Ahead of the Bell: Dow futures are trading up 17 points and S&P futures are trading up 2 points indicating that the rally that took major indexes to record highs would continue as investors continued to digest corporate earnings results. Investors await industrial-output and housing data before the Federal Reserve’s policy meeting starting tomorrow. Fed policy makers meet Tuesday and Wednesday when they will consider when to start trimming $85 billion of bond purchases. It is widely expected the central bank will not begin tapering it stimulus until March.
- On the economic calendar today, September industrial production will be released before the market opens and a 0.4% increase is expected, unchanged from the month prior. September pending home sales data will be issued after the market opens and the data is forecasted to be flat (0.0%).
- The dollar is up against the euro and down against the Japanese yen and British pound. Gold is trading at $1,351. Crude oil is currently trading at $97 a barrel.
- Last week, stocks climbed to new record highs following last week's legislation to avoid a U.S. debt default and end a partial government shutdown, as well as increased speculation the Federal Reserve will delay scaling back its stimulus for several months. For the week, the Dow rose 1.1% and the S&P 500 gained 0.9 %. On the economic front, new orders for long-lasting U.S. manufactured goods outside of transportation equipment fell in September, possibly due to uncertainty over government spending. U.S. consumer sentiment dropped in October to its lowest level since the end of last year as consumers worried about congressional dysfunction. According to Thomson Reuter’s data, based on results so far and estimates for companies still to report, S&P 500 earnings are expected to have risen just 3.4% in the third quarter, with 69% of companies reporting earnings above analysts' expectations. Revenue growth is seen at 2.2% for the quarter, with just 54.2% beating sales estimates.
- The week ahead, a slew of earnings from a number of S&P 500 