Stock Futures Rise Moderately Ahead of Key Data

Market Update
Wednesday, August 4, 2010


Stocks:

U.S. stock futures turn higher after ADP data. Stock futures erased their earlier losses to trade higher on Wednesday after data showed that US private-sector employment increased in July, rekindling hopes of an economic recovery ahead. Stock futures were following European markets lower Wednesday amid worries over the state of the US economic recovery ahead of data. Job cuts announced by US employers fell in July from a year earlier. The American Petroleum Institute on Tuesday reported a decline in oil inventories of about half the decrease expected.

U.S. stocks slipped Tuesday, halting Monday's strong start to the month as disappointing earnings and economic reports had investors questioning the strength of the recovery. Investors are growing nervous that July's gains may have exaggerated the economic recovery. "Right when they think they're starting to see [positive signs], they're being hit with pieces in the news that are telling them to be cautious at best," said Don Montanaro, chief executive of TradeKing, an online stock and options broker.

US Stocks Decline As Earnings, Economic Data Point To Weakness June Consumer Spending Flattens. New economic data signaled a weakening recovery in the U.S. and prompted analysts to lower their estimates for growth in the second quarter.

Consumer spending, personal income, and pending home sales all were weaker than expected, according to the reports Tuesday. Spending, a key driver of economic growth, was unchanged last month after inching 0.1% higher in May, the Commerce Department said. The report said personal incomes were flat in June as private wages and salaries fell.

Demand for factory goods in June tumbled, as did inventories. Michael Feroli, of JPMorgan Chase Bank, said the drop in inventories means gross domestic product for April through June likely grew 1.7% instead of 2.4% as the government estimated last week. GDP is the broad measure of economic activity in the U.S.. "Second-quarter growth is now looking especially soft," Feroli wrote in a research note.


Treasurys:

The Treasury market posted a broad price rally, sending the two-year note's yield to a record low of 0.515%, as weak economic data added to speculation that the Federal Reserve may need to renew bond purchases to prevent a relapse of the economy. Consumer spending was unexpectedly flat in June, pending home sales faltered and factory orders dropped more than economists' forecasts.

Besides pledging a low rate policy for an extended period, the Fed may need to restart its bond buying program, which was just completed in March.


Forex:

The dollar fell against the euro and yen after disappointing U.S. data fed into talk the Federal Reserve could consider pumping additional money into a U.S. economy that investors worry is slowing. Economic data pressured the greenback against the euro and yen. A continuing stream of weak U.S. data "would fuel concerns that the Fed would have to take some monetary action," said Jessica Hoversen, fixed income and foreign exchange analyst at MF Global in Chicago.


Dow Jones 10,636.38 -38.00 (-0.36%)
S&P 500 1,120.46 -5.40 (-0.48%)
Nasdaq 2,283.52 -11.84 (-0.52%)
Crude Oil 82.08 - 0.57%
Natural Gas 4.68 + 0.91%
Gasoline 2.18 - 0.41%
Heating Oil 2.19 - 0.51%
Gold 1196.19 + 0.87%
Silver 18.53 + 0.82%
Copper 3.34 - 0.36%


World markets

Shanghai 2,638.52 +11.52 (0.44%)
Nikkei 225 9,489.34 -204.67 (-2.11%)
Hang Seng Index 21,549.88 +92.22 (0.43%)
TSEC 7,972.66 +15.13 (0.19%)
FTSE 100 5,340.83 -55.65 (-1.03%)
CAC 40 3,732.00 -15.51 (-0.41%)
S&P TSX 11,782.60 +69.17 (0.59%)
S&P/ASX 200 4,542.10 -29.50 (-0.65%)
BSE Sensex 18,217.44 +102.61 (0.57%)


Wednesday's Calendar

7:00 a.m.
July 30 MBA Weekly Mortgage Applications Survey Market Composite Index (previous 720.6), Cur Chg (previous -4.4%), Purchase Index (S.A.) (previous 168.9), Cur Chg (previous +2%), Refinance Index (previous 3918.1), Cur Chg (previous -5.9%)

7:30 a.m.
July Challenger Job-Cut Report

8:15 a.m.
July ADP National Employment Report Private Payrolls Forecast (expected +39000)

10:00 a.m.
July ISM Non-Manufacturing Report on Business Non-Manufacturing PMI (expected 53.1), Prices Index (previous 57.5), Employment Index (previous 58.6), Business Index (previous 50.2), New Orders Index (expected 53.5)

10:00 a.m.
U.S. Department of the Treasury - U.S. Department of the Treasury's quarterly refunding announcement

10:00 a.m.
Tsy Asst Secy Miller and Tsy Dep Asst Secy Rutherford host Aug '10 Quarterly Refunding Statement in Washington

10:30 a.m.
July 30 EIA Weekly Petroleum Status Report Crude Oil Stocks (previous 360.76M), (Net Change) (expected -200K), Gasoline Stocks (previous 222.25M), (Net Change) (expected -800K), Distillate Stocks (previous 167.51M), Distillate Stocks (Net Change) (expected +700K), Refinery Usage (expected 89.9%)

11:00 a.m.
July Global Services PMI

4:00 p.m.
Tsy Secy Geithner participates in a panel discussion in Washington

4:00 p.m.
Center for American Progress - U.S. Treasury Sec Geithner outlines administration's pro-growth fiscal agenda