Asia: -2.7% to 19520. Hong Kong -1% to 28133. China -0.8% to 4442. India -0.8% to 27011.
Europe: London flat. Paris -0.3%. Frankfurt flat.
Futures: Dow -0.4%. S&P -0.3%. Nasdaq -0.5%. Crude +0.5% to $58.87. Gold -0.7% to $1202.10.
Ten-year Treasury Yield +6 bps to 2.04%
8:30 Initial Jobless Claims
8:30 Personal Income
9:45 Chicago PMI
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
Key earnings before the open
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Key earnings after the close
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U.S. stock-index futures post further losses and pointed to a negative day on Wall Street as investors evaluate a trio of economic reports and earnings. Weekly jobless claims dropped by far more than expected, while employment costs rose last quarter signaling tightening in the labor market. Consumer spending rose modestly in March, while inflation ticked up. There’s also another raft of corporate earnings to review today, including results from Exxon Mobil ( XOM), New York Times ( NYT), and Colgate-Palmolive (CL).
Global stock markets and the dollar were under pressure overnight, reacting to anemic U.S. growth and cautious comments from the Federal Reserve. “It looks like we could be finally be entering the correction that everyone has been waiting for,” said Tobias Britschof of Meriten Investment Management. Following Asia lower, European stocks declined for a third day, heading for their first monthly drop of the year. U.S. futures are also swimming in the red.
“I think they’re going to raise rates once in 2015, if only because they want to prove that they can do it,” Bill Gross said in an interview, stressing the Fed’s possible increase in June is definitely “off.” BlackRock (BLK), the world’s largest money manager, feels a September increase is more likely. Yesterday, the FOMC brushed off a Q1 slowdown as weather-related and transitory in its policy statement, but gave no indication whether a June rate hike is off the table.
Moody’s has slashed Greece’s credit rating deeper into junk territory, lowering its government bond rating to ‘Caa2’ from ‘Caa1’ and assigning it a “negative” outlook. The ratings agency said a balance of economic and financial risks in the country and upcoming debt repayments slanted it “to the downside.”
The Bank of Japan maintained its massive monetary stimulus in an 8-1 vote Thursday, holding off on additional easing for now, while pushing back the timeframe for its ambitious inflation goal. Inflation is now expected to hit the 2% target around the half year from April to September 2016, the BOJ predicted, watering down its previous forecast that stated it would be met around the current fiscal year.
The S&P 500 continues to trade near the upper end of 2015’s trading range. Either we bump our head on the ceiling… again, or finally break through and start the next rally leg. The challenge there is while we recently set new highs, they failed to trigger any big wave of breakout buying and short-covering. If we were coiled to spring higher, it would have happened by now. Eliminating the breakout scenario leaves us with more of the same – down or sideways. Either way, expect near-term weakness as we slip back into the trading range.
Nokia (NOK) takes a hit after posting a 61% profit drop at its core networks business due to lower software sales, higher costs and challenging conditions in Europe and Latin America. Nokia reported Q1 operating profit of €85M in its networks division, down from €216M a year earlier. Operating margin declined to 3.2% from 9.3%.
Sony (SNE) had another rough year in fiscal 2015 as it dealt with problems in its troubled smartphone business and a number of hacking attacks. The company posted a net loss of ¥126B, in line with guidance, but its sixth net loss in seven years. With CEO Kazuo Hirai spearheading a plan to rebuild the company around its Hollywood studio, videogame division and image sensor unit, Sony expects to post net income of ¥140B this year, although it still anticipates sales to slip.
Apple (AAPL) has limited the availability of the Apple Watch after a key component supplied by a Chinese company was found to be defective. The component, called the taptic engine, enables its haptic feedback feature and produces the sensation of being tapped on the wrist. As a result, Apple is now sourcing nearly all of its components from Japan’s Nidec, however, it will likely take time to speed up production.
Twitter (TWTR) disclosed it’s issuing up to 12.6M shares to buy e-commerce ad tech platform TellApart, based on a Tuesday close of $42.27. That would value the acquisition at $533M. Following an 8.9% drop in Wednesday trading, Twitter is now down 25% since its Q1 results first leaked out on Tuesday afternoon.
Salesforce (CRM) shares skyrocketed 11.6% yesterday on reports that the company had been approached by a potential acquirer and was working with bankers to field offers. With a current $51B market cap, only a handful of enterprise tech companies could afford to digest Salesforce. The short list includes Oracle (ORCL), Microsoft (MSFT), IBM (IBM), and just maybe SAP (SAP).
Royal Bank of Scotland (RBS) posted a larger-than-estimated first-quarter loss after it put aside £856M to cover charges for past misconduct and litigation. The banks was also hit by restructuring charges as it continued to shrink its trading division and global business. Compared with £1.2B in profit in the year-earlier period, the lender reported a net loss of £446M.