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After a New Record High, US Stocks Have a Choppy Day
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

German unemployment rose by 25,000 in May, which was higher than what was expected and attributed to underperformance in German equities. The Italian FTSEMIB (INDEXBIT:FTSEMIB) was the strongest index in Europe today as investors continued to expect the ECB to ease monetary conditions at its meeting next Thursday. Reports from China indicated that the government was prepared to lower its reserve-rate ratio and ease its loan-to-deposit ratio, both of which would stimulate lending activity in the country.

The major US indices had a very choppy trading session and hugged the flat line for most of the day. Higher-beta tech and small-cap stocks both underperformed the S&P 500 (INDEXSP:.INX), which was only down 0.11% after a last minute selloff.

Utilities continued to perform strongly due to yesterday's power auction results, as well as industrials. Home builders also did well following the results from Toll Brothers (NYSE:TOL) earnings in the pre-market. The company expects to see significant price increases for its new home constructions this year and next. As a result, that will improve its gross margins and profits. Bank stocks were mixed after Royal Bank of Scotland (NYSE:RBS) said that it was cutting its total assets and exiting the mortgage trading business to avoid being designated as a systemically important financial institution (SIFI) in impending Dodd-Frank regulation.

US Treasuries had a very strong day, led by a number of different factors, including: the ECB lowering its deposit rate into the negative next week; comments from the Chinese government indicating further easing was on the horizon, which drove a sell-off in the renminbi; a strong rally in agency MBS; and short covering. The JPMorgan client survey of Treasury positioning showed the second-largest amount of shorts in the past year. The 10-year yield finished near its low of the day, down eight basis points to 2.43%, eclipsing its lowest level since last July. The Treasury sold $35 billion of five-year notes at a high yield of 1.507% that was met by strong demand despite the day's rally.

Tomorrow's Financial Outlook

The second estimate of first-quarter GDP is scheduled to be released tomorrow. Because of recent releases of March's trade balance and inventories, as well as revisions to retail sales, economists have revised down the expected growth to -0.5% at a quarterly annualized rate. The first estimate from the government saw a rise of only 0.1%. Also scheduled to be released are weekly jobless claims and April pending home sales.

Only two reports are scheduled for tomorrow. One is the Canadian current account balance from the first quarter. The second, which is more important, is Japan's retail sales for April. That report is expected to show an extreme decrease of -11.7% month-on-month after the government enacted a 3% sales tax increase at the start of the month, which boosted sales in that month to a gain of 6.3%.

Notable earnings reports scheduled for tomorrow include Costco (NASDAQ:COST), Abercrombie & Fitch (NYSE:ANF), Lions Gate (NYSE:LGF), Express (NYSE:EXPR), and Splunk (NASDAQ:SPLK).


Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

After a New Record High, US Stocks Have a Choppy Day
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

German unemployment rose by 25,000 in May, which was higher than what was expected and attributed to underperformance in German equities. The Italian FTSEMIB (INDEXBIT:FTSEMIB) was the strongest index in Europe today as investors continued to expect the ECB to ease monetary conditions at its meeting next Thursday. Reports from China indicated that the government was prepared to lower its reserve-rate ratio and ease its loan-to-deposit ratio, both of which would stimulate lending activity in the country.

The major US indices had a very choppy trading session and hugged the flat line for most of the day. Higher-beta tech and small-cap stocks both underperformed the S&P 500 (INDEXSP:.INX), which was only down 0.11% after a last minute selloff.

Utilities continued to perform strongly due to yesterday's power auction results, as well as industrials. Home builders also did well following the results from Toll Brothers (NYSE:TOL) earnings in the pre-market. The company expects to see significant price increases for its new home constructions this year and next. As a result, that will improve its gross margins and profits. Bank stocks were mixed after Royal Bank of Scotland (NYSE:RBS) said that it was cutting its total assets and exiting the mortgage trading business to avoid being designated as a systemically important financial institution (SIFI) in impending Dodd-Frank regulation.

