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Wall St. Breakfast's Pre-Market Snapshot:

U.S. Futures As of 8:45 AM EST

S&P 500: -3.10; 1,513.30
NASDAQ 100: -5.50; 1,908.50
Dow: -23.00; 13,438.00

International Indexes

Asia
NIKKEI 225: +0.07%; 18,053.38 (+12.45)
HANG SENG: -0.09%; 20,800.16 (-18.45)
S&P/ASX 200: -0.41%; 6,311.10 (-26.00)
BSE SENSEX 30: -0.49%; 14,186.18 (-69.75)

Europe
FTSE 100: -0.69%; 6,478.00 (-44.70)
CAC 40: -0.98%; 5,919.24 (-58.63)
XETRA-DAX: -1.26%; 7,633.00 (-97.05)

Commodity Futures (Reuters/Jefferies CRB)

Oil: +0.33%; $66.18 (+$0.22)
Gold: +0.09%; $675.20 (+$0.60)
Natural Gas: +0.59%; $8.13 (+$0.05)
Silver: -0.16%; $13.695 (-$0.022)

U.S. Breaking Newssee today's Wall Street Breakfast for earlier news

May Same-Store Sales Roundup

Most retailers announced May same-store sales Thursday. Overall, a mixed bag:

  • Costco sales at stores open at least one year rose 7% vs. analyst estimates of 5.4%. Total sales rose 11% to $5.14 billion.
  • Wal-Mart Stores sales at stores open at least one year rose 1.1%, excluding fuel, or 1.3% including fuel; analysts expected 1.4%. It sees 0-2% gains in June.
  • Gap same-store sales fell 3%. Total sales gained 2% to $1.19b.
  • Target Corp. same-store sales climbed 5.8%, in line with internal forecasts and analyst expectations. Net sales increased 10.1% to $4.33b. It said it June same-store sales should rise 3-5%.
  • Limited Brands sales at stores open at least one year rose 2%; analysts were looking for a 1.6% drop. Net sales climbed from $719m to $775m. It said it expects a low-to-mid-single-digit percentage increase in June same-store sales.
  • Abercrombie & Fitch same-store sales fell 5%, vs. estimates of -1.2%. Sales were up 16% to 215 million. Direct-to-consumer sales rose 50% to $12.9 million.
  • J.C. Penney same-store sales fell 2%; analysts had estimated a 0.3% gain. Total sales rose 0.3% to $1.2 billion. The company expects June same-store sales gains in the low single-digits.
  • Kohl's Corp. same-store sales rose 10.5% (the exact same amount by which they fell in April), vs. an expected 6.2%. Total sales were up 19% to $1.19 billion. May results, it said, were driven by broad-based strength, but it expects a low-single-digit drop in June due to a calendar shift.
  • Saks Inc. sales at stores open at least one year jumped 37.5%, way ahead of estimates of 13.9%. Total sales gained 39.4% to $248.9 million.
  • Jos. A. Bank Clothiers Inc. comparable-store sales jumped 13.5%, vs. a projected gain of 3.3%. Direct-marketing sales rose 16.3%. Total sales were up over 23% to $45.3 million.
  • Nordstrom same-store sales rose 6.3%, vs. analyst estimates of 2.6%. Total sales gained 6.1% to $638 million.
  • Pacific Sunwear same-store sales climbed 6.4%. Total sales were up 10.9% to $98 million.
  • Bebe Stores Inc. same-store sales fell 3%, slightly worse than analyst estimates of -2.8%. Total sales were up 8% to $53.1 million.
  • American Eagle Outfitters Inc. sales at stores open over one year were up 5%, vs. analyst estimates of a 5.7% gain. Total sales rose 18% to $199 million. It reiterated Q1 EPS forecasts of $0.34-0.35, vs. analysts estimates of $0.36.
  • Sharper Image Corp. same-store sales fell 8%, better than analyst estimates of a 13.8% drop. Total company sales tumbled 27% to $24.1 million. It is the company's 31st straight month in decline.
  • AnnTaylor Stores same-store sales dropped 4.6%, vs. consensus estimates of -3.1% drop. It said weak mall traffic and sweater sales hurt its numbers. Total sales rose slightly to $221 million.
