Stocks are set for a third day of gains after some economic data showing that Americans are earning, spending, and saving more.
Initial claims for unemployment insurance fell by 9,000 last week to 346,000, just 1,000 more than economists expected. Consumer spending beat expectations, rising 0.3% in May after going unchanged in April. Income also jumped 0.5%, beating forecasts of 0.2%.
Despite an ugly downward GDP revision, US stocks advanced yesterday. Dow
(INDEXDJX:.DJI) futures were up 0.43% at 14,888 this morning. Futures contracts on the S&P 500
(INDEXSP:.INX) gained 0.53% to 1,604.70. Nasdaq
(INDEXNASDAQ:.IXIC) futures climbed 0.51% to 2,897.75.
After trading hours begin, we will get more data on the housing recovery in the US. Economists expect to see pending home sales rise 1% on a monthly basis in May after a 0.3% rise in April. Eariler this week, we saw some positive surprises in other housing indicators.
Gold prices declined overnight and regained their footing. Spot prices of the yellow metal approached $1200/ounce, but rose back to $1,232/ounce this morning.
Stocks advanced in Asia, led by a 3% rise on the Nikkei 225
(INDEXNIKKEI:.NI225). Industrial profits for large enterprises rose 15.5% on a yearly basis in May according to a government report. April's year-over-year growth rate was 9.3%.
Europe shares are mostly higher. French consumer confidence fell to its lowest level on record. The index fell to just 78, even worse than analysts expected. German unemployment unexpectedly dropped by 12,000 this month. Germany's jobless rate was flat at 6.8%, far below the regional average, and close to its post-unification low.
The UK's GDP for the first quarter was revised to a rise of 0.3%, which means that the double-dip recession actually never happened. However, Britain's economy is still 3.9% below the pre-recession high. Ireland, on the other hand, officially fell into recession after a downward GDP revision.
The eurozone consumer confidence index was flat at -18.8 this month. Economic confidence rose to 91.3 from 89.5.
Today, Europe's finance ministers took another step toward a banking union. Under new rules for future bank bailouts, creditors will be forced to take losses before taxpayers. If a bank fails, they say, 8% of the bank's total liabilities will be covered by stockholders, then junior bondholders. After that, as they did in Cyprus, non-risk-bearing but uninsured depositors with accounts larger than 100,000 euros must be "wiped out" before public funds are tapped.
In corporate news, Dish Network Corp
(NASDAQ:DISH) abandoned its bid for Clearwire Corporation
(NASDAQ:CLWR). This comes just days after Dish admitted defeat in its pursuit of Sprint Nextel Corporation
(NYSE:S), which also owns a large stake in Clearwire.
(NASDAQ:PAYX) shares declined 3% this morning after the payroll processor reported fourth-quarter earnings of $0.34 per share, missing analyst estimates. Management expects to see net income increase by 8-9% in fiscal 2014.
Today, three Federal Reserve board members, William Dudley, Jerome Powell, and Dennis Lockhart will give speeches. Investors will examine their comments for clues that yesterday's downward GDP revision might forestall the Fed's plans to taper off quantitative easing.
No positions in stocks mentioned.
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