21 September 2010 THE ECONOMIC MONITORU.S. The S&P 500 slipped 0.26 percent to 1,139.78. The Dow Jones Industrial Average rose 7.41 points, or 0.1 percent, to 10,761.03. The dollar was last 0.7 percent lower at 85.09 yen. In late afternoon trading in New York, the euro was up 1.3 percent at $1.3238. Benchmark 10-year notes rose a point in price to yield 2.59 percent, the lowest since early September and down from 2.70 percent. November crude fell $1.22, or 1.6 percent, to settle at $74.97 a barrel. U.S. gold futures for December delivery slipped $6.50 during the trading session to settle at $1,274.30. MARKETS AT A GLANCE INSIDE THE REPORT STOCK INDICES INDEX LAST CHNG % CHNG DJIA* 10761.03 7.41 0.07 NYSE Composite* 7245.95 -20.07 -0.28 Nasdaq* 2349.35 -6.48 -0.28 S&P 500* 1139.78 -2.93 -0.26 DJ Total Stock Market* 11891.6 -40.46 -0.34 Russell 2000* 664.66 -5.32 -0.79 Global Dow* 1928.44 -0.82 -0.04 Nasdaq 100* 1989.11 -0.32 -0.02 DJ Transportation Avg* 4511.27 36.15 0.81 S&P 100* 515.53 -0.83 -0.16 * CLOSING VALUES Stock recommendations and price targets from top brokerage firms Forecasts on Economic Indicators Important Events Scheduled on 22 September Economic Events Prime Minister of Greece, George Papandreou, Speaks at Lunch Meeting of the Economic Club of New York Assistant Treasury Secretary for Financial Institutions Michael Barr speaks before a b iennial conference U.S. Commerce Secretary Gary Locke gives speech to services industry conference Corporate Events Bed Bath & Beyond, Red Ha t second quarter results Darden Restaurants, General Mills first quarter 2011 results Breaking News ConAgra profit misses expectation Carnival beats Street Potash bid seen running into next year Textron to lay off 700 at Cessna Abbott to cut 3,000 jobs Delay in Nokia’s N8 phone again Weight-loss drug effective over 2 years: VivusFed on possible further easing Housing starts at 4-mth high Student Loan shareholder sues to bar Citi deal iStar may seek pre-packaged bankruptcy: Report Free EditionCURRENCIES INDEX LAST PRIOREuro (EUR/USD) 1.3241 1.3062 U.K. Pound (GBP/USD) 1.5614 1.5552 Japanese Yen (USD/JPY) 85.06 85.75 All prices are at 04:14PM EDTFUTURES SETTLE CHANGE Crude Oil (Oct) 72.96 -1.34 Natural Gas (Nov) 4.089 0.084 Gold (Dec) 1289.70 8.90 Copper ( Dec) 348.35 -2.10 Wheat (Dec) 717.00 0.00 All prices are at 04:04 PM EDT
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8/8/2019 21/9/10 - The Economic Monitor US Free Edition
Cameron International Starts with overweight rating Overweight
FMC Technologies Starts with neutral rating Neutral
National Oilwell Varco Starts with overweight rating OverweightBMO
CSX Corp Starts with $72 target price Outperform
Norfolk Southern Starts with $70 target price Outperform
Union Pacific Corp Starts with $95 target price Outperform
Stifel
Coca-Cola Raises price target to $65 from $5 Buy
Qualcomm Raises price target to $49 from $47 Outperform
Sterne Agee
Micron Technology Cuts to neutral from buy Neutral
SanDisk Corp Cuts to neutral from buy Neutral
Longbow
Nucor Corp Cuts to sell from neutral Sell
United States Steel Cuts to neutral from buy Neutral
Macquarie
Owens Illinois Cuts to neutral from outperform; lowers price target to $32 from $34 Neutral
Citigroup
Progressive Corp Raises price target to $25 from $22 Buy
Jefferies
Vulcan Materials Raises to buy from hold on valuation Buy
Credit Suisse
Raises to buy from hold on valuation Cuts to underperform from neutral; price target to $30 from $40 Underperform
Disclaimer : The views and investment tips expressed by investment experts are their own, and not that of IBTimes or its management. We advise users to check with certified experts before taking any investment decisions.
