Pre-market, futures are near unchanged after a key summit on Europe’s debt crisis gave investors few solid solutions. Gainers this morning include CAT, GT, XLNX, FCX and SLE. Losers include LO, TMK, MU, WDC and CRM. Light crude is up +0.51% at 87.85 and gold is up +1.27% at 1,656.80.
U.S. Stock News
December S&Ps this morning are down 2.20 points on a little disappointment that there wasn’t more positive news from the weekend Eurozone summit. The US stock market last Friday rallied sharply: Dow Jones +2.31%, S&P 500 +1.88%, Nasdaq Composite +1.49%. Bullish factors included (1) optimism that Eurozone leaders may be headed toward a deal to solve the debt crisis, (2) a sharp 3.8% rally in European bank stocks, (3) bullish technicals with the new 11-week high in the S&P 500 index, (4) favorable earnings reports during the week, and (5) Fed Vice Chairman Janet Yellen’s comment that a third round of quantitative easing might become warranted. McDonald’s rallied 3.7% and Honeywell rallied 5.8% on positive earnings news.
December 10-year T-notes this morning are trading +2 ticks on the slightly lower trade in Dec S&Ps. T-note prices last Friday closed mixed: TYZ11 -1.5, FVZ11 +1, EDH12 -2.0. The main bearish factor was reduced safe-haven demand with the rally in stocks and optimism about a European debt crisis deal. The main bullish factor was optimism that the Fed might seriously consider additional stimulus measures after Fed Vice Chairman Janet Yellen last Friday said that a third round of quantatative easing might become warranted. That followed Fed Governor Daniel Tarullo’s comment last Thursday that the Fed should consider a program of buying mortgage securities.
The dollar index this morning is trading up 0.134 points with USDJPY down 0.21 yen and EURUSD down 0.63 cents. The euro is lower on some disappointment on the lack of any positive announcements out of the weekend Eurozone meeting. USDJPY is lower despite ongoing threats by Japanese authorities regarding intervention. The dollar index last Friday slipped to a 5-week low while EURUSD closed just below its 6-week high. USDJPY dropped to a record low. Friday’s closes: Dollar Index -0.024, USDJPY -0.051, EURUSD +0.0014. The euro continued to be boosted by progress toward a European debt crisis deal. Meanwhile, the yen continued to show strength on yen repatriation and on technicals.
Dec crude oil prices this morning are up 21 cents and Dec gasoline is up 1.19 cents. Bullish factors center on today’s positive economic reports from Japan and China, which boosted hopes for Asian fuel demand. Crude oil and gasoline last Friday closed higher: CLZ11 +$1.33, RBZ11 +0.0012. Crude oil last Friday was boosted by strength in the stock market and increased optimism about a European debt and stronger global economic growth. However, gasoline lagged the strength in crude oil since last week’s death of Qaddafi will accelerate Libya’s progress in restoring oil production, thus putting downward pressure on Brent crude oil prices and by extension U.S. gasoline prices, which have lately been more closely correlated with Brent crude oil than WTI. Crude oil prices last Friday also continued to see support from Wednesday’s DOE report showing that u.S. crude oil inventories fell sharply by 4.73 million barrels to a 20-month low of 332.9 million barrels.
Earnings reports (confirmed releases, sorted by mkt cap): CAT-Caterpillar (BEST earnings consensus $1.57), AMGN-Amgen (1.29), TXN-Texas Instruments (0.57), KMB-Kimberley-Clark (1.26), LO-Lorillard (2.03), VFC-VF Corp (2.57), ETN-Eaton (0.40), ROP-Roper Industries (1.08), WSH-Willis Group (0.37), NFLX-Netflix (1.07), PCL-Plum Creek Timber (0.30), RMD-Resmed (0.34).
0830 ET Sep Chicago Fed national activity index expected -0.21, Aug -0.45 to -0.43.
0845 ET New York Fed President William Dudley speaks on the regional and national economy at Fordham University.
0900 ET Dallas Fed President Richard Fisher speaks on challenges to economic growth at the Toronto Forum for Global Cities Fifth Annual Conference.
1100 ET USDA weekly grain export inspections.
1130 ET Weekly 3-mo and 6-mo T-bill auctions.
1700 ET USDA weekly crop progress report for week ended Oct 23.