Ahead of the Bell: Dow futures are trading up 28 points and S&P futures are trading up 3 pointsafter China's second quarter GDP came in slightly below expectations. The world's second largest economy's growth rate slowed to 7.5% versus 7.7% a year ago, as lower demand overseas weighed on output and investments. The country's industrial output in June also rose less than anticipated, while retail sales advanced more than expected. Investors are optimistic Beijing will respond with more monetary stimulus to revamp the economy in light of the deteriorating data.
- On the economic calendar today, June's retail sales data will be out prior to the opening bell; it is forecasted to be 0.8% compared with 0.6% for May. Empire State manufacturing survey for July will also be released before the opening bell; a reading 5 is expected versus 7.84 for June.
- The dollar is up against the euro and British pound and down against the Japanese yen. Gold is trading at $1,281. Crude oil is currently trading at $105 a barrel.
- The week ahead, earnings season, Chairman Ben Bernanke's testimony, and Chinese data are expected to move financial markets. Second quarter earnings will take center stage as the season gets into full swing. Among the companies on tap to report this week, are American Express, Goldman Sachs, Citigroup, Intel, Google, Microsoft, Johnson & Johnson, and Coca-Cola. This week, roughly a third of the Dow components are due to report, and about 75 S&P 500 companies are due to open their books. According to Thompson Reuters, earnings for S&P 500 companies are expected to grow 2.8% this quarter, and revenues are expected to grow about 1%. There are a number of key pieces of data points on the docket, such as retail sales, CPI and industrial production, and weekly jobless claims. There are also a few housing reports on the calendar and investors will be keenly looking at the health of the housing sector. Federal Reserve Chairman, Ben Bernanke is scheduled to testify before a House panel on Wednesday and a Senate committee on Thursday in his semi-annual testimony to Congress on the economy. Market participants will also be paying attention to crude oil prices due to tensions in the middle east, particularly in Egypt. The euro zone crisis is still lingering; this time it’s Portugal in the spotlight, as its bond yields are on the rise.
- Last week, the bulls returned and momentum started to build after Federal Reserve Chairman, Ben Bernanke said highly accommodative monetary policy is needed for the foreseeable future and the unemployment rate of 7.6% might be overstating the health of the jobs market. The central bank remains divided over tapering. The major indices climbed to all-time highs as money moved into equities. The S&P 500 index enjoyed its best week since January and its third consecutive week of gains. For the week, the S&P 500 rose 3.0% while the Dow climbed 2.2%. Second quarter earnings began on a positive note after Alcoa reported better than expected results, citing an increase in demand for aluminum products from the aerospace and commercial transportation sectors. JPMorgan Chase and Wells Fargo also beat analysts’ forecast. The economic data was mixed after weekly Jobless claims unexpectedly climbed to a two-month high with initial claims showing a rise of 16K. A preliminary reading of consumer sentiment edged down in July while PPI data show an increase due to improving demands from farms, factories, and refineries. The IMF cut its global growth forecast for a fifth time since early last year due to a slowdown in emerging economies and concerns over a recession in Europe. Greece received approval for another tranche of financial aid from the ECB.
- On CNBC today, Robert Doll, Nuveen Asset Management Chief Equity Strategist and Robert Albertson, Principal and Chief Strategist of Sandler O'Neill & Partners, talked about the Federal Reserve scaling back its stimulus program. Doll said this is good news for banks, but he is concerned where the growth for the financial sector will come from. He added, we need more corporate confidence. Albertson said as a result of the Federal Reserve starting the conversation of tapering, interest rates are on the rise and this is great news for banks. Yields are on the rise and this is important for stocks, although like Doll, he does acknowledge that growth for the financial sector will be tough. However, the benefit of rising interest rates is that the M&A cycle is beginning to pick up. Earnings per share will rise and stocks will appreciate higher.
- Congratulations to Oracle Corporation (ORCL) on its transfer to the New York Stock Exchange today.
- "Despicable Me 2" was the top movie at the Box Office this past weekend.
- Happy Monday and have a wonderful week!
Friday’s Close
DJIA up 3.38pts/+0.02%/ 15,464.30
S&P up 5.17 pts/+0.31%/ 1,680.19
Nasdaq up 21.78 pts/+0.61%/ 3,600.08
Monday’s Futures
Dow Futures up 28.27 pts/+0.18%
S&P Futures up 3.50 pts/+0.18%
Nasdaq Futures up 7.25 pts/+0.23%
Overseas Markets
FTSE +0.33%
CAC 40 +0.32%
NIKKEI 225 +0.23%
HANG SENG +0.21%
Overseas: World stock markets are up today. European markets are up on better than expected housing data from Britain. Asian markets are up after China reported growth data that came in slightly below expectations.
Economic Reports: Retail Sales expected to be 0.8%, Empire State Manufacturing Survey expected to be 5.00 at 8:30 a.m., and Business Inventories expected to be flat at 10:00 a.m., later in the week Consumer Price Index, Treasury International Capital, Industrial Production, Housing Market Index, MBA Purchase Applications, Housing Starts, Beige Book, Weekly Jobless Claims, Philadelphia Fed Survey, Leading Indicators, and Fed Balance Sheet.
Top Headlines:
- AT&T Inc. (T) announced it is buying Leap Wireless International Inc. (LEAP) for $1.19 billion or $15 per share, which is about two times the current value of the prepaid mobile carrier.
- Reports indicate Roche Holdings AG is seeking financing for a potential bid for China's Alexion Pharmaceuticals Inc. (ALXN) which could be valued at over $22 billion.
- Reports indicate GlaxoSmthKline Plc (GSK) channeled bribes to Chinese officials and doctors through travel agencies for six years to illegally boost sales and raise the prices of its medicine.
Commodities/Currency:
Gold:up $4.90 to $1,281.50
Oil:down 0.55 to $105.65
EUR/USD 1.3026 -0.0040
USD/JPY 99.9450 +0.6200
GBP/USD 1.5054 -0.0055
Volatility Index (VIX): As of the close of business Friday, July 12, 2013 the VIX is down 0.17 at 13.84
Companies Reporting Quarterly Earnings:
Citigroup reports Q2 EPS ex-items $1.25, vs. Est $1.18 and Q2 revenue ex-CVZ/DVA $20.0B, vs. Est $19.79B.
Platinum Group reports Q3 EPS (C4c), vs. Est 0c.
Today’s Opening and Closing Bells:
Organovo celebrates listing on NYSE MKT Keith Murphy, President and CEO will ring the opening bell.
Sikorsky Aircraft Corporation celebrating its 90th anniversary of founding will ring the closing bell.
Paras Madho
Corporate Actions & Market Watch
NYSE Euronext | Global Corporate Client Group
11 Wall Street | New York NY 10005
P: (212) 656-5404
pmadho@nyx.com
Exclusive Market Intelligence, Insight, and Network: www.NYSEConnect.com
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