STOCK RECOMMENDATIONS BY BROKERAGE HOUSES
MARKET BRIEFING
U.S. stocks fell, dragging down S&P 500 from a four-month high, as investors bought Treasuries amid speculation the Federal Reserve will purchasemore government debt to buoy the economy. While, the Nasdaq ended modestly lower, with the Federal Reserve inching closer to further stepsdesigned to support the recovery. The S&P 500 slipped 0.26 percent to 1,139.78. The Dow Jones Industrial Average rose 7.41 points, or 0.1 percent, to10,761.03. The Nasdaq Composite was down 6.48 points, or 0.28 percent, at 2,349.35.
The dollar fell sharply against the yen and euro after the Federal Reserve suggested it stood ready to further stimulate the U.S. economy, raising fears itmay print more dollars to do so. The euro surged to a 6-week high against the dollar and broke above its 200-day moving average for the first timesince January, suggesting more gains were ahead. The yen powered higher against the greenback as well, breaking through the 85 level for the first timesince Japanese authorities intervened to weaken the currency last week. In late afternoon trading in New York, the euro was up 1.3 percent at $1.3238after climbing as high as 1.3281. The dollar was last 0.7 percent lower at 85.09 yen. It fell to 84.97 yen on EBS. In late afternoon trading in New York, theeuro was up 1.3 percent at $1.3238 after climbing as high as 1.3281.
U.S. Treasury prices rallied after the Federal Reserve signaled it was open to more policy easing in an effort to support the economy and prevent it fromslipping back into recession. The yield on two-year government notes posted a series of record lows on expectations the Fed would hold short-termrates near zero even longer than previously thought, while long-dated yields declined on the Fed's acknowledgment that inflation will stay subdued anddeflation is a threat. Bonds briefly pared previous gains as the Fed disappointed some traders who had bet the U.S. central bank would immediately buymore government debt and/or engage in other quantitative easing measures after its latest policy meeting. Benchmark 10-year notes rose a point inprice to yield 2.59 percent, the lowest since early September and down from 2.70 percent. The 30-year bond was up 1-24/32 for a yield of 3.77 percent,down from 3.88 percent on Monday.
Crude oil prices fell for the fifth time in six days on Tuesday, wilting amid high oil inventories and the Federal Reserve's continued concern aboutsluggish economic recovery. Crude futures extended losses right before the close of the oil's open outcry trading session in New York after the U.S.Federal Reserve said it would keep interest rates exceptionally low and that the central bank was prepared to provide additional accommodation if needed to support recovery. The October U.S. crude contract expired on Tuesday, helping keep pressure on the front month and nearby months,industry sources said. U.S. crude for October delivery fell $1.34, or 1.79 percent, to settle at $73.52 a barrel as it expired and went off the board. Tradingranged from $72.81 to $74.60. U.S. November crude fell $1.22, or 1.6 percent, to settle at $74.97 a barrel. ICE Brent for November fell 90 cents to settle at$78.42.
Gold prices climbed to a fourth consecutive record high near $1,300 an ounce after the U.S. Federal Reserve inched nearer to taking new steps tostimulate the U.S. economy and expressed concerns about low inflation. As expected, the U.S. central bank did not move to extend the purchases of government debt, or quantitative easing, which helped fuel gold's 17 percent gain this year. But its renewed attention on the risk of deflation wassufficient to put gold into the black. Spot gold, which had hit five record highs in the past six days, reversed early losses and rose to a new record of $1,290.70 an ounce by 3:56 p.m. EDT from around $1,272 prior to the Fed announcement. U.S. gold futures for December delivery slipped $6.50 duringthe trading session to settle at $1,274.30, but after the Fed announcement the price jumped to a peak at $1,292.40 an ounce.
8/8/2019 21/9/10 - The Economic Monitor US Free Edition
ConAgra Foods Inc posted lower-than-expected quarterly earnings and cut itsfull-year forecast. ConAgra cited material costs that rose faster than thecompany's efforts to curb expenses and promotions that were more aggressive
than anticipated. ConAgra forecast a rise in full-year profit of 5 to 7 percent fromthe $1.74 per share it earned in fiscal 2010, which ended May 30. ConAgra raisedits dividend by 15 percent and affirmed its long-term target for annual earningsgrowth of 8 to 10 percent.
Carnival beats Street
World’s largest cruise company, Carnival Corp & Plc posted better-than-expected third-quarter results. Excluding one-time items, Carnival reported aprofit of$1.65 per share. The number of bookings in the third-quarter rose 8percent compared with last year.