  • Family Dollar Stores same-store sales climbed 2.5%, ahead of estimates of 2%. Total sales were up 5.9% to $522 million. Sales of home products were soft, while apparel and food were stronger (a complete reversal of April's trend).
  • Stein Mart Inc. sales at stores open at least one year were up 2.9%; analysts were calling for flat same-store sales. Total sales fell 0.6% to $119 million.
  • BJ's Wholesale Club Inc. same-store sales rose 4.1%, vs. estimates of a 1.5% gain. This included a 2.2% jump in gas sales. Net sales were up 8.2% to $711 million.
  • Wet Seal same-store sales were up 1.9%. Net sales were $42.6 million, vs. $37.3 million a year ago. It expects another low-single-digit increase in comparable-store sales for June, and reiterated Q2 guidance of "significant improvement in gross profits and operating income."
  • Wilsons The Leather Experts comparable-store sales fell 25%; analysts were calling for a milder -14.5%. Total sales dropped 27% to $11.4 million.
  • Children's Place sales at stores open at least one year rose 4%, ahead of analysts' 2.9% estimate. Total sales were up 13% to $128 million.
  • Dillard's sales at stores open at least a year fell 2%, vs. estimates of a 1.2% drop. Sales fell 1% to $533 million. The company said shoe sales were strong and cosmetics sales were weak.
  • Macy's same-store sales fell 3.3%; analysts were expecting a milder 1% drop. Total sales fell 2.3% to $1.98 billion. "While we were disappointed with sales in the month of May... increased promotional marketing ... is expected to improve sales trends in June and July," it said, forecasting a -2 to 0% change in June.
  • TJX same-store sales were up 5%, ahead of analyst forecasts of 3.7%. Total sales grew 9% to $1.4 billion.
  • Cato sales at stores open at least one year rose 2%, while analysts were calling for a 4% drop. Total sales were up 3% to $76 million. The company said inventory levels improved as a result of markdown sales.
  • Ross Stores same-store sales rose 1%. Total sales were up 9% to $450 million. For June, it expects 0-1% same-store sales gains, and 3-4% in July.
  • Rite Aid same-store sales were up 1.7%, short of the 2.5% analysts expected. Total sales were up 2.2% to $1.72 billion.
  • Dollar General same-store sales were up 4.1% (or 3.5% excluding the 122 stores it's closing). Analysts were looking for a milder 2.9%. Total sales increased 6% to $733 million.
Sources: Reuters, MarketWatch I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX, XX, XXI, XXII, XXIII, XXIV, XXV, XXVI, XXVII, XXVIII
Commentary: April Same-Store Sales RoundupMarch Same-Store Sales Retail Roundup
Stocks/ETFs to watch: Pacific Sunwear of California Inc. (NASDAQ:PSUN), bebe stores inc. (NASDAQ:BEBE), Nordstrom Inc. (NYSE:JWN), Limited Brands Inc. (LTD), Wal-Mart Stores Inc. (NYSE:WMT), Costco Wholesale Corp. (NASDAQ:COST), Saks Inc. (NYSE:SKS), American Eagle Outfitters Inc. (AEOS), Sharper Image Corp. (SHRP), J.C. Penney Company Inc. (NYSE:JCP), Abercrombie & Fitch Co. (NYSE:ANF), Target Corp. (NYSE:TGT), Kohl's Corp. (NYSE:KSS), AnnTaylor Stores Corp. (NYSE:ANN), Family Dollar Stores Inc. (NYSE:FDO), Stein Mart Inc. (NASDAQ:SMRT), BJ's Wholesale Club Inc. (NYSE:BJ), Jos. A. Bank Clothiers Inc. (NASDAQ:JOSB), Wet Seal Inc. (WTSLA), Wilsons The Leather Experts Inc. (WLSN), The Children's Place Retail Stores Inc. (NASDAQ:PLCE), Dillard's Inc. (NYSE:DDS), Macy's Inc. (NYSE:M), TJX Companies Inc. (NYSE:TJX), Cato Corp. (NYSE:CTR), Ross Stores Inc. (NASDAQ:ROST), Rite Aid Corp. (NYSE:RAD), Dollar General Corp. (NYSE:DG)

