Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:52 AM EST
S&P 500: +3.60; 1,534.70
NASDAQ 100: +2.50; 2,012.00
Dow: +33.00; 13,710.00
NIKKEI 225: -0.36%; 17,984.14 (-65.37)
HANG SENG: +0.89%; 22,809.02 (+202.00)
SHANGHAI SE COMPOSITE: +1.22%; 15,092.04 (+181.42)
BSE SENSEX 30: +1.30%; 3,915.99 (+50.27)
FTSE 100: +0.44%; 6,644.10 (+29.00)
CAC 40: +0.66%; 6,040.50 (+39.41)
XETRA-DAX: +0.52%; 7,939.53 (+40.99)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.85%; $73.18 (+$0.62)
Gold: +0.66%; $666.50 (+$4.40)
Natural Gas: -1.29%; $6.52 (-$0.085)
Silver: +0.42%; $13.03 (+$0.055)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Marriott Beats, Shares Lower Pre-Market
Hotelier Marriott International said Thursday morning its 2Q net income rose 8.9% to $207 million, good for EPS of $0.51, after one-time items. Without those items, which included a settlement with the IRS, EPS would have been $0.57. Revenue for the quarter was $3.21 billion. Consensus estimates called for EPS of $0.53 on revenue of $3.16 billion. Looking ahead, Marriott expects revenue per available room in N. America to rise 6% to 7% with EPS totaling $1.88 to $1.96 for the full year. With expectations it will open 30,000 new room in both 2007 and 2008, Marriott Chairman and CEO J.W. Marriott, Jr. believes the company has "great reason to be excited about the future." Shares are lower by 0.76% in pre-market action, as of 8:07 a.m. after gaining 1.4% in trading Wednesday.
Sources: Press Release, MarketWatch, Reuters, AP [check back for MAR's conference call transcript later today]
Commentary: Marriott and Schrager to Develop Boutique Hotel Chain • Eight Hotel Stocks To Watch This Summer • Cramer's Take on MAR
Stocks/ETFs to watch: Marriott International (MAR). Competitors: Starwood Hotels & Resorts Worldwide, Inc. (HOT), Hilton Hotels Corp. (HLT), Intercontinental Hotels Group plc (IHG). ETFs: Consumer Discretionary SPDR ETF (XLY), PowerShares Dynamic Consumer Discretionary (PEZ), Vanguard Consumer Discretionary VIPERs (VCR)
Conference call transcripts: Marriott and Schrager to Develop Boutique Hotel Chain
Nexen Q2 Earnings Beat Estimates, Shares Trading Higher
Nexen Inc., Canada's fourth-largest independent oil explorer, reported a 9.8% decline in Q2 EPS due to a one-off gain in the prior year period, but beat analysts' average EPS estimate by C$0.09. Its shares were up 3% to $34.56 in early trading in Toronto. Nexen's Q2 sales rose 35% and it set a new record with C$1.70/share of cash flow. Production after royalties increased 9% to 208,000 boe/d. "The timing of several of our projects has slipped but this has not impacted project returns. As a result of these timing delays, we will likely be at or slightly below the lower end of our guidance range of 275,000 boe/d to 305,000 boe/d for the full year," said Nexen President and CEO Charlie Fischer. Nexen's 43% stake in the Buzzard field in the North Sea helped boost daily production by 18%. Fischer said the company expects pre-tax annual cash flow generation of about C$1.6b from Buzzard once it is producing at full facility. Nexen's NYSE-listed shares gained 2.5% to $32.79 on Wednesday.
Sources: Press release, Bloomberg, MarketWatch
Commentary: Big-Cap Oil Companies Likely To Exceed Expectations • Blackmont: Nexen, Talisman To Benefit More from Oil Price Differences Than Canadian Natural, EnCana • Gimme Credit: Nexen Has Good Growth Potential
Stocks/ETFs to watch: Nexen Inc. (NXY). Competitors: Petro-Canada (PCZ), BP plc (BP), Exxon Mobil Corp. (XOM).
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.
Today's Market (via Sam Collins, ChangeWave.com)
Recap of Yesterday's Action
A bounce after Tuesday's sharp sell-off was expected, but the buying seemed to more than just a technical rebound backed by some solid support. First, the Fed and the Treasury Department chimed in on the subprime/hedge fund mess and said, "It is not causing systemic risks." And Philadelphia Fed President Charles Plosser said that most banks remain in "good shape" to handle subprime losses.
