Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:45 AM EST
S&P 500: +6.10; 1,513.60
NASDAQ 100: +6.50; 1,924.50
Dow: +47.00; 13,468.00
NIKKEI 225: -0.16%; 17,732.77 (-28.14)
HANG SENG: -0.28%; 20,578.75 (-57.64)
S&P/ASX 200: -0.95%; 6,180.70 (-59.40)
BSE SENSEX 30: -0.91%; 14,003.03 (-127.92)
FTSE 100: +0.05%; 6,523.40 (+3.00)
CAC 40: +0.20%; 5,909.71 (+11.55)
XETRA-DAX: -0.75%; 7,620.53 (-57.73)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.28%; $65.17 (-$0.18)
Gold: -0.49%; $649.90 (-$3.20)
Natural Gas: +0.69%; $7.74 (+$0.05)
Silver: -0.84%; $12.98 (-$0.11)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Retail Sales Surge 1.4%, More Than Doubling Forecasts
Retail sales surged 1.4% during May, more than doubling economist expectations, according to data released Wednesday morning by the Department of Commerce. Consensus estimates were for a 0.6% gain. The broad-based gain -- the biggest since Jan. 2006's 3.3% -- may be a sign the U.S. economy is on the mend. March sales were revised to -0.1%, up from an original -0.2%. GDP dropped to a weak 0.6% growth in Q1, and last week retailer Bed Bath & Beyond warned FQ1 earnings would come in low, leading many investors to believe the May retail figure would disappoint. Building and garden supplies jumped 2.1% (vs. -2.2% in April), automotive was up 1.8% (vs. -0.5%), gas sales were up 2.8% (vs. 1.8%), and furniture sales were up 0.3%. Significantly, not a single decrease was to be found among the report's 15 categories. Separately, the Labor Department said import prices rose 0.9% in May, after a 1.4% jump in April, on higher food, energy and automobile prices. Economists were predicting just a 0.2% gain. Barclays' economist Dean Maki: "The consumer is holding up very well in the face of the energy-price shock."
Sources: Department of Commerce release, Department of Labor release, Wall Street Journal, MarketWatch, Bloomberg
Commentary: To Stay Invested, Or Not? • The S&P Continues To Experience Weakness • Housing Slump Continues: Are Economists Ready For Reality?
Stocks/ETFs to watch: S&P 500 Index (SPY), Diamonds Trust Series 1 ETF (DIA), iShares Lehman Aggregate Bond (AGG)
Volkswagen Narrows U.S. Losses, Sees 10%-plus Sales Growth in '08
Volkswagen says it narrowed its first-half loss in the U.S., and although sales were down 4.4% year-over-year and will be flat in 2007 -- due to readying for '08 models -- the company expects to achieve a minimum of 10% sales growth next year. It could break even in '08 and says it will at the latest in '09. Ordinary shares of Volkswagen rallied on the news, last up 1.1% to €109.80 in afternoon trading. Volkswagen of America credits its improving bottom line to reducing discounts and warranty claims, while focusing on sales of its most profitable models. Next year it will be introducing to the U.S. market a compact SUV, a new Passat coupe and a minivan built jointly with DaimlerChrysler. Volkswagen of America has a long-term goal of raising sales to 400,000 - 600,000 autos annually. It sold 235,140 vehicles in '06 -- well shy of its 1970 record of nearly 570,000.
Commentary: Eye on Volkswagen: A Brief History • Auto Retail Earnings Season: Headlines Rarely Tell the True Story • Volkswagen's Profit More Than Doubles, Sending European Shares Higher
Stocks/ETFs to watch: Volkswagen AG (VLKAY.PK). Competitors: General Motors (GM), DaimlerChrysler (DCX), Ford (F), Toyota (TM), Honda (HMC), Nissan (NSANY)
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Asian Headlines (via Bloomberg.com)
• Asian Stocks Fall to Two-Week Low on Rising Bond Yields; Samsung Declines Asian stocks fell to a two-week low on concern interest rates will rise and sap growth in the world's largest economies.
• Yen Falls to Lowest Since 2002 as Global Yields Spur Offshore Investment The yen fell to the lowest against the dollar since December 2002 and retreated from a one-month high versus the euro on speculation rising global bond yields will prompt Japanese investors to keep buying overseas assets.
• U.S. Reluctance to Call China Manipulator Prompts Dodd, Shelby Complaint U.S. lawmakers faulted the Bush administration's failure to label China a currency manipulator and proposed legislation to make it easier to rule against countries that meddle with their exchange rates.
• China's Retail Sales Rise by Most in Three Years on Incomes, Stock Market China's retail sales unexpectedly accelerated at the fastest pace in three years, buoyed by rising incomes and a stock market that's doubled this year.
• Reliance May Join BP, Chevron, Exxon in Bidding for Oil Rights in India Reliance Industries Ltd., India's biggest company, may bid with BP Plc (BP), Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) for drilling rights in India, to share rising exploration costs and gain the expertise of its foreign peers.
European Headlines (via Bloomberg.com)
• European Stocks Drop for Second Day; Allianz, British Energy, Skanska Fall European stocks dropped for a second day on concern rising borrowing costs will undermine profit growth and erode demand for equities.
• European Bonds Extend Slide on Speculation of More Interest-Rate Increases European government bonds slid by the most in more than a year on concern quickening global expansion will prompt central banks to increase interest rates.
• Parmalat Banks Including Citigroup, UBS, Morgan Stanley to Stand Trial A Milan judge ordered Morgan Stanley (MS), Deutsche Bank AG (DB), UBS AG (UBS) and Citigroup Inc. (C) to stand trial in connection with the 2003 bankruptcy of Italian dairy company Parmalat SpA.
• Finmeccanica May Spend More Than $665 Million in U.S., Guarguaglini Says Finmeccanica SpA, Italy's largest aerospace company, is ready to make a large acquisition to boost its presence in the U.S., the world's biggest defense market, Chief Executive Officer Pier Francesco Guarguaglini said.