U.S. 10-Year Treasury Passes 5%, Futures Dip

Both the European Central Bank and New Zealand hiked their benchmark interest rates a quarter-point, to 4.0% and 8.0%, respectively. The Bank of England paused at 5.5%. Fed fund futures now show traders only expect an 18% chance of an FOMC rate cut to 5.0% in '07, compared to 40% last week and 98% a month ago. Global-Central-Bank-Rates-chart-06-07-07 Benchmark rates are at multi-year highs across the globe. A Glasgow-based bond fund manager said the hike by New Zealand "frightened" investors, adding that "Global growth is too strong, yields have to rise. The trend is bearish." Yields on U.S. 10-year Treasury bonds are currently above 5%, their highest level in 10 months, pushing futures lower: Dow -21, S&P -3.5 and Nasdaq -5.75. Yields for both the 2-year and 5-year are currently at 4.99%. The Dow Jones Industrial Average has fallen 210 points (-1.5%) in the past two days, while the S&P is down 1.4% and the Nasdaq is off 1.2%. Meanwhile, the VIX has increased 16% to 14.87, since the start of June. The Fed next meets June 28; it has kept its overnight lending rate at 5.25% for the past seven meetings.
Sources: Bloomberg, MarketWatch
Commentary: White House Lowers 2007 Growth Forecast, Raises Inflation OutlookThe Fed Won't CutBond Yields Are Rising - Trouble For Equities?ECB Hikes to 4% as ExpectedThe Fed's Not Alone: Global Tightening Cycle Going On
Stocks/ETFs to watch: iShares Lehman TIPS Bond (NYSEARCA:TIP), iShares Lehman 1-3 Year Treasury Bond (NYSEARCA:SHY), iShares Lehman 7-10 Yr Treasury Bond (NYSEARCA:IEF), iShares Lehman 20+ Year Treas Bond (NYSEARCA:TLT), S&P 500 Index (NYSEARCA:SPY), Diamonds Trust Series 1 ETF (NYSEARCA:DIA), iShares Lehman Aggregate Bond (NYSEARCA:AGG)

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Today's Market (via Sam Collins, ChangeWave.com)

Recap of Yesterday's Action
To say that there was news before Wednesday's opening that impacted our stocks is an understatement. A combination of higher interest rates in Europe and a "triple-sell signal" by Morgan Stanley (NYSE:MS) on European equities (predicting a 14% correction) sent the markets there into a tailspin before our opening bell sounded.

After the first hour of trading yesterday, stocks were down more than 100 points prior to the only economic data of the day being released. And that report -- from the Labor Department -- showed that unit labor costs were revised higher to 1.8% from the previously reported 0.6%.

Then later, one of the Federal Reserve members uttered a few words about seeing no moderating trend yet in U.S. inflation, and the words "cost-push (inflation)" began to circulate. It didn't help that crude oil was up again, since the two factors that cause "cost-push" are higher wages and higher raw material prices.

So, for the second day in a row, stocks took a hit. This time the Dow Industrials lost 130 points and closed at 13,467, the S&P 500 lost 14 at 1,517, and the Nasdaq dropped 24 points to close at 2,587. Volume on the NYSE was 1.5 billion shares and 2.2 billion traded on the Nasdaq. Brokers' screens were bright red with breadth sharply negative at 13-to-3 on the New York and 20-to-9 on the Nasdaq.

