Morning Outlook

Wall Street is heading into the last week of July with mixed futures Monday. Equities are taking a pause ahead of another busy week of earnings and economic data, however today is shaping up to be a quiet day. So far in premarket trading, Dow Jones industrial average futures fell 8, or 0.1 percent, to 10,378. Standard & Poor’s 500 index futures fell 1.50, or 0.1 percent, to 1,099.10, while Nasdaq 100 index futures rose 0.50, or less than 0.1 percent, to 1,874.75. Lets see if the broader market can hold 1100 following the best 3 week period for the benchmark in nearly a year.

Stocks surged into the weekend with solid gains on Friday to cap off the second best week for equities in 2010. Following a divvy hike by blue chip bellwether General Electric Co (GE), the Dow Jones Industrial Average rose 102.32 points, or 1%, to 10,424.62. The S&P 500 gained 8.99 points, or 0.8%, to 1,102.66, while the Nasdaq Composite added 23.58 points, or 1.1%, to 2,269.47

Currencies and Commodities

The dollar fell 0.4785% at 87.045 yen in the currency market. The euro rose 0.1255% at $1.2926 while the pound appreciated 0.4153% to $1.5489. Gold lost 80 cents to $1187, while silver lost 0.36% at $18.04. Light, sweet crude lost 58 cents to $78.40 per barrel on the NYMEX; a 0.73% decline

Economic Calendar

10:00 AM
New Home Sales: Measure the number of newly constructed homes with a committed sale during the month of June. The level of new home sales indicates trends in the housing market. We saw a drop in existing home sales last week that wasn’t as large as expected. For June, new home sales are expected to be at a seasonally adjusted annual rate of 310,000 after plunging 33.3% in May to 300,000, which is the lowest level on record which dates back to 1963.

Morning Outlook

It is an earnings full premarket on Wall Street Friday, as big boys General Electric Co (GE) and Bank of America Corp (BAC) beat analyst estimates following Google’s miss on profit after the bell yesterday. The street will get a gauge on the consumer while headline inflation most likely continued to move down following the tumble in the Producer Price Index. Futures are heading higher before the bell as we wrap up the first week of Q2 earnings while the dollar is mixed. So far in the premarket, Dow Jones industrial average futures rose 16, or 0.2 percent, to 10,308. Standard & Poor’s 500 index futures advanced 3.10, or 0.3 percent, to 1,093.50, while Nasdaq 100 index futures climbed 4.00, or 0.2 percent, to 1,853.25.

Stocks recovered most of their losses on Thursday as the SEC and GS settled fraud charges to the sum of $550 million, which to my surprise was the largest fine ever to a Wall Street firm. The DJIA fell 7.41, or 0.07 percent, to 10,359.31. The Standard & Poor’s 500 index edged up1.31, or 0.1 percent, to 1,096.48, while the Nasdaq composite index declined 0.76, or 0.03 percent, to 2,249.08

On the Corporate Front

Bank of America’s second-quarter net income came in at $2.78 billion 27 cents per share, up 15 percent from $2.42 billion, or 33 cents per share a year ago. Analysts expected profit of 22 cents per share in the quarter.

GE saw a 4 percent decline in revenue, while quarterly net income rose 16 percent to $3.0 billion, or 28 cents per share, up from $2.6 billion, or 25 cents per share, a year earlier. The bottom line was helped by a $3 billion cut in expenses.

Currencies and Commodities

The dollar fell 0.8281% at 86.673 yen in the currency market. The euro appreciated 0.3431% at $1.2994, while the pound lost 0.6136% to $1.5367. Gold moved down $2.50 to $1205.80, while silver fell 0.50% at $18.27. Light, sweet crude came up 8 cents to $76.70 per barrel on the NYMEX; a 0.10% decline.

Economic Calendar

8:30 AM
Consumer Price Index (CPI): Measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly changes in the CPI represent the rate of inflation. The consensus is for a 0.1% decrease in June, with a 0.1% gain excluding food and energy. This follows a 0.2% drop in May for the second monthly decline in a row as a drop in energy prices weigh on the headline number.

9:55 AM
Consumer Sentiment: Consumer sentiment is directly related to the strength of consumer spending, by questioning 500 households each month on their financial conditions and attitudes about the economy. The consensus reading for July is 75, down from June’s final reading of 76 which was a 0.5 point gain. We haven’t really seen a decline in sentiment despite the softening economy. It is still more important to see consumers spend rather than what they say in a poll.

