Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:32 AM ET
S&P 500: -3.00; 1,538.40
NASDAQ 100: -5.00; 2,059.00
Dow: -10; 13,888
NIKKEI 225: +0.20%; 16,413.79 (+32.25)
HANG SENG: +0.57%; 25,701.13 (+146.49)
SHANGHAI SE COMPOSITE: +1.39%; 5,470.06 (+74.80)
BSE SENSEX 30: +0.15%; 16,347.95 (+25.20)
FTSE 100: -0.84%; 6,405.50 (-54.50)
CAC 40: -0.76%; 5,687.23 (-43.59)
XETRA-DAX: -0.33%; 7,725.57 (-25.27)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.18%; $82.08 (+$0.15)
Gold: +1.14%; $737.80 (+$8.30)
Natural Gas: -3.35%; $5.97 (-$0.21)
Silver: +1.60%; $13.315 (+$0.21)
U.S. Breaking Newssee today's Wall Street Breakfast for earlier news
Goldman Reports Record Q3 Earnings, Smashes Estimates
Goldman Sachs posted a 79% jump in third-quarter net income to $2.85 billion, or $6.13/share, helped by a one-time investment gain of $900M and benefiting from short mortgage positions, which more than offset "significant losses" on its subprime related investments. Analysts were expecting EPS of $4.35. Goldman shares were last up 2.3% to $210.3 in pre-market trading. Goldman said revenues climbed 63% to $12.33B, easily beating analyst estimates of $9.57B. Shares of Goldman gained 2.5% to $205.50 on Wednesday. Goldman's earnings conference call is at 11:00 AM Eastern (see full earnings call transcript later today).
Sources: Press release, Bloomberg, MarketWatch
Commentary: Earnings Preview For Goldman Sachs • Lehman's Earnings Bolster My Confidence In Goldman's • Morgan Stanley Misses Due To Lack of International Exposure
Stocks/ETFs to watch: GS. Competitors: MS, LEH, BSC, MER
FedEx Beats Estimates But Tumbles On Soft Forward Guidance
FedEx Corporation saw its first-quarter EPS and revenue top consensus analyst forecasts, but soft forward guidance sent its shares sharply lower in pre-market trading (check back later for earnings call transcript). The Memphis shipping giant saw its net income grow 4% to $494 million, good for EPS of $1.58, from $1.53-a-share a year ago. Sales climbed 8% to $9.2 billion; consensus estimates had first-quarter EPS pegged at $1.54 and sales at $9.07 billion. But the company issued guidance that was considerably lower than Wall Street's estimates, both for Q2 and for the full year. FedEx expects EPS of $1.60-$1.75 next quarter and full year EPS of $6.70-$7.10, compared with consensus estimates for EPS of $1.97 and $7.19 respectively. FedEx CEO Frederick W. Smith praised "growth in our international express shipments" and added that "FedEx increased its revenue and earnings against the backdrop of a sluggish U.S. economy." But CFO Alan B. Graf, Jr. said "recent financial market volatility and high energy costs have increased the uncertainty surrounding the near-term economic outlook, and weakness in the housing sector continues.” FedEx shares were down 3.13% in pre-market trading as of 8:01 a.m. ET on the company's weak outlook.
Sources: Press Release, MarketWatch I, II, Bloomberg, Reuters,
Commentary: FedEx: A Likely Buyout Target - Barron's • FedEx Misses Estimates; Expects Business To Pick Up In Late Summer
Stocks/ETFs to watch: FDX. Competitors: UPS. ETFs: IYT
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Today's Market (via Sam Collins, ChangeWave.com)
Recap of Yesterday's Action
Yesterday investors were looking for some follow-through from Tuesday's Fed-inspired blow out and they got it -- well, at least part of it.
Trading began strong but around noon it tailed off and drifted for the rest of the day. Morgan Stanley's (NYSE:MS) earnings report was partly to blame for the sag. It was expected to be bad and it was, with losses from its hedge funds and write-downs amounting to more than $1 billion.
Further, Dow component General Motors (NYSE:GM) curbed a wider Dow move by falling 2.2% after being picked as the UAW bargaining target this time around.
The impact of the Fed rate cut could be dulled if it looks like inflation is heading north, but the Labor Department's report showing 0.1% decline in August consumer prices and just a 0.2% rise in the core consumer price index met estimates and confirmed that inflation is not a current problem.
Of concern, however, the Commerce Department said that housing starts and permits fell to a 12-year low in August, dropping 2.6% to 1.331 million, which missed analysts' forecasts of 1.35 million.
