer-killing agent DM attached with trastuzumab.
Allied Irish reported a narrower loss for 2011, while it also said it expects to report to a profit in 2014.
Sweetener maker Tate & Lyle said its fiscal year performance got a boost from a solid performance during the final quarter that ended in March.
On the economic front, a survey by the GfK Institute showed that the U.K.’s consumer confidence declined in March. The GfK NOP consumer confidence index slipped to –31 in March from –29 in February, while economists had expected the reading to stay put at –29.
German retail sales unexpectedly fell in February, according to a report released by the Federal Statistical Office. Retail sales declined 1.1 percent month-over-month in February contrary to expectations for a 1.2 percent increase.
French statistical office INSEE reported that French consumer spending rose 3 percent month-over-month in February after sales fell 0.4 percent each in the previous two months. Economists had expected a more modest 0.2 percent increase.
Flash estimates released by Eurostat showed that the annual consumer price inflation rate was 2.6 percent in March compared to 2.7 percent in February. Economists had expected the rate of inflation to slow to 2.5 percent”. U.S. Economic Reports
With U.S. personal spending increasing at a much faster rate than personal income in the month of February, the Commerce Department released a report on showing a notable drop in the personal savings rate for the month.
The report showed that personal spending rose by 0.8 percent in February following an upwardly revised 0.4 percent increase in January. Economists had expected spending to increase by 0.6 percent compared to the 0.2 percent growth that had been reported for the previous month.
Meanwhile, personal income edged up by 0.2 percent in February, matching the downwardly revised increase seen in the previous month. Personal income had been expected to increase by 0.4 percent. As a result, personal saving as a percentage of disposable income tumbled to 3.7 percent in February from 4.3 percent in January
In January, personal consumption rose by a mere 0.2 percent month-over-month. In real terms, consumer spending remained almost unchanged. Spending on durable goods increased, while spending on services was unchanged. The savings rate edged down 0.1 points to 4.6 percent.
The results of the Institute for Supply Management-Chicago's business survey for March are scheduled to be released at 9:45 am ET. Economists expect the business barometer based on the survey to slip to 63.
The Chicago business barometer rose to 64 in February from 60.2 in January. The new orders index rose 5.6 points to 69.2 and the order backlogs index climbed 5.3 points to 50, while the production index was up 4 points. More importantly, the employment index rose about 10 points to its highest level since May 1984.
Reuters and the University of Michigan's final report on the consumer sentiment index for March is scheduled to be released at 9:55 am ET. The consumer sentiment index is expected to be upwardly revised to 75 from the mid-month reading of 74.3.Stocks in Focus
Micron Technology (MU) announced that it has settled a lawsuit filed by Oracle (ORCL) alleging that the chip maker illegally jacked up DRAM prices and violated anti-trust laws. The settlement will mean a reduction in Micron’s already published second quarter revenues and an increase in its net loss by $58 million. Accordingly, the company’s net loss for the second quarter was 29 cents per share and revenues were $2.009 billion.
Quicksiler Resources (KWK) announced the resignation of its CFO Philip Cook after the filing of its 10-K report, which is expected in the week of April 16th, 2012. The company also said its VP, controller and Chief Accounting Officer John Regan will assume the role of CFO on an interim basis.
AstraZeneca (AZN) said a U.S. district court has found the formulation patent protecting SEROQUEL extended release tablets to be valid and has ruled that generic drug makers, including Mylan (MYL), have infringed the patent.
Research In Motion (RIMM) reported fourth quarter adjusted net income of 80 cents per share. Revenues fell 19 percent to $4.2 billion, reflecting shipments of 11.1 million smartphones and 500,000 tablets. The results were worse than expected. The company also said it would no longer provide quantitative guidance due to the ongoing weakness in its smartphone business, an increased focus on BlackBerry 7 smartphones ahead of the BlackBerry 10 launch, competitive pressure and a higher mix of sales coming from entry level products.
Williams (WMB) said it intends to commence an underwritten public offering of 26 million shares. The company also said it intends to use the proceeds from the offering to purchase additional William Partners (WPZ) common units.
TIBCO Software (TIBX) said its board has authorized the repurchase of up to $300 million worth of its common stock. The company also reported first quarter non-GAAP earnings of 20 cents per share on revenues of $225.7 million. The results were better than expected.
GenCorp. (GY) said its first quarter net income rose to 4 cents per share from 2 cents per share last year. Net sales fell to $201.9 million from the year-ago quarter’s $209.8 million.
Cache (CACH) reported fourth quarter adjusted net income of 12 cents per share compared to a loss of 16 cents per share a year ago. Net sales rose 12.5 percent to $62.9 million. The earnings were below estimates, while the revenues were about in line with estimates. For the first quarter, the company expects a net loss of 9 cents per share and comparable store sales in the high single digit range. Additionally, the company said it expects to report higher earnings per share for the first half of 2012.