Morning Market Update
Stocks that are expected to trade actively in U.S. markets on Wednesday include: Target Corporation (NYSE:TGT), Lowe’s Companies, Inc. (NYSE:LOW), Merck & Co., Inc. (NYSE:MRK), Toll Brothers Inc (NYSE:TOL), NetApp Inc. (NASDAQ:NTAP) and Saks Inc (NYSE:SKS).
• US: Dow Futures: 15373.00 (0.12%), S&P 500 Futures: 1669.50 (0.23%), NASDAQ Futures: 3032.50 (0.36%)
• Europe: CAC: 4023.97 (-0.30%), DAX: 8467.34 (-0.06%), FTSE: 6813.30 (0.15%)
• Asia-Pacific: Australia: 5165.40 (-0.28%), China: 2302.40 (-0.12%), Hong Kong: 23261.08 (-0.45%), Japan: 15627.26 (1.58%).
• Metals: Gold: 1390.30 (0.92%), Silver: 22.74 (1.25%), Copper: 3.40 (1.82%)
• Energy: Crude Oil: 95.90 (-0.29%), Natural Gas: 4.17 (-0.13%)
• Commodities: Corn: 6.38 (-1.66%), Soya Bean: 14.75 (0.92%), Wheat: 6.84 (-1.38%)
• Currency: EUR/USD: 1.2927 (0.16%), GBP/USD: 1.5089 (-0.43%), USD/JPY: 103.0400 (0.53%)
• 10 year US Treasury: 1.926% (-0.002)
Market and Economic News Update
U.S. stock-index futures rise: U.S. stock-index futures are pointing to a higher open on Wednesday, amid investor expectation that Fed Chairman is unlikely to signal a policy shift, and will maintain status quo on the quantitative easing program. The National Association of Realtors will release April existing-home sales data at 10 a.m. Eastern Time. Economists are expecting a seasonally adjusted annual rate of 5 million.
European markets mixed: European markets are mixed in trade, amid investor caution ahead of a testimony by Federal Reserve Chairman Ben Bernanke before the Joint Economic Committee of Congress. On the economic front, minutes from the Bank of England’s latest monthly Monetary Policy Committee meeting showed members voted unanimously to keep interest rates unchanged at a record low of 0.5 percent. The DAX (INDEXDB:DAX) dropped 0.1 percent to 8467.34. The FTSE 100 (INDEXFTSE:UKX) added 0.2 percent to jump to a new 13-year high, while the CAC 40 (INDEXEURO:PX1) lost 0.3 percent to 4023.97 points. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) dropped 0.2 percent.
Asian markets end mostly lower: Asian stocks finished lower on Wednesday, with the SSE Composite Index (SHA:000001) (Shanghai Composite Index) snapping a five-day winning streak amid weak commodity prices. The HANG SENG INDEX (INDEXHANGSENG:HSI) closed 0.5 percent lower at 23261.08 points. The NIKKEI 225 (INDEXNIKKEI:NI225) hit a fresh closing high of 15,627.26 after the Bank of Japan raised its economic outlook, and kept monetary policy steady. The S&P/ASX 200 (INDEXASX:XJO) index gave up gains made earlier in the session, hurt by data that showed Australian consumer confidence fell in May.
Stocks in News
Target Corporation (NYSE:TGT)
Target Corporation (NYSE:TGT) reported first-quarter earnings excluding items of 77 cents per share, compared to estimates of 85 cents per share. Sales increased 1 percent to $16.7 billion, trailing the $16.8 billion average analysts’ estimate. First-quarter sales at U.S. stores open at least a year fell 0.6 percent, missing analysts’ expectations for a 0.03 percent decline. For the full-year, Target Corporation (NYSE:TGT) expects adjusted earnings of $4.70 to $4.90 per share, down from its earlier forecast of $4.85 to $5.05 per share.
Lowe’s Companies, Inc. (NYSE:LOW)
Lowe’s Companies, Inc. (NYSE:LOW) posted first quarter profit of 49 cents per share, two cents below the consensus estimate. Revenue fell 0.5 percent to $13.09 billion, also short of analyst projections. Same-store sales for the quarter dropped 0.7 percent, while gross margins narrowed slightly to 34.8 percent from 34.7 percent, a year earlier. In addition, the home improvement retailer backed its view for the year.
Merck & Co., Inc. (NYSE:MRK)
Merck & Co., Inc. (NYSE:MRK) unveiled a $5 billion accelerated share repurchase program. The drug giant will buy back 99.5 million shares from Goldman Sachs at current market prices. The transaction is expected to be completed by November 25. Merck’s board had authorized additional buyback of up to $15 billion of its shares, and said that it would repurchase about $7.5 billion worth of its common stock over the next 12 months. Shares edged higher in early trade.
Toll Brothers Inc (NYSE:TOL)
Toll Brothers Inc (NYSE:TOL) reported second quarter profit of 14 cents per share, seven cents above the average analysts’ estimates. Revenue jumped 38 percent to $516 million, slightly above consensus of $515.5 million. The homebuilder said its average selling price of homes delivered increased 3.6 percent in the second quarter to $577,000 per home compared with the same period last year. Shares climbed 3 percent in pre-open session.
NetApp Inc. (NASDAQ:NTAP)
NetApp Inc. (NASDAQ:NTAP) posted fourth quarter profit of 69 cents per share, edging past estimates by a penny. Revenue increased 0.8 percent to $1.72 billion, in line with expectations. The data storage company forecast current quarter adjusted profit of 45 cents to 50 cents per share on revenue of between $1.48 billion and $1.58 billion. NetApp has also launched a quarterly cash dividend of 15 cents per share, and said it would cut 900 jobs as part of a restructuring program.
Saks Inc (NYSE:SKS)
Saks Inc (NYSE:SKS) has hired Goldman Sachs to explore strategic alternatives, including a possible sale of the company, the New York Post reported late yesterday. The retailer is considering selling itself to a private-equity firm in a leveraged buyout, the report said citing people with knowledge of the matter. Earlier this month, rival Neiman Marcus Group Inc. hired Credit Suisse Group AG to explore an initial public offering or sale. Shares of Saks Inc (NYSE:SKS) surged 20 percent in pre-market trading.
Economic Calendar for Wednesday, May 22, 2013:
07:00 A.M. ET: MBA Purchase Applications (May 17)
10:00 A.M. ET: Existing Home Sales (MoM) (April)
10:00 A.M. ET: Federal Reserve Chairman Ben Bernanke testifies before the Joint
Economic Committee of Congress.
10:30 A.M. ET: EIA Petroleum Status Report (Week ending Friday, May 17)
01:00 P.M. ET: Dallas Federal Reserve Bank President Richard Fisher speaks.
02:00 P.M. ET: FOMC Minutes