Potash bid seen running into next year
BHP Billi ton, a global miner extended its offer periodfor its $39 billion takeover of Canada's Potash Corp ,after it failed to win immediate backing from Canadianauthorities. The Anglo-Australian miner also said it hadno plan to change its $130-a-share offer and shruggedoff talk of a China-backed rival bid emerging.
Textron to lay off 700 at Cessna
Citing soft demand for business jets, the diversified U.S. manufacturer TextronInc said it is cutting back production at its Cessna unit.
It will lay off about 700 workers at Cessna, which currently employs 8,400 people,as well as cutting operating hours, a spokesman said. It held its full-year profittarget steady. The company expects to reduce outstanding receivables at itsfinance arm by about $2.4 billion this year, ahead of its initial target of $1.6 billion.
Abbott to cut 3,000 jobs
Following the purchase of Solvay SA's pharmaceuticals business, AbbottLaboratories Inc plans to cut 3,000 jobs. The cuts will take place over the nexttwo years. The job cuts are part of "a series of recent strategic announcementsdesigned to position Abbott's pharmaceutical business for sustained and futuregrowth," Abbott spokesman Scott Stoffel said.
Delay in Nokia’s N8 phone again
Nokia said it would delay again its flagship smartphone N8 model. The N8 isseen as Nokia's first top-range model to challenge Apple's iPhone more thanthree years after its launch. It was originally scheduled to reach consumers inJune.
"In some markets, we had planned to start delivering the N8s to our pre-ordercustomers by the end of September. To ensure a great user experience, we havedecided to hold the shipments for a few weeks to do some final amends," thecompany said in a statement, adding that the N8s would reach consumers inOctober.
Weight-loss drug effective over 2 years: Vivus
Vivus Inc said that the second year of an experimental weight loss drug trialfound that patients taking the highest dose of its drug, Qnexa, lost an average of 26 pounds, or 11.4 percent of their body weight. Vivus officials declined tocomment on the latest trial results, citing the sensitivity of discussions with theFDA. Although safety details were scant for the drug, which in July was turneddown by a panel of U.S. experts.
Student Loan shareholder sues to bar Citi deal
According to a lawsuit, a shareholder of Student Loan Corp has sued to blockthe sale of the company by majority owner Citigroup Inc because it benefits theWall Street bank at the expense of minorityinvestors. Citigroup, which owns 80 percent of thestake, agreed last week to sell it to DiscoverFinancial Services for $600 million.
The complaint by Alan Kahn seeks class actionstatus, said Student Loans directors were acting tobenefit Citigroup by selling the Wall Street bank
the best loans. The shareholder said that at $30per share, the deal is priced at a significant discount to the company's bookvalue of $65.74 per share, even though most of the student loans areguaranteed by the U.S. government.
iStar may seek pre-packaged bankruptcy: Report
iStar Financial may look to a pre-packaged bankruptcy after creditors blocked itfrom amending loans, Bloomberg reported on Tuesday citing people withknowledge of the plan.
The Commercial real-estate lender company expects to meet with creditors incoming weeks to discuss potential terms of a so-called pre-packagedbankruptcy, paper said.
The bankruptcy may not occur until sometime next year, the report said. It hashired Lazard Ltd and Kirkland & Ellis LLP to advise on the debt restructuring,the news agency said.
ECONOMY NEWS
Fed on possible further easing
The Federal Reserve’s policy-setting panel made no shift in monetary policy atthe end of a one-day meeting but it opened the door wider to pumping moremoney into the economy.
It said in a statement, "The committee will continueto monitor the economic outlook and financialdevelopments and is prepared to provideadditional accommodation if needed to supportthe economic recovery and to return inflation, overtime, to levels consistent with its mandate."
The Fed said, "With substantial resource slack continuing to restrain costpressures and longer-term inflation expectations stable, inflation is likely toremain subdued for some time."
Housing starts at 4-mth high
The Commerce Department said that housing starts rose 10.5 percent, thelargest increase since November, to a seasonally adjusted annual rate of 598,000units. The residential construction rose more than expected suggesting theembattled housing market was starting to stabilize following the end of ahomebuyer tax credit.
July's residential construction was revised down to show a 0.4 percent gain,which was previously reported as a 1.7 percent increase. New building permitsfor future home construction rebounded 1.8 percent to a 569,000-unit pace lastmonth, lifted by a 9.8 percent rise in permits for multi-family units, after anunrevised 4.1 percent drop in July.