Market Summary

It was a huge day on the street Tuesday, with major averages gaining well over 2 percent. Rising commodity prices on economic optimism alongside tech and industrials led the market rally. The New York Federal Reserve regional manufacturing expanded has expanded for an 11th straight month in June.

The Dow Jones Industrials surged 213.88, or 2.1 percent, to 10,404.77. The broader Standard & Poor’s 500 index rose 25.60, or 2.4 percent, to 1,115.23, closing above its 200 day moving average, a very bullish sign following a spring of volatility and downward moves. Led by General Electric Co (GE) and Boeing Co (BA), all 57 industrial companies in the S&P 500 advanced. The tech heavy Nasdaq composite index led the way, up 61.92 points, or 2.8 percent, to 2,305.88.

The euro rose to $1.2332 in trading, while crude oil for July rose $1.82 to $76.94 per barrel on the NYMEX.

Economic Rundown

Dollar Dominates Price Level

Import prices fell 0.6 percent in May reflecting a steep 5.0 percent monthly decline in import petroleum prices. Excluding petroleum, import prices rose 0.5 percent following the same 0.5 percent rise in April. The rising value of the dollar points to easing pressure for import prices in the months ahead. The rising dollar is a big plus that will keep import prices down and help keep inflation in check.

For exports, the rising dollar points to greater gains as foreigners have to pay more for less. Export prices rose 0.7 percent to extend solid gains for a third month. As the dollar has strengthened, that could hamper our manufacturing base shipping outside dollar denominated regions.

Post Tax Credit Shows Weakened Housing Market

The homebuilders’ housing market index fell back a steep five points in June to 17 from a recovery peak of 22 of May. The biggest decline came in current single-family sales, down six points to 17 and pointing at trouble for May’s existing home sales report to be released next week in what will be a key report that will offer the most important look yet at the post-stimulus market.

Morning Outlook

It is Friday on Wall Street, and what a busy day it is. Two blue chips reported so far in the premarket and beat analyst’s views. We also are awaiting economic news on housing starts and consumer sentiment. A fully loaded Friday for sure, and the market is hot, advancing yesterday for the 6th consecutive session. The market is a funny thing, after all the good things I said that are coming into play this morning, futures are pointing lower. Dow Jones industrial average futures fell 4, or less than 0.1 percent, to 11,092. Standard & Poor’s 500 index futures declined 1.10, or 0.1 percent, to 1,207.30, while Nasdaq 100 index futures dropped 5.50, or 0.3 percent, to 2,029.25.

It is only a slight decline however, and another perfect red to green opportunity if we see some solid housing numbers. A rising greenback isn’t making things any easier for equities this morning.

On the Corporate Front

Multinational conglomerate General Electric Co (GE), whose capital arm’s holdings are still concerning, posted earnings from continuing operations of $2.4 billion or 21 cents per share; greater than the 16 cents per share forecast by analysts.1st quarter earnings for the company were down 30%, while revenue fell 5 percent to $36.6 billion. GE is another bellwether company who stated this morning that they are seeing encouraging economic conditions.

Bank of America Corp (BAC), free from the $45 billion owed to the government, reported 1st quarter earnings of $2.83 billion, or 28 cents per share. Analysts expected profit for the Charlotte based financial giant to tally a mere 9 cents per share. As we have seen from other major financial institutions, proprietary trading operations have made up for the weakness in the commercial banking sector.

Currencies and Commodities

The dollar fell 0.2050% at 92.8350 yen in the currency market. The euro depreciated 0.2925% at $1.3533 while the pound declined 0.2246% to $1.5461. Gold lost $4.50 at $1155.80, while silver dropped 0.40% at $18.36. Light, sweet crude for May delivery fell 94 cents to $84.57 on the NYMEX; a 1.10% decline

Economic Calendar

8:30 AM
Housing Starts: Measures initial construction of residential units for the month of March. Housing construction impacts so many other segments of the economy, from consumer spending on appliances and material to labor. The consensus figure is 605,000 units, up from 575,000 in February as housing starts fell 5.9% in the month.

9:55 AM
Consumer Sentiment: Consumer sentiment is directly related to the strength of consumer spending, by questioning 500 households each month on their financial conditions and attitudes about the economy. The consensus first reading for April is 75, up from the final March reading of 73.6.

