Markets closed down but spent much of the day in positive territory as investors digested positive U.S. housing data and after Germany’s Merkel and newly elected French President Hollande both said they want Greece to stay in the Euro zone.
Markets started to turn course after reports ran that the ECB has halted monetary policy operations to certain Greek banks – though it is unclear if there is just a position to freeze assets until the government accelerates the process of recapitalizing lenders. Late this evening, International Monetary Fund Managing Director Christine Lagarde was reportedly made the comment that “the best outcome would be for Greece to agree to the bailout terms and stay in the Euro.
European and Asian markets fell as well today after investors sought safer places for assets as Greece’s financial and political situation remains under fire. After a number of failed attempts to form a government in Greece, the troubled country will soon hold new elections raising further concerns of a euro zone exit.
On the economic front, housing is showing signs of improvement after the Commerce Department reported today that U.S. housing starts rose 2.6% in April to a seasonally adjusted 717,000 units while housing permits fell 7%. Industrial production for the month of April also exceeded expectations led by motor vehicle output.
FOMC minutes revealed that Federal Reserve policymakers remain open to quantitative easing efforts if the U.S. economy continues to worsen. It was reported that a couple of Fed members thought additional stimulus may be warranted. The unemployment rate is still viewed as “elevated” and will decline gradually. The minutes release did not have a significant impact on the markets.
Gold is down 20% from all-time intra-day high of 1,923 due to liquidation of assets from banks.
Market Indices/Statistics:
- Dow closed down 33.45 pts/-0.26% to 12,598.55
- S&P closed down 5.86 pts/-0.44 to 1,324.80
- Nasdaq closed down 19.72 pts/-0.68% to 2,874.04
- 13 of the 30 Dow stocks closed higher
- 2 of the 10 S&P 500 sectors closed up
- Consumer Staples was the most positive sector (+0.28%); Financials were the biggest laggards (-1.45%)
- The VIX ended up 0.30 at 22.27
- Oil is down $1.22 to $93.13
- Nat Gas is up $0.130 to $2.698
- Gold is down $18.70 to $1,538.40
- Euro vs. Dollar is down $0.0017 to $1.2713
- Dollar vs. Yen is up $0.10 to $80.29
Companies in the News:
BHP Billiton LTD (BHP, -$1.35/-2.1% t o$64.42) shares closed lower today after it was reported that the world’s largest miner expects commodity markets to slow down. BHP Chairman Jacques Nasser went on to say, "the tail winds of high commodity prices have contributed to record growth in the sector. Now we have a period where those tail winds are moderating and we expect further easing over time.
Cisco Systems Inc. (CSCO, +$0.10/+0.6% to $16.69) traded higher after Barclays Capital raised the Company’s stock to “overweight” from “equalweight” implicating the stock is expected to beat the un-weighted total return of all companies in the same industries over the next year.
Facebook has reportedly hired Spencer Stuart, an executive-search firm to identify at least one women to join the board as the social media giant is seeking board diversity in light of much criticism over the absence of such diversity.
JPMorgan Chase & Co. (JPM, -$0.78/2.2% to $35.46) continues to be in the news…reports confirmed that FBI chief, Robert Mueller, said that the agency has opened a “preliminary” probe into JPMorgan Chase’s recently announced $2 billion trading loss.
Legg Mason (LM, +$1.67/+7.5% to $24.05) traded higher today after the Company reported it plans to buy back $1.25 billion in convertible senior notes held by KKR & Co LP (KKR, -$0.33/-2.7% to $12.06) and buy back additional stock to help reduce their gross debt providing more opportunity to return cash to shareholders.
NYSE Euronext (NYX, -$0.37/-1.5% to $24.75), according to sources, was removed from the list of potential buyers of the London Metal Exchange, leaving CME Group Inc., IntercontinentalExchange Inc., and Hong Kong Exchanges and Clearing Ltd. in the running
Earnings
Deere & Co. (DE, -$2.44/-3.2% to $74.18) reported EPS of $2.61 vs. expectations of $2.53; revenue was $10.01 billion, better than the $9.71 billion expected by analysts. raised its full-year profit outlook to about $3.35 billion from $3.275 billion on rising global demand for farm equipment. Apparently, according to an analyst note, shares were under pressure because the company’s results were not as strong as some of its competitors.
Limited Brands Inc. (LTD, -$0.09/-0.2% to $47.96) reported adjusted EPS of $0.41 vs. estimates of $0.40; revenues were $2.15 billion in line with expectations.
J.C. Penney Co. Inc. (JCP, -$6.57/-19.7% to $26.75) tumbled today after the company reported EPS of ($0.25) vs. estimates of ($0.11); revenue was $3.15 billion, lower than the $3.4 billion expected by analysts. In an unexpectedly dour comment, CEO Ron Johnson noted “sales and profitability have been tougher than anticipated during the first 13 weeks.” The company also cut its dividend and received several analyst downgrades.
Staples Inc. (SPLS, -$0.88/-6.0% to $13.91) reported EPS of $0.27 vs. estimates of $0.30; revenue was $6.1 billion vs. expectations of $6.18 billion. A surprise 1% drop in sales sent shares of the office supply company lower.
Target Corp. (TGT, +$0.24/+0.4% to $55.32) reported adjusted EPS of $1.11 vs. estimates of $1.01; revenue was $16.87 billion vs. expectations of $16.85 billion.
Coming Thursday:
Economic Reports: Jobless Claims (365k expected) at 8:30 a.m.; Philadelphia Fed (10.0 expected), Leading Indicators (+0.1% expected) at 10:00 a.m. Earnings: Advance Auto Parts Inc. (est: $0.13), Aeropostale Inc. (est: $-0.15), Buckle Inc. (est: $1.06), Computer Sciences Corp. (est: $0.04), GameStop Corp. (est: $0.54), Gap Inc. (est: $0.04), Gold Fields Ltd. ADS (est: $2.48), Precision Castparts Corp. (est: $0.23), Prestige Brands Hldgs Inc. (est: $0.26), salesforce.com inc. (est: $-0.67), Silvercorp Metals Inc. (est: $0.01), Teekay Corp. (est: $0.51), Wal-Mart Stores Inc. (est: $-0.06)
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