Residential construction in August was up by a 32.2 percent jump ingroundbreaking activity in the volatile multi-family segment to an annual rate of 160,000 units. Single-family starts increased 4.3 percent to a 438,000-unit pace,the highest since June. Home completions increased 5.6 percent to a 603,000-unit pace.
REGULATORY NEWS
8/8/2019 21/9/10 - The Economic Monitor US Free Edition
Refinancing Index - Forecast: NA Prior: 4396.1U.S. mortgage applications for home loan refinancing fell last week for asecond straight week, dropping to its lowest level since early August, asrock-bottom interest rates failed to boost demand. The MortgageBankers Association on last Wednesday said its seasonally adjustedindex of mortgage applications, which includes both purchase andrefinance loans, for the week ended Sept. 10 decreased 8.9 percent. Thefour-week moving average of mortgage applications, which smoothsthe volatile weekly figures, was down 0.8 percent. The MBA's seasonallyadjusted index of refinancing applications decreased 10.8 percent,reaching its lowest level since the week ended August 6. Borrowingcosts on 30-year fixed-rate mortgages, excluding fees, averaged 4.47percent, down 0.03 percentage point from the previous week. The MBAsaid fixed 15-year mortgage rates averaged 3.96 percent, down fromthe previous week's 4.00 percent. Rates on one-year adjustable-ratemortgage, or ARMs, decreased to 6.89 percent from 7.00 percent.
Source: Mortgage Bankers Association
FHFA Home Price (July)
Forecast: NA Prior: -0.3%
Prices of U.S. single-family homes fell for the first time in four months inJune, and by an adjusted 1.7 percent from a year earlier, the FederalHousing Finance Agency said in last month's release. The index fell bya seasonally adjusted 1.7 percent for the 12 months ending in June.Home prices, however, gained on a quarter-over-quarter basis. Thegauge in the second quarter rose 0.9 percent from the first quarter, butdropped 1.6 percent from the second quarter of 2009. The U.S. index asof June is 12.6 percent below its April 2007 peak, the regulator said.
Source: Federal Housing Finance Agency
NEXT TRADING DAY
Economic Events
NEW YORK - Prime Minister of Greece, George Papandreou, Speaks atLunch Meeting of the Economic Club of New York - 1615 GMT
Greek Prime Minister George Papandreoustressed on Monday, during a visit to theNew York Stock Exchange where heattended a working lunch with the stockexchange's president and leading WallStreet members, that Greece has changeddramatically over the past year, when thecountry's new government promoted themost ambitious monetary and structural reforms in the history of theEurozone, with the help of the IMF and EU. He said a debt defaultwould be a 'tragedy.'
The Prime Minister said it's hard to argue with a 'prophet' like thefamed 'Dr. Doom,' New York University professor, Nouriel Roubini ,who says an orderly restructuring of Greece’s public debt is required inorder to avoid an inevitable default. However, Papandreou said that adefault would have long-term consequences, which would hit thepoorer sections of Greek society in particular.
WASHINGTON -Assistant Treasury Secretary for Financial InstitutionsMichael Barr speaks before the Corporation for EnterpriseDevelopment (CFED) biennial conference, "The Assets Movement at ItsMoment: Creating the Save & Invest Economy" - 1800 GMT
WASHINGTON - U.S. Commerce Secretary Gary Locke discusseschallenges and opportunities of U.S. services trade with China and theAsia-Pacific in speech to services industry conference -1800 GMT
Corporate Events
Analysts expect Bed Bath & Beyond toreport a profit of 63 cents per share, upfrom 34 cents a year earlier for thesecond quarter. The home furnishingsretailer posted a strong profit in therecent first quarter as consumerscontinued to splurge on their homes, but
the company forecast weak second-quarter earnings, sending its sharesdown 7 percent. The company reported first quarter net income of $137.6 million or $0.52 per share, compared to $87.2 million or $0.34per share in the year-ago quarter. Net sales for the quarter increased13.5% to $1.92 billion from $1.69 billion in the prior-year quarter.Twenty-one analysts had a revenue consensus of $1.89 billion for the
first quarter. Comparable store sales in the first quarter of 2010increased by about 8.4%, compared with a decrease of around 1.6% inlast year's fiscal first quarter.