Market Summary

A lower dollar helped energy and material stocks send the broader market higher on Friday, while solid economic data boosted market confidence. After stumbling mid week, equities look poised to continue their forward momentum next week as earnings season begins. Despite not being able to hold 11K at the closing bell Friday, the Dow Jones Industrial average advanced 70.28 points, or 0.6 percent, to close at 10,997.35. The blue chips are up 68 percent from their March 2009 lows. The Standard & Poor’s 500 index climbed 7.93, or 0.7 percent, to 1,194.37, while the Nasdaq composite index gained 17.24, or 0.7 percent, to 2,454.05.

The Dow climbed 0.6% for the week, with the S&P up 1.4% and the Nasdaq up 2.1%. Next week is the start of earnings season, with Alcoa Inc (AA) reporting after the bell on Monday.

Economic Rundown

Wholesalers increased their inventories by a larger-than-expected 0.6 percent in February, while sales at the wholesale level increased by 0.8 percent to $338.7 billion, marking the 11th consecutive monthly gain and the largest since October 2008. Sales rose a revised 0.9% in january. As sales rise alongside inventories, look for business to stockpile more orders and boost economic output. A good trend indeed!

Earnings Preview

Monday: Like we said earlier, AA will report after the bell. The aluminum maker is expected to report 10 cents a share in earnings, up from a loss of 60 cents a year ago. Revenue is supposed to jump 25% to $5.2 billion.

Tuesday: Intel Corporation (INTL) is expected to show a 37% increase in revenue to $9.82 billion and earnings per share of 38 cents, up 245% from a year ago.

Wednesday: Financial stud JPMorgan Chase & Co (JPM) is expected to report 63 cents a share in earnings, up from 40 cents a year ago.

Thursday: Google Inc (GOOG), interested to see what they have to say as shares are down 8.7% this year.

Friday: Earnings continue right through Friday, as Bank of America Corp (BAC) and General Electric Co (GE) will release results in the premarket. BAC is expected to report 9 cents a share in earnings, down from 17 cents a year ago. The stock is up 23 percent this year, while GE is up 22 percent.

Equity markets tumbled sharply on Thursday over concern of new financial regulation. The Dow Jones Industrials tumbled 213.27, or 2 percent, to 10,389.88. The broader Standard & Poor’s 500 index lost 21.56, or 1.9 percent, to 1,116.48. The Nasdaq composite index declined 25.55, or 1.1 percent, to 2,265.70.

Don’t worry republicans, if you dont like it you have your filibuster. It’s what you do best.

Morning Outlook

Following the sharp declines on Wall Street yesterday, futures look for the market to open decisively lower on Friday. By the closing bell, we could be in for the worst two day slide the market has experienced since June. Dow Jones industrial average futures fell 51, or 0.5 percent, to 10,287. Standard & Poor’s 500 index futures declined 4.60, or 0.4 percent, to 1,106.50, while Nasdaq 100 index futures dropped 3.00, or 0.2 percent, to 1,838.00. The dollar is mostly lower alongside commodities as equities tumble and demand is coming into the equation.

Google inc (GOOG) failed to enthuse investors following their earnings release after the closing bell on Thursday, while GE did the same this premarket. With such a run up the past 10 months, the news is going to have to be great, and its not. Now you also have a tightening of policy in China and possible new regulation of the major financial institutions. There are too many cards in play.

This is day 3 of the market correction. I knew it was going to happen. I was surprised that we had a nice rally the first half of the month, but yeah, see you at 9700

On the Corporate Front

General Electric Co. (GE) saw a 10 percent decline in revenue to $41 billion in the quarter. The hedge fund with a light bulb posted a 19 percent drop in earnings as net income tallied $2.94 billion, or 28 cents per share. That compared with $3.65 billion, or 35 cents, a year earlier. Analysts expected 26 cents per share in earnings.

Currencies and Commodities

The dollar fell 0.5419% at 89.94 yen in the currency market. The euro appreciated 0.2884% to $1.4124 while the pound lost 0.5496% to $1.6106. Gold fell $11 to $1102.92 an ounce, while silver declined 1.03% at $17.33. Light, sweet crude for March delivery lost 33 cents to $75.75 per barrel on the NYMEX; a 0.43% decline. Here we go down and test $75.

