Market Happenings for Tuesday, May 31, 2011

Last day of the Merry Month of May. Greek bailout? Maybe. Pre-market, futures are up big. Winners this morning include FSLR, BIG, DNR, GD and FTI. Losers include MDT, BSX, HCBK, RL and AIG. Light Crude is up +1.83%.

U.S. Stock News

* June S&Ps this morning are trading up +12.30 points on Greek aid optimism. The US stock market last Friday moved higher after G-8 leaders said the global economy is strengthening along with an unexpected increase in US consumer confidence: Dow Jones +0.31%, S&P 500 +0.41%, Nasdaq Composite +0.50%. Bullish factors for stocks included (1) the statement from G-8 leaders meeting in France that “the global recovery is gaining strength and is becoming more self-sustained,” which will pave the way for reductions in debt, (2) the unexpected increase in May US University of Michigan consumer confidence (+1.9 to 74.3 versus expectations of unchanged at 72.4), and (3) a rally in financial stocks on reduced European debt concerns after ECB Council member Wellink said heÂ’s “fully confident” Greece will meet conditions to receive its 3.3 billion-euro ($4.7 billion) aid payment by the IMF next month.

* Bearish factors included (1) the weaker-than-expected Apr US personal spending (+0.4% versus expectations of +0.5%), and (2) the plunge in Apr US pending home sales (-11.6% m/m versus expectations of -1.0% m/m).

* Goldman Sachs (GS) climbed 1.0% in pre-market trading after JPMorgan Chase upgraded the stock to “overweight” from “neutral.”

* Alcoa (AA) rose 1.3% in pre-market trading after industrial metals prices rose in overnight trade, with copper climbing to a 3-week high.

The Markets

* June 10-year T-notes this morning are down -12 ticks as global equity markets strenghten. T-note prices last Friday shook off early losses and moved higher on concern the economy is slowing along with increased safe-haven demand from Europe’s debt crisis: TYM11 +2.5, FVM11 +1.2, EDU11 +1.0. Jun T-notes rose to a 5-1/2 month nearest-futures high and the 10-year T-note yield slipped to a 5-1/2 month low of 3.05%. Bullish factors included (1) the weaker-than-expected Apr US personal spending (+0.4% versus expectations of +0.5%), (2) the plunge in Apr US pending home sales (-11.6% m/m versus expectations of -1.0% m/m), and (3) increased safe-haven demand for Treasuries on concern that Greece may not receive additional bailout funds and default on its debt after Greek Prime Minister Papandreou failed to secure support from the country’s main opposition parties for new austerity measures. Bearish factors included (1) the unexpected increase in May US University of Michigan consumer confidence (+1.9 to 74.3 versus expectations of unchanged at 72.4), and (2) reduced safe-haven demand for Treasuries after the statement from G-8 leaders meeting in France that “the global recovery is gaining strength and is becoming more self-sustained,” which will pave the way for reductions in debt.

* The dollar index this morning is lower and at a 2-1/2 week low with the dollar/yen +0.64 yen and the euro/dollar +1.19 cents. The dollar index last Friday plunged to a 2-week low as weaker-than-expected data on US consumer spending and home sales suggests the Fed will lag behind other central banks in raising interest rates: Dollar Index -0.595, USDJPY -0.490, EURUSD +0.01583. Bearish factors included (1) the weaker-than-expected economic data on Apr US personal spending and Apr pending home sales, which may prompt he Fed into maintaining its overly easy monetary policy, and (2) euro strength after ECB Council member Wellink said heÂ’s “fully confident” Greece will meet conditions to receive its 3.3 billion-euro ($4.7 billion) aid payment by the IMF next month. Bullish factors included (1) the larger-than-expected decline in the May Euro-Zone economic confidence which fell to a 7-month low and is euro negative, and (2) the unexpected increase in the May US University of Michigan consumer confidence, which is dollar supportive.

* July crude oil prices this morning are trading up +$1.61 barrel and July gasoline is +2.17 cents per gallon, both at 2-week highs. Crude oil and gasoline prices last Friday finished higher as a weak dollar and a statement from the G-8 saying the global economy is strengthening offset weaker-than-expected US economic data: CLN11 +$0.36, RBN11 +2.39. Jul gasoline rallied to a 2-week high. Bullish factors included (1) the fall in the dollar index to a 2-week low, which boosts investment demand in commodities, (2) the statement from the G-8 leaders meeting in France that the global economy is strengthening, which may lift global energy demand, and (3) strength in gasoline after a power blackout shut 3 refineries in Texas City, Texas. Bearish factors included (1) the weaker-than-expected Apr US personal spending and Apr pending home sales, which signals economic weakness that may lead to reduced fuel demand, and (2) the prediction from JPMorgan Chase that OPEC will raise oil-output quotas next month as the group seeks to “assuage” pressure on consumer nations to release emergency stockpiles.

Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap) PVH-Phillips-Van Heusen (BEST earnings consensus $1.16), GMLP-Golar LNG Partners LP (0.40), CRIC-China Real Estate Information (0.04), EJ-E-House China Holdings (0.09), LGF-Lions Gate Entertainment (0.20).

Financial Calendar

0900 ET Mar S&P/CaseShiller composite-20 home price index expected -0.2% m/m and -3.4% y/y, Feb -0.2% m/m and 3.3% y/y. Q1 S&P CaseShiller composite-20 home price index, Q4 -4.1% y/y.

0945 ET May Chicago purchasing managers index expected -5.3 to 62.3, Apr -3.0 to 67.6.

1000 ET May consumer confidence expected +1.1 to 66.5, Apr +1.6 to 65.4.

1100 ET USDA weekly grain export inspections.

1130 ET Weekly 3-mo and 6-mo T-bill auctions.

Both comments and pings are currently closed.

Comments are closed.