Morning Happenings for Friday, April 29, 2011

U.S. Stocks

* JNJ, BA and MMM al hit new 52 week highs.

* June S&Ps this morning are trading up +1.00 point. The US stock market yesterday closed higher as better-than-expected earnings results offset concerns of slowing economic growth: Dow Jones +0.57%, S&P 500 +0.36%, Nasdaq Composite +0.09%. The Dow and S&P 500 posted 2-3/4 year highs. Bullish factors included (1) the larger-than-expected increase in Mar US pending home sales (+5.1% m/m versus expectations of +1.5% m/m), (2) strong company earnings results as 77% of the 269 companies in the S&P 500 that reported earnings results since Apr 11 have beaten analysts’ estimates, (3) strength in energy and raw-material producers after crude rose to a 2-1/2 year high and gold climbed to a record high, and (4) the decline in the 10-year T-note yield to a 1-month low of 3.295%.
* Bearish factors for stocks included (1) the weaker-than-expected Q1 US GDP (+1.8% annualized versus expectations of +2.0% annualized), (2) the unexpected jump in weekly initial US unemployment claims to a 3-month high (+25,000 to 429,000 versus expectations of -8,000 to 395,000), and (3) weakness in technology stocks led by the slide in Akamai Technologies which fell after its sales forecasts missed analysts’ projections.
* Research in Motion (RIMM) tumbled 11% in European trading after the company late yesterday cut its Q2 EPS to a range of $1.30 to $1.37 a share, below last month’s forecast of profit of $1.47 to $1.55 a share.

Other News

* June crude oil prices this morning are trading down -23 cents a barrel and June gasoline is -1.21 cents per gallon. Crude oil and gasoline prices yesterday fluctuated between gains and losses and finished higher as the plunge in the dollar offset weaker-than-expected economic data: CLM11 +$0.10, RBM11 +1.14. Jun crude posted a 2-1/2 year high, while Jun gasoline posted a contract high and nearest-futures May gasoline climbed to a 2-3/4 year high. Bullish factors included (1) the slide in the dollar index to a 2-3/4 year low, which boosts investment demand in commodities, (2) the decline in Apr German unemployment to a 19-year low, which shows economic strength that my lead to increased fuel demand, and (3) the rally in the S&P 500 to a 2-3/4 year high, which bolsters confidence in the economic outlook and energy demand. Bearish factors included (1) the unexpected increase in weekly US jobless claims to a 3-month high, which shows weakness in the US labor market that may curtail fuel demand, (2) the weaker than expected Q1 US GDP, which shows slower-than-expected energy consumption, and (3) the action by the BOJ to cut its GDP growth forecast for Japan this year, which signals reduced energy consumption and demand.

Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap) CVX-Chevron (BEST earnings consensus $3.02), MRK-Merck (0.84), CAT-Caterpillar (1.31), SPG-Simon Property Group (0.54), NEE-NextEra Energy (0.95), AON-AON Corp. (0.80), WY-Wyerhaeuser (0.09), ETR-Entergy (1.33), VFC-VF Corp. (1.62), ITT-ITT Corp. (0.93), CPN-Calpine (-0.13), REGN-Regeneron Pharmaceuticals (-0.32), NWL-Newell Rubbermaid (0.28), FLIR-FLIR Systems (0.35), PBI-Pitney Bowes (0.53), LEA-Lear (1.15), CVH-Coventry Health Care (0.52).

US Financial Calendar

0830 ET Q1 employment cost index expected +0.5%, Q4 +0.4%.

0830 ET Mar personal spending expected +0.5%, Feb +0.7%. Mar personal income expected +0.4%, Feb +0.3%. Mar PCE deflator expected +1.9%, Feb +1.6% y/y. Mar PCE core deflator expected +0.1% m/m and +0.9% y/y, Feb +0.2% m/m and +0.9% y/y.

0840 ET St. Louis Fed President James Bullard delivers opening remarks at the 2011 Federal Reserve Community Affairs Research Conference in Arlington, VA.

0945 ET Apr Chicago purchasing managers index expected -2.4 to 68.2, Mar –0.6 to 70.6.

0955 ET Final Apr U.S. University of Michigan consumer confidence expected +0.4 to 70.0, previous +2.1 to 69.6.

1230 ET Fed Chairman Ben Bernanke speaks at the Fed’s Community Affairs Research Conference in Arlington, VA.

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