Manufacturers Likely Shrunk

Bloomberg reports manufacturing in the U.S., which accounts for 12% of the economy, likely contracted for a third consecutive month. Numbers from the Institute of Supply Management are due out at 10:00 AM EST and economists expect the index to fall to 48.0 from 48.6 in March. Although the sector hasn’t collapsed, economists expect it to be weaker in the next few months as companies cut back on costs due to increasing energy prices and a slowing economy. For context, see last week’s Five Things You Need To Know by Professor Kevin Depew.

From the Bull Pen: Bulls looking for a play in the manufacturing sector see the breakout in ITT Corp. (ITT). Sell-stops can below $62.

From the Bear Cave: Bears can play the downside in manufacturer/bearded financial giant General Electric (GE); buy-stops can be set above $33.70.


Starbucks Cuts Back

According to the Wall Street Journal, Starbucks (SBUX) said it plans to cut back on the number of stores it planned to open in the U.S. to 1,020 locations, down from a previous 1,175 it planned in January. The coffee chain also said it plans to cut that number by more than half in the next three years with less than 400 net new locations per year after posting dismal numbers for its second quarter last night. In that quarter net income dropped 28% with same-store sales in the U.S. falling by a midsingle digit. SBUX Chairman and CEO Howard Schultz said the company is going to be highly disciplined in regards to growth especially in the areas “deeply affect by the mortgage crisis.” See Professor Quint Tatro’s perspective in Listen Up, Starbucks.

From the Bull Pen: Those bullish SBUX can set sell-stops below $15.60.

From the Bear Cave: Bears might see a downside play in Nestle (NSRGY); near-term buy-stops can be set above $121.


For more ideas, check out Minyanville's Spotlight Stocks.


Quick Check Around the World

It's quiet this morning, too quiet as foreign markets are closed nearly across the board celebrating May Day.

In Asian trading, the Nikkei closed lower -0.60%. Over in Europe, the lone market still ticking is the FTSE at +0.26%.

As of 8:40 AM EST S&P futures are higher by 1 point to 1386, and Nasdaq futures are up by 5.75 points to 1929.


A Look At Commodities

In commodities, crude is lower -0.54 to 112.95. Gold is unchanged at 865.00. Silver is higher +0.118 to 16.620 and copper is lower -3.5 to 389.90.

The dollar index is higher +0.456 to 72.964.


On the Radar

Personal Income: 0.3% vs. 0.4% cons.
Personal Spending: 0.4% vs. 0.2% cons.
PCE Deflator (y/y): 3.2% inline
PCE Core (m/m): 0.2% vs. 0.1% cons.
PCE Core (y/y): 2.1% vs. 2.0% cons.
Initial Jobless Claims: 380 k
Continuing Claims: 3019 k

10:00 ISM Manufacturing: 48.0 cons.
10:00 ISM Prices Paid: 83.5 cons.
10:00 Construction Spending (m/m): -0.6% cons.

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Happy Thursday! Good luck!