Time to look back on the year that was 2009, and the end of the first decade of the 21st century. For Wall Street, is was a decade most would like to forget. One thing we have definately learned is that despite the way 2010 starts, it is not a precurser to how it will end.

The benchmark Standard & Poor’s 500 is down about 10 percent over the last 10 years, which puts Wall Street on course to register its first-ever negative decade on a total return basis, even with dividends reinvested.

Even the Great Depression in the 1930s, which followed the stock market crash in October 1929 and spanned one of the worst periods for stock investing, turned out positive as dividends helped investors cushion some of the turbulence.

Below is a list of the 5 top performers and laggards for the blue chips.
LOSERS:

- General Electric (GE) -54.18 pct

- Merck & Co (MRK) -46.49 pct

- DuPont (DD) -39.94 pct

- Alcoa Inc (AA) -21.78 pct

- Coca-Cola Co (KO) -14.89 pct

WINNERS:

- United Technologies Corp (UTX) 155.49 pct

- Caterpillar Inc (CAT) 148.65 pct

- 3M Co (MMM) 127.68 pct

- Hewlett-Packard Co. (HPQ) 92.70 pct

- Exxon Mobil Corp (XOM) 86.56 pct

Where do we go from here? You have some swearing that this is a V shaped recovery, while others point out that the economic fundamentals don’t support that. The facts are that you have a ton of government monetary and fiscal stimulus in the system right now. The November unemployment rate stands at 10%.

The S&P 500 is up 66.5 percent from a 12-year closing low set on March 9. Its trading levels now imply a forward price/earnings ratio of 15.5. Such a huge run up begs the question where will the correction come. for 2009, the S&P 500 is up 24.7 percent — a gain that puts the broad market index on track for what could be its best year since 2003. An even stronger advance this week could put the S&P 500 in position for its best year since 1998. For 2009, the Dow is up 19.9 percent and the Nasdaq is up 45 percent.

Trading to start the year will be determined based whether or not the economy can grow without government support. I don’t know if it can. There are serious underlying problems in this economy, with the lack of serious consumer spending being number one. You have seen a generational shift, as people are saving more and spending less.

And then you have the X factor…Terrorism. All bets are off when it comes to economic direction when you throw that wild card in. In the best of economic times and can cause panic, as we stand now it could be a near fatal blow to the American way of life. This near Christmas tragedy is a reminder of all the nuts out there.

U.S. stocks jumped on Monday, extending gains from the previous week, on renewed risk-taking sentiment after the G20 pledged to keep economic stimulus in place until a recovery was assured. 29 out of the 30 blue chips rose, sending the Dow Jones Industrial Average to its highest close this year. The major averages all powered forward, shaking off the 10.2% employment number from Friday.

The Dow Jones industrial average jumped 203.52 points, or 2.03 percent, to 10,226.94; a 13 month high. The Standard & Poor’s 500 Index rose 23.78 points, or 2.22 percent, to 1,093.08, while the Nasdaq Composite Index gained 41.62 points, or 1.97 percent, to 2,154.06.

Morning Outlook

Following the massive rally yesterday on the street, futures point to a lower open. Dow futures are down 14, or 0.2 percent, at 10,178. Standard & Poor’s 500 index futures are down 2.00, or 0.2 percent, at 1,089.70, while Nasdaq 100 index futures are down 1.00, or 0.1 percent, at 1,765.50.

Once again there is a lack of economic reports to influence trading. Yesterday the weak dollar and activity from General Electric Co (GE) and Comcast Corp (CMCSA) added fuel to the buying. Im not sure what actually justifies such a run up, but this is a great market to trade, like we do all day in our chat room over at Investors Underground!

On the Corporate Front

Beazer Homes USA Inc (BZH) posted a quaretly profit of $33.8 million, or 84 cents per share. That compares with a loss of $473.9 million, or $12.29 per share, a year earlier. The results were from the company’s fiscal 4th quarter. Revenue fell 42 percent to $376.3 million from $649.8 million. The homebuilder beat the street on the top and bottom line, as analysts expected a loss of $1.24 per share on revenue of $338.3 million.

Currencies and Commodities

The dollar rose 0.03% at 89.952 yen in the currency market. The greenback stabalized against foreign currencies following yesterday’s big declines. The euro fell 0.15% at $1.4977 while the pound dipped 0.6093% to $1.6656 . After closing at an all time high, gold lost $2.50 to $1098.90 an ounce, while silver declined 1.57% at $17.29. Light, sweet crude for December gave up 27 cents to $79.16 per barrel on the NYMEX; a 0.34% decline.