At the close, the Dow Industrials were up 76 points closing at 13,815. The S&P 500 gained more than nine to close at 1,529, and the Nasdaq added 15 points and closed at 2,666. Volume picked up on both major exchanges with the Big Board trading 1.7 billion shares and the Nasdaq trading 2.2 billion. Advancers exceeded decliners on both exchanges by about 2-to-1.
Crude oil (October contract) closed at $81.93, up 42 cents, to hit a new intraday high of $82.50. The Amex Energy SPDR (NYSEARCA:XLE) set its second consecutive new high by closing at $76.03, higher by 47 cents.
The December gold contract gained $5.80 and closed at $729.50 per troy ounce. The euro fell slightly against the U.S. dollar yesterday following a strong day on Tuesday -- it closed at $1.3962 down from $1.3977.
What the Markets Are Saying
All of the major averages have broken out of the inverse head-and-shoulders patterns with targets that should take them back to the July highs.
But, and I hate to repeat myself, the volume is just not high enough to immediately punch into new highs. With a great number of the market's internal indicators flashing "overbought" and momentum showing some signs of lagging, we might expect to see some profit taking today. But the near-term trend is up and the intermediate trend should follow after a minor round of profit taking.
After a shallow pullback, be prepared to commit some of the cash that we've accumulated.
Today's Trading Landscape
Today look for earnings from ACI Worldwide (NASDAQ:ACIW), Oracle (NYSE:ORCL), 3Com (COMS), A.G. Edwards (AGE), American Greetings (NYSE:AM), Bear Stearns (NYSE:BSC), Carnival Corp (NYSE:CCL), Circuit City (NYSE:CC), ConAgra Foods (NYSE:CAG), Diamond Foods (NASDAQ:DMND), FedEx (NYSE:FDX) (read above), Goldman Sachs (NYSE:GS), Nike (NYSE:NKE), Pernod Ricard (RI), Pier 1 Imports (NYSE:PIR), Scholastic (NASDAQ:SCHL), Steelcase (NYSE:SCS) and Tektronix (TEK).
Weekly jobless claims, the August Index of Leading Economic Indicators (the consensus expects -0.4% versus July's +0.4%), and September's Philadelphia Fed report are due today. The euro hit $1.40 this morning, prompting talk of interest rate cuts in Europe to help stabilize currency markets. Domestic markets may open lower.
Asian Headlines (via Bloomberg.com)
• Asian Stocks Climb to Eight-Week High on Metals, Oil Price; BHP Advances Asian stocks advanced to an eight- week high as a jump in metals prices boosted commodity producers BHP Billiton Ltd. (NYSE:BHP) and Jiangxi Copper Co.
• Las Vegas Sands Seeks Record Singapore Dollar Loan to Build Planned Casino Las Vegas Sands Corp. (NYSE:LVS), the world's largest casino operator by market value, is seeking a record Singapore dollar loan to fund construction of the nation's first gambling resort, three people familiar with the deal said.
• Nine Dragons Paper's Profit Rises 30 Percent on Demand for Cardboard Boxes Nine Dragons Paper Holdings Ltd., run by China's richest woman Zhang Yin, had a 30 percent gain in second-half profit as companies in the world's fastest-growing major economy used more cardboard boxes to ship finished goods.
• Sharp Buys 14 Percent Stake in Pioneer, Enters Car Navigation Partnership Sharp Corp. (OTCPK:SHCAY), Japan's largest maker of liquid-crystal display televisions, will acquire a 14 percent stake in Pioneer Corp. for 41.4 billion yen ($358 million) to develop DVD players and car navigation equipment.
• Indian Rupee Surges Past 40 Per Dollar as Fed Rate Cut Spurs Stock Rally India's rupee strengthened beyond 40 per dollar for the first time in nine years, as a U.S. interest-rate cut prompted investors to seek higher returns in the world's second-fastest growing major economy.
European Headlines (via Bloomberg.com)
• Dollar Falls to Record Low $1.40 Against Euro Before Bernanke's Testimony The dollar sank to a record low against the euro on speculation Federal Reserve Chairman Ben S. Bernanke will tell a congressional hearing that the U.S. housing slump threatens to slow economic growth.
• King Says U.K. Law Hampered Covert Northern Rock Rescue by Bank of England Bank of England Governor Mervyn King said British and European Union laws complicated his efforts to rescue Northern Rock Plc and prevented the central bank from acting covertly to prevent a panic.
• Metro's Koerber to Step Down, Will Be Replaced by Chairman Eckhard Cordes Metro AG, Germany's largest retailer, said the head of its biggest shareholder will take over as chief executive officer after Hans-Joachim Koerber chose to step down from the post more than a year early.