That was all very welcome news and followed Tuesday's announcements by Moody's and Standard and Poor's regarding downgrades of almost a thousand mortgage-backed securities. Those announcements, along with a resurgence of M&A activity, brought buyers to the oversold financial sector. Alcan (AL) said it has begun negotiations with Rio Tinto (RTP) rather than Alcoa (AA). Gerdau Ameristeel (GNA) said that it is buying Chaparral Steel (CHAP) for $4.2 billion, and Colgate-Palmolive (CL) is looking at Unilever (UL).
At the close, the Dow Industrials had gained 76 points to finish at 13,578. The S&P 500 gained 7 at 1,519, and the Nasdaq gained 13 closing at 2,652. Volume on the NYSE was 1.5 billion shares, and the Nasdaq traded 2 billion with breadth at a positive on both exchanges at about 8/7.
August crude oil contracts closed down by just 25 cents at $72.56, and the Amex Energy SPDR (XLE) was down 17 cents at $71.82. Gold (August contracts) dropped for the first time in four sessions falling $2.30 to $662.10 per troy ounce, and the Gold/Silver Index [XAU] lost 8 cents and closed at $145.94.
What the Markets Are Saying
Despite the bears' murmurings, the market is holding nicely within a narrow trading range which is bounded by the S&P 500's range of 1,487 to 1,540. Some technicians have opined that we may have "formed a triple top," but that is pure nonsense since tops are formed over months not weeks.
Most recently the most broad-based of all averages -- the NYSE Composite -- broke into a series of new highs plowing right through its supposed "triple top" like a knife through butter. Also, the Nasdaq made its own way forward last week with four successive days of new highs for this year -- not exactly the stuff of bull market tops.
With the recent consolidation, sentiment has turned, which indicates more fear on the part of the public. Odd-lot shorts have increased and so has put open interest (both pointed out by S&P) and this is good news. We're staying long stocks.
Today's Trading Landscape
Today, look for the May trade balance, June chain store sales, the monthly budget statement and weekly jobless claims -- that's a lot to chew on and a lot of news to potentially affect markets.
From the earnings area expect reports from Bank of the Ozarks (OZRK), Commerce Bancshares (CBSH), Fastenal (FAST), Fleetwood Enterprises (FLE), M&T Bank (MTB), Marriott International (MAR) (read above), Methode Electronics (METH) and Texas Industries (TXI).
After yesterday's close, Rio Tinto (RTP) announced an offer for Alcan (AL) for $38 billion, or more than $100 per share. Alcoa (AA) said it is "evaluating" the hostile offer. Genentech (DNA) beat Q2 estimates by 7 cents, and YUM Brands (YUM) beat estimates by 2 cents. Both raised their full-year guidance. Motorola (MOT) is lowering its Q2 and full-year guidance.
Asian Headlines (via Bloomberg.com)
• India's May Industrial Production Growth Slows More Than Expected on Rates India's industrial production growth slowed for a second month in May as the highest interest rates in five years crimped demand and currency gains weakened exports.
• Goldman's Ong Misses Chief Job in China, Doesn't Meet Language Requirement Goldman Sachs Group Inc. (GS), the world's most profitable investment bank, couldn't name the co-head of investment banking in Asia as chief executive officer of its Beijing joint venture because his knowledge of Chinese was too weak, three bankers at the firm said.
• Philippine Central Bank Cuts Rate, Won't Stagger Costs for Larger Deposits The Philippine central bank cut its key interest rate and ended a policy of staggering borrowing costs depending on the size of deposits, effectively keeping the cost of lending in the $117 billion economy unchanged.
European Headlines (via Bloomberg.com)
• European Stocks Rise, Led by BHP Billiton, Xstrata on Takeover Speculation European stocks rose for the first time in three days, led by BHP Billiton Ltd. (BHP) and Xstrata Plc, after Rio Tinto Group's (RTP) $38.1 billion purchase of Canada's Alcan Inc. (AL) fanned takeover speculation in the industry.
• Dollar Falls to Record Low Against Euro on View Subprime Losses to Spread The dollar fell to a record low against the euro and dropped versus the yen on speculation losses on debt backed by U.S. subprime mortgages will spread.