Crude oil (July contract) gained 35 cents at $65.96 a barrel, but the Amex Energy SPDR (NYSEARCA:XLE) lost 90 cents and closed at $68.80. Gold (August contract) lost again, this time by 50 cents, closing at $674.60 per troy ounce, and the Philly Gold and Silver Index [XAU] fell by $1.24 and closed at $139.20. The next test for the XAU is the May 30 reversal low of $133.54. A failure to hold there would mean that a test of the lower support line at $130 would be next.

What the Markets Are Saying
After a spectacular run of almost 7% from the breakout of the Dow Industrials in mid-April, it is time for the markets to take a short and well-earned rest. As pointed out yesterday, many of the internal market indicators flashed "overbought" signals. This, along with a series of "non-confirmations," resulted in a call for a mild correction.

Yesterday, both the Dow and the S&P 500 closed below their 20-day moving averages -- a mark usually noted by traders as a signal to take profits. Also, breadth on the NYSE turned decidedly negative, with decliners outpacing advancers by 13-to-3. Look for a pullback to at least the first lines of support at Dow 13,300, S&P 500 1,500 and Nasdaq 2,530.

Today's Trading Landscape
The jobless numbers will be in focus today along with consumer credit and April's wholesale inventories. Earnings are expected from Analogic (NASDAQ:ALOG), National Semiconductor (NYSE:NSM) and Smithfield Foods (NYSE:SFD), among others. And again the focus will be on the 10-year T-bond yield (read above) as well as the jobs report results, since both could have an impact on future growth and inflation.

Asian Headlines (via Bloomberg.com)

Asian Stocks Are Little Changed; Sony, Sino Land Decline, Cnooc Advances Asian stocks were little changed as concern global interest rates will rise dragged on technology and property shares, offsetting gains among oil producers.

Australia's Employment Gains Exceed Estimates, Triggering Currency Rally Australian employment increased four times as much as expected in May, worsening a labor shortage that may force the central bank to raise interest rates to ward off inflation. The nation's currency climbed.

New Zealand Raises Key Interest Rate to Record 8 Percent; Currency Surges New Zealand's central bank unexpectedly raised its benchmark interest rate a quarter point to a record 8 percent, saying housing demand and consumer spending are fanning inflation. The currency rose to a 22-year high.

Danone Seeks $100 Million in Damages Over Illegal China Juice, Water Sales Groupe Danone SA (DA), the French bottler of Evian, is seeking at least $100 million in damages from companies linked to Chinese partner Zong Qinghou as it sues them for illegal fruit-juice and mineral-water sales.

Hero Honda, Bajaj Cut Motorcycle Production as Rate Increases Curb Demand Hero Honda Motors Ltd. and Bajaj Auto Ltd., India's two biggest motorcycle makers, cut production after interest rates at a five-year-high curbed demand.

European Headlines (via Bloomberg.com)

European Stocks Fall for Fourth Day, Led by Volvo, SKF; BAE Systems Slides European stocks headed for the longest losing streak in three months, paced by industrial companies after brokerages downgraded shares of Volvo AB (OTCQX:VLKAY) and SKF AB.

Bank of England Keeps Key Interest Rate at Six-Year High of 5.5 Percent The Bank of England left its benchmark interest rate unchanged at a six-year high, giving four previous increases time to slow inflation.

Ahold's Profit Falls Less Than Analysts Estimated as Dutch Sales Increase Royal Ahold NV (AHO), the biggest Dutch food retailer, said first-quarter profit fell 2 percent, less than analysts estimated, after higher sales in the Netherlands made up for narrower margins at its U.S. Stop & Shop and Giant stores.

Telefonica May Sell First Bonds in Yen After Debut Czech Koruna Note Sale Telefonica SA (NYSE:TEF), Europe's most-indebted phone company, may sell its first bonds in Japanese yen and plans notes in dollars to reduce reliance on European investors to refinance its 51.9 billion euros ($70 billion) of debt.

Source: Pre-Market Snapshot: Bearish Open On Tap Again