Market Snapshot
Asia: Japan +0.3%. Hong Kong -0.4%. China +0.4%.
Europe: London +0.2%. Paris -0.5%. Frankfurt -0.6%.
Futures: S&P -0.2%. Dow -0.2%. Nasdaq -0.2%. Crude -0.3%. Gold +0.1%.
Economic News
8:30 Jobless Claims
9:45 PMI Manufacturing Index Flash
10:00 New Home Sales
10:30 EIA Natural Gas Inventory
4:30 Fed Balance Sheet
Key earnings before the open
ABBV, AEP, ALK, ALXN, ASPS, AVT, BAX, BBT, BCC, BEAV, BHE, BKU, BMS, BTU, CAB, CAM, CAT, CFX, CLFD, CLI, CMS, COL, COR, CSL, DAN, DGX, DHR, DLX, DNKN, DOW, DPS, DPZ, DST, EQM, EQT, ERIC, FAF, FCX, FNB, GM, GMT, GPK, GRA, HP, HSY, HUB.B, IQNT, IR, IVC, JAH, JCI, JNS, KKR, LAZ, LLY, LTM, LUV, MDP, MDSO, MHO, MJN, MMM, MO, MTH, NDAQ, NUE, NVS, NWE, ORI, PENN, PEP, PG, PHM, PII, PNK, PRLB, PTEN, RS, RTIX, RTN, SFE, SNA, SQNS, STC, SUI, SWK, SXC, SYNT, UAL, UNP, USG, UTEK, WBC, WCC, WNS
Key earnings after the close
ACTG, ALGN, ALTR, AMZN, AWAY, BAS, BCR, BGS, BJRI, BLDR, CB, CBI, COF, CPHD, CVTI, CYN, DGII, DV, EFII, ELY, ETFC, ETH, FET, FICO, FII, FR, FSL, GHL, GIMO, GOOG, HA, HBHC, HBI, HUBG, HWAY, JNPR, KLAC, KN, LSTR, MKTO, MMSI, MSCC, MSFT, MTSN, MXIM, MXWL, N, NEM, NTGR, P, PEB, PFG, QDEL, QLIK, RGA, RHI, RMD, RSG, SBAC, SBUX, SFG, SHOR, SIVB, SPNC, SRCL, SWN, SYA, SYNA, TRN, UIS, VCRA, VRSN, WIRE, WREEconomy
Markets
U.S. stocks were poised for a pullback on Thursday, as futures dropped amid a cascade of earnings reports led out by General Motors, Procter & Gamble and Caterpillar. Investors are also digesting a weaker jobless claims report and awaiting new home-sales data, coming a day after a stellar reading on existing-home sales.
European stocks traded mostly lower after the disappointing PMIs. Investors are also closely monitoring news about Greece’s reform talks ahead of a key meeting of eurozone finance ministers on Friday. Greek Prime Minister Alexis Tsipras is due to meet German Chancellor Angela Merkel in Brussels on Thursday.
China’s factory activity declined at its fastest pace in a year, according to HSBC/Markit’s Purchasing Managers Index. PMI fell to 49.2 (est. 49.6) in April, beneath the 50-point watermark that separates growth from a contraction. In Japan, manufacturing fell to 49.7 (est. 50.8), dropping below 50 for the first time since July 2014.
Gold tumbled to its sharpest single-session loss in more than six weeks Wednesday after strong U.S. existing home sales raised expectations for a Fed interest rate hike in June.
Boston Fed chief Eric Rosengren cautioned that weak growth data could delay interest rate hikes. “There has definitely been a weakness to the tone of the data. The employment report was weak. That was little bit of a surprise… Certainly what is happening globally with Greece and China would indicate that there may be more softness elsewhere in the world than we might have anticipated a few months ago. That is not a particularly positive development.”
Stocks
22% of hybrid and electric car owners trading in this year opted to go for a SUV, up from 18.8% a year ago and 11.9% three years ago, as lower gas prices shift the breakeven point. The rate at which hybrid and EV car owners bought another green car fell below 50%.
