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Better Economic Data Boosts US Markets Despite Weakness in Japan


Today's financial recap and tomorrow's financial outlook.

Overnight Asian shares took a beating with the Nikkei 225 (INDEXNIKKEI:NI225) leading the way downward, falling 6.4%. The Japanese index has now technically entered into a bear market, having lost more than 20% of its value since the end of May. Regardless, the Nikkei remains up 19% on the year.

US jobless claims came in better than expected this morning, with 334,000 initial claims filed last week. This compares to estimates of 346,000. This week's claims figure is close to the lowest level in five and a half years. Retail sales topped estimates as well, rising 0.6% month over month, led by strong auto sales in the month of May.

The S&P 500 (INDEXSP:.INX) rallied off of its early losses, finishing the day up 20 handles and snapping a three-day losing streak. Homebuilders led the intraday rally with the SPDR S&P Homebuilders (NYSEARCA:XHB) up 3.5%.

The 10-year treasury dropped 6 bps to 2.17%. Gold traded down 1% on the day to $1,378 per ounce. The Treasury reopened $13 billion of 30-year bonds in a very sloppy auction today. The high yield for the auction priced at 3.355%, tailing 3.1bps versus the 1 p.m. EDT bid level.

Gannett Co., Inc. (NYSE:GCI) announced a $1.5 billion bid for Belo Corp. (NYSE:BLC). Both of the stocks reacted very positively to the news, each rising more than 25% on the day.

Late in the day, notorious Fed leaker Jon Hilsenrath of the WSJ released an article saying that the Fed was very likely to push back against market expectations of higher interest rates sooner at its next meeting, scheduled for June 19th.

Tomorrow's Financial Outlook

The EU HICP (harmonized index of consumer prices) will be released tomorrow morning at 5:00 a.m. EDT. The index is a measure of inflation across the European Union. The month-over-month change is expected to come in at 0.1%.

The US producer price index will be released tomorrow at 8:30 a.m. EDT. PPI is expected to come in at 0.2%. US industrial production will be released at 9:15 a.m. EDT tomorrow morning. Production is expected to have seen a month-over-month increase of 0.2%. Manufacturing is expected to have expanded by 0.3% last month.

The University of Michigan's consumer sentiment index will be released at 9:55 a.m. EDT. After recording its highest reading in five years last month, the street expects the index to come in at 84.5.

Smithfield Foods, Inc. (NYSE:SFD) is reporting earnings tomorrow morning before the market opens. Analysts expect revenue of $3.27 billion and earnings per share of $0.43.

Twitter: @Minyanville

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