US Treasuries had a very strong day, led by a number of different factors, including: the ECB lowering its deposit rate into the negative next week; comments from the Chinese government indicating further easing was on the horizon, which drove a sell-off in the renminbi; a strong rally in agency MBS; and short covering. The JPMorgan client survey of Treasury positioning showed the second-largest amount of shorts in the past year. The 10-year yield finished near its low of the day, down eight basis points to 2.43%, eclipsing its lowest level since last July. The Treasury sold $35 billion of five-year notes at a high yield of 1.507% that was met by strong demand despite the day's rally.

Tomorrow's Financial Outlook

The second estimate of first-quarter GDP is scheduled to be released tomorrow. Because of recent releases of March's trade balance and inventories, as well as revisions to retail sales, economists have revised down the expected growth to -0.5% at a quarterly annualized rate. The first estimate from the government saw a rise of only 0.1%. Also scheduled to be released are weekly jobless claims and April pending home sales.

Only two reports are scheduled for tomorrow. One is the Canadian current account balance from the first quarter. The second, which is more important, is Japan's retail sales for April. That report is expected to show an extreme decrease of -11.7% month-on-month after the government enacted a 3% sales tax increase at the start of the month, which boosted sales in that month to a gain of 6.3%.

Notable earnings reports scheduled for tomorrow include Costco (NASDAQ:COST), Abercrombie & Fitch (NYSE:ANF), Lions Gate (NYSE:LGF), Express (NYSE:EXPR), and Splunk (NASDAQ:SPLK).


Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

More From Minyanville Staff
Daily Recap
After a New Record High, US Stocks Have a Choppy Day
Today's financial recap and tomorrow's financial outlook.
Minyanville Staff    

German unemployment rose by 25,000 in May, which was higher than what was expected and attributed to underperformance in German equities. The Italian FTSEMIB (INDEXBIT:FTSEMIB) was the strongest index in Europe today as investors continued to expect the ECB to ease monetary conditions at its meeting next Thursday. Reports from China indicated that the government was prepared to lower its reserve-rate ratio and ease its loan-to-deposit ratio, both of which would stimulate lending activity in the country.

The major US indices had a very choppy trading session and hugged the flat line for most of the day. Higher-beta tech and small-cap stocks both underperformed the S&P 500 (INDEXSP:.INX), which was only down 0.11% after a last minute selloff.

Utilities continued to perform strongly due to yesterday's power auction results, as well as industrials. Home builders also did well following the results from Toll Brothers (NYSE:TOL) earnings in the pre-market. The company expects to see significant price increases for its new home constructions this year and next. As a result, that will improve its gross margins and profits. Bank stocks were mixed after Royal Bank of Scotland (NYSE:RBS) said that it was cutting its total assets and exiting the mortgage trading business to avoid being designated as a systemically important financial institution (SIFI) in impending Dodd-Frank regulation.

US Treasuries had a very strong day, led by a number of different factors, including: the ECB lowering its deposit rate into the negative next week; comments from the Chinese government indicating further easing was on the horizon, which drove a sell-off in the renminbi; a strong rally in agency MBS; and short covering. The JPMorgan client survey of Treasury positioning showed the second-largest amount of shorts in the past year. The 10-year yield finished near its low of the day, down eight basis points to 2.43%, eclipsing its lowest level since last July. The Treasury sold $35 billion of five-year notes at a high yield of 1.507% that was met by strong demand despite the day's rally.

Tomorrow's Financial Outlook

The second estimate of first-quarter GDP is scheduled to be released tomorrow. Because of recent releases of March's trade balance and inventories, as well as revisions to retail sales, economists have revised down the expected growth to -0.5% at a quarterly annualized rate. The first estimate from the government saw a rise of only 0.1%. Also scheduled to be released are weekly jobless claims and April pending home sales.

Only two reports are scheduled for tomorrow. One is the Canadian current account balance from the first quarter. The second, which is more important, is Japan's retail sales for April. That report is expected to show an extreme decrease of -11.7% month-on-month after the government enacted a 3% sales tax increase at the start of the month, which boosted sales in that month to a gain of 6.3%.

Notable earnings reports scheduled for tomorrow include Costco (NASDAQ:COST), Abercrombie & Fitch (NYSE:ANF), Lions Gate (NYSE:LGF), Express (NYSE:EXPR), and Splunk (NASDAQ:SPLK).


Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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