Iron ore prices enjoyed their biggest one-day jump since October 2012, rising 5.9% to more than $54/metric ton – still near 10-year lows – after BHP Billiton (BHP) announced it’s slowing the pace of its expansion program. Analysts say the decision will lower BHP’s capex profile over the next few years to preserve free cash flow to support the dividend and balance sheet, and could deflect some of the negative public commentary about surplus supply.
Embattled Associated Estates agreed to sell itself to a property fund managed by Brookfield Asset Management (BAM) for $28.75/share in cash. The deal is expected to close in H2.
China said Thursday it will scrap export duties on rare earths and some metal products, including molybdenum, tungsten and some aluminum products, effective May 1. Beijing is attempting to boost exports, which fell 15% Y/Y in March. Currently, China levies export duties of 15-20% on rare earth products, while molybdenum products carry export duties of 5-20%.
The FCC recommended that the proposed Comcast (CMCSA)/Time Warner Cable (TWC) merger undergo a hearing, seen by some as a “deal-killer.” A hearing would put the merger in the hands of an administrative law judge, a strong sign the FCC doesn’t see the merger to be in the public interest.
Google (GOOG, GOOGL) launched its U.S. mobile service Wednesday with the help of network partners Sprint (S) and T-Mobile (TMUS). Google is pricing aggressively and providing free roaming for the service, which is known as Project Fi. Google charges $20 per month for voice, SMS, Wi-Fi tethering, and international roaming in 120+ countries; each GB of data (incl. roaming) costs an extra $10/month, and unused data is refunded.
The gulf coast will see $100B in new industrial projects, leading to “tremendous growth in the use of natural gas,” Kinder Morgan (KMI) CEO Richard Kinder predicts. The growth of gas production in the Marcellus and Utica shales has profoundly affected the flow of gas, which has historically flowed from the producing regions of Louisiana and Texas to markets in the northeast.
McDonald’s (MCD) rose yesterday post-earnings report, as investors focused on the May 4 unveiling of a turnaround plan. Restaurant analysts think the company’s channeling of Ray Kroc’s “take risks” mantra, could tip a more dramatic transition for the company than originally forecast.
Less than three years after striking a deal to buy Motorola Home for $2.35B, Arris (ARRS) announced it’s buying U.K. set-top hardware/software provider Pace (PCMXF) for $2.1B in cash and stock. Pace shareholders will own 24% of the post-merger company. The fragmented nature of the global set-top industry could help secure regulatory approval. The deal is expected to close in late 2015.
Shares of NCR (NCR) jumped in post-market trading following a report it’s exploring strategic alternatives such as asset divestitures, buybacks, and a dividend; a full sale of the company is a less likely option. The report comes two months after activist Jana Partners disclosed a 7.1% stake and ahead of NCR’s April 28 Q1 report.
Omnicare (OCR) closed solidly higher yesterday after gaining as much as 18% on reports it’s reportedly working with financial advisors seeking a buyer.
Petrobras (PBR) wrote down $2.1B in corruption-related charges during Q4 in the much-anticipated release of its first audited financial results since August. In addition, it booked a $14.8B impairment charge for 2014 after determining that assets were overvalued on its balance sheet. The company says it is still unable to complete and present Q3 audited results.
Trinity Industries (TRN) plunged 8.4% following a report that it’s ET-Plus guardrail system is involved in a federal criminal investigation.
Uranium stocks surged Wednesday after Japan approved the reopening of nuclear reactors: CCJ +3.6%, DNN +8.3%, LEU +11.4%, URRE +10.45%, UEC +20%, URZ +6%, URG +9.7%, UUUU +6.9%.
Vitamin Shoppe (VSI) spiked 12.6% yesterday after activist investor Carlson Capital disclosed a 5.3% stake.
China said it will open up bank card processing to foreign firms, sending shares of Visa (V) and MasterCard (MA) higher. Morgan Stanley thinks the firms could begin operations in China in late 2016 or early 2017, which could add $336M to $360M in revenue for Visa and $224M to $240M for MasterCard by 2021.