Market Summary

U.S. stocks jumped on Monday, extending gains from the previous week, on renewed risk-taking sentiment after the Group of 20 pledged to keep economic stimulus in place until a recovery was assured. 29 out of the 30 blue chips rose, sending the Dow Jones Industrial Average to its highest close this year. The major averages all powered forward, shaking off the 10.2% employment number from Friday.

The Dow Jones industrial average jumped 203.52 points, or 2.03 percent, to 10,226.94; a 13 month high. The Standard & Poor’s 500 Index rose 23.78 points, or 2.22 percent, to 1,093.08, while the Nasdaq Composite Index gained 41.62 points, or 1.97 percent, to 2,154.06.

Corporate mergers and acquisitions also boosted the market, with General Electric Co (GE) and Comcast Corp (CMCSA) agreed on a valuation of around $30 billion for a joint venture between NBC Universal and Comcast.

Dollar Pegged Commodities Soar

Energy and mining stocks were nice performing sectors, as called in the morning outlook as the falling dollar shot spot prices higher. Gold closed at a record $1,101.40 an ounce in New York, up $5.70 from Friday, after hitting a new high of $1,111.70 an ounce earlier in the day. The gold bugs are loving this, as gold has gained more than 23% on the year. Benchmark crude for December delivery on Monday rose $2 to settle at $79.43 a barrel on the NYMEX

More Layoffs on the Street

Sprint Nextel Corp (S) is starting the process of eliminating up to 2,500 jobs in the current quarter in an effort to save at least $350 million annually. The company employs 42,000 workers. The No. 3 U.S. mobile service said many of the job cuts would happen by the end of December and would include jobs across the entire company

Electronic Arts Inc.’s (ERTS) will cut 1,500 jobs, most by March 31, in a restructuring aimed at trimming at least $100 million in costs. The company currently has about 9,000 employees.

In their quarterly report, EA experienced a loss of $391 million, or $1.21 a share, compared with a year-earlier loss of $310 million, or 97 cents a share. Adjusted revenue rose 2% to $1.15 billion; compared to analyst expectations of $1.14 billion.

Market Summary

Wall Street finished with modest gains Monday in a seesaw session that was heavily influenced the days economic data. Despite the positive signs, investor’s brought back some volatility to the market, dragging the blue ships down to nearly half of their earlier gains. The Dow Jones rose 76.71, or 0.8 percent, to 9,789.44. The broader Standard & Poor’s 500 index rose 6.69, or 0.7 percent, to 1,042.88, and the Nasdaq composite index rose 4.09, or 0.2 percent, to 2,049.20. The Russell 2000 index of smaller companies fell 0.37, or 0.1 percent, to 562.40. Doubting the strength in the financials seems to be the new in thing. Citigroup Inc (C), Bank of America Corporation (BAC), may even throw General Electric Co. (GE) in there with their financing arm.

The yield on the benchmark 10-year Treasury note rose to 3.42%; a 3 basis point gain. Benchmark crude for December advanced $1.13 to settle at $78.13 a barrel on the NYMEX.

Rundown of the Data

The Institute for Supply Management’s gauge of manufacturing activity grew in October at the fastest pace in more than three years. It was driven by businesses’ replenishing of stockpiles, higher demand for American exports and support from the government’s $787 billion stimulus program.
The ISM index shot up to 55.7 in October, the third straight reading above 50, which signals growth in the sector. It was the highest level since April 2006.

The Senate is expected this week to pass an extension of the credit that was originally going to expire Nov. 30. Buyers who sign a purchase agreement by April can now claim the credit. The extension is packaged at $10.8 billion.

The extension will apply to higher income buyers. Previously the credit was available to individual filers making $75,000 a year or less. For couples the limit was $150,000. The new income limit will be $125,000 for individuals and $225,000 for couples.

There’s also something in for move-up buyers. Previously you couldn’t claim the credit if you owned a home in the past three years. Now, if your last home was your primary residence for at least five years, you can claim $6,500 in credit if you buy a new home. The new house can’t cost more than $800,000.

In the meantime, the National Association of Realtors reported that pending home sales jumped 6% today to a reading of 110.1. That’s the highest level since December 2006. And it’s more than 21 percent above a year ago.