Market Happenings for Friday, June 10, 2011

Pre-market, futures are lower. Gainers this morning include CMCSA, TIF, CME, LMT and ADI. Losers include URBN, GT, ROK, WFR and STI. Light Crude is down -1.18%.

U.S. Stock News

*September S&Ps this morning are trading down -4.00 points. The US stock market yesterday rallied after the US trade deficit unexpectedly narrowed amid record exports along with positive comments from Philadelphia Fed President Plosser: Dow Jones +0.63%, S&P 500 +0.74%, Nasdaq Composite +0.35%. The S&P 500, the Dow and the Nasdaq all fell to 2-1/2 month lows. Bullish factors for stocks included (1) the unexpected narrowing of the Apr US trade deficit to -$43.7 billion from -$46.8 billion in Mar, which indicates economic strength and is positive for Q2 GDP, (2) comments from Philadelphia Fed President Plosser who said “I expect the economy to expand at a moderate pace and for inflation to move back down from its current level as oil prices stabilize,” (3) strength in energy producers after crude oil rose to a 1-week high, and (4) a rally in fertilizer producers and makers of agriculture machinery after corn prices surged to a record when the USDA cut its corn production and supply estimates.

*Bearish factors included (1) the unexpected increase in weekly US initial unemployment claims (+1,000 to 427,000 versus expectations of -3,000 to 419,000), (2) concern the European sovereign-debt crisis will worsen after credit-default swaps to insure the government debts of Greece, Portugal and Ireland all surged to records, and (3) comments from Fed Vice Chairman Yellen who said she sees no quick or easy solutions for the problems still afflicting the US housing market that will undergo a “long, drawn-out recovery.”

The Markets

*September 10-year T-notes this morning are up +10 ticks. T-note prices yesterday rallied early on the unexpected increase in weekly jobless claims but shed their gains and turned lower on reduced safe-haven demand after the stock market rallied: TYU11 -14.5, FVU11 -11.2, EDZ11 -1.5. The 10-year T-note yield dropped to a 6-month low of 2.92% before moving back up to 3.00%. Bearish factors included (1) reduced safe-haven demand for Treasuries after the equity market rallied, (2) the unexpected narrowing of the Apr US trade deficit to -$43.7 billion from -$46.8 billion in Mar, which indicates economic strength and is positive for Q2 GDP, and (3) the $13 billion Treasury auction of 30-year T-bonds that were sold at a yield of 4.238%, higher than expectations of 4.216% and a sign of weak demand. Bullish factors included (1) the unexpected increase in weekly US initial unemployment claims (+1,000 to 427,000 versus expectations of -3,000 to 419,000), and (2) comments from Philadelphia Fed President Plosser who said “I expect the economy to expand at a moderate pace and for inflation to move back down from its current level as oil prices stabilize.”

*The dollar index this morning is higher with the dollar/yen -0.26 yen and the euro/dollar -0.48 cents. The dollar index yesterday strengthened on speculation the ECB may limit further interest rate hikes after it lowered its 2012 Euro-Zone growth estimates: Dollar Index +0.262, USDJPY +0.476, EURUSD -0.00729. Bullish factors included (1) the unexpected narrowing of the Apr US trade deficit, (2) weakness in the euro after the ECB cut its 2012 Euro-Zone GDP estimate to 0.6% to 2.8% from an earlier estimate of 0.8% to 2.8%, which bolsters speculation the ECB may limit any further interest rate hikes, and (3) concern the European sovereign-debt crisis will worsen after credit-default swaps to insure the government debts of Greece, Portugal and Ireland all surged to records. Bearish factors included (1) the unexpected increase in weekly initial US unemployment claims, which hints at economic weakness and is dollar negative, and (2) comments from ECB President Trichet that hint at an ECB interest rate hike next month when he said “strong vigilance” is warranted to contain inflation.

*July crude oil prices this morning are trading down -$1.08 a barrel and July gasoline -1.32 cents per gallon. Crude oil and gasoline prices yesterday moved higher on carry-over support from OPEC’s decision to not raise crude production along with an unexpected narrowing of the Apr US trade deficit: CLN11 +$1.19, RBN11 +6.11. Jul crude and Jul gasoline posted 1-week highs. Bullish factors included (1) carry-over strength from WednesdayÂ’s rally after OPEC failed to increase production quotas, (2) the unexpected narrowing of the Apr US trade deficit, which signals economic strength and is positive for energy demand, and (3) the rally in stocks which bolsters optimism in the economic outlook and energy demand. Bearish factors included (1) strength in the dollar, which discourages investment demand in commodities, and (2) the unexpected increase in weekly US initial unemployment claims, which indicates labor market weakness that may hold back fuel demand.

Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap) LULU-Lululemon Athletica (BEST earnings consensus $0.38), CZZ-Cosan Ltd. (0.25), CRAI-CRA International (0.40).

Financial Calendar

0830 ET May import price index expected -0.7% m/m and +11.2% y/y, Apr +2.6% m/m and +11.1% y/y.

0900 ET New York Fed President William Dudley speaks to the Brooklyn Chamber of Commerce.

1400 ET May monthly budget statement expected -$136.0 billion, Apr -$40.488 billion.

Both comments and pings are currently closed.

Comments are closed.