WallStreet expects Darden Restaurants to report a profit of 77 centsper share for the first quarter, down from 90 cents for the same perioda year ago. The casual dining chain, reported a profit that droppedbelow estimates in the recent fourth quarter on pre-tax charges andlower sales reflecting the absence of an extra week benefit in the prioryear. The company's net earnings from continuing operations droppedto $116.0 million or $0.81 per share from $122.8 million or $0.87 pershare in the same quarter a year ago. Darden's sales from continuingoperations were down 5.7% at $1.86 billion, compared to $1.98 billionin the prior year quarter, missing Street expectation of $1.89 billion. Theadditional fiscal week contributed approximately $124 million of sales inthe fourth quarter of fiscal 2009. U.S. same-restaurant sales decreased1.5% at Olive Garden and 4.6% at Red Lobster while LongHornSteakhouse's U.S. same-restaurant sales increased 1.8%
NEXT TRADING DAY (contd…)
General Mills is expected to post a profit of 63 cents per share for thefirst quarter, up from 43 cents for the same period a year ago. Thecompany reported diminutive fiscal 2010 results in the recent fourthquarter. For the quarter, adjusted earnings dropped 4.6% to 41 cents ashare compared with 43 cents in the year-ago period. For fiscal 2010,
adjusted earnings jumped 16% to $2.30 per share compared with theyear-ago earnings of $1.99. Net sales for the fourth quarter declined 2%to $3.57 billion from $3.65 billion in the year-ago quarter. Total revenuefor the reported quarter dipped 2% year over year to $3.6 billion. Thequarter experienced positive currency translation, flat volume comparedwith the year-ago period, but unfavorable price and product mix.
WallStreet expects Red Hat to report a profit of 18 cents per share forthe second quarter, up from 15 cents for the same period a year ago.The provider of open source software services, reported higher earningsfor the recent first quarter helped by a 20 percent organic revenuegrowth. Adjusted earnings came in line with analysts’ expectation, butrevenues exceeded consensus. The company's earnings increased to$24.07 million or 12 cents a share from $18.51 million or 10 cents ashare in the previous year quarter. Excluding stock compensation andamortization expenses, net income was $35.58 million or 18 cents ashare, compared to $28.71 million or 15 cents a share in the previousquarter last year. Total revenues for the quarter rose 20 percent to$209.14 million from $174.39 million in the comparable quarter of lastyear.
8/8/2019 21/9/10 - The Economic Monitor US Free Edition
0830 4 Week Average NA 464.75 k0830 Continuing Claims 4.46 mln 4.485 mln
1000 Existing Home Sls(Aug) 4.1 3.83 mln
1000 Existing home sls(Aug) 8.40% -27.20%
1000 Lead Indicators (Aug) 0.10% 0.10%
FRI 09/24 0830 Durable Goods (Aug) -1% 0.40%
0830 Ex-Transportation 1% -3.70%
0830 Ex-Defense -0.40% 0.40%
0830 Nondefense ex-air 2% -7.20%
1000 New Home Sales
(Aug)0.29 mln 0.276 mln
1030 ECRI Weekly Index NA 122.6
MON 09/27 0830 Chicago Fed Index NA NA
1200 Chicago Midwest(Aug) NA 81.4
TIME TBA Building Permits NA NA
ECONOMIC CALENDAR
DATE - 22/September2010
COMPANY NAME EVENT
General Mills Q1 2011
Lyris Q4 2010
Versar Q4 2010
Psivida Q4 2010
Bed Bath & Beyond Q2 2010
PHC Q4 2010
Darden Restaurants Q1 2011
Steelcase Q2 2011
IHS Q3 2010
Red Hat Q2 2011
eGain Communications Q4 2010
Carmax Q2 2011Jefferies Q3 2010
CORPORATE RESULTS
DJIA
MARKET PERFORMANCE
A. Stocks were cautious as Wall Street refrained from decisive movesahead of learning later on whether the Federal Reserve takesfurther action to jolt the economy. The Dow Jones climbed 5.28points to 10,758.88.
B. Stocks attempted to swing higher Tuesday as Wall Street offered avolatile take on the Federal Reserve's decision to hold ratesunchanged, with the U.S. central bank saying it is ready to do moreif needed. Dow Jones rose 32.77 points to 10,786.39.
C. Stocks lost most of their afternoon gains by the close of trading.The Dow Jones still eked out fractional gains, helped by a 2.2%advance in shares Caterpillar Inc. The blue-chip average finishedup 7.41 points, or 0.1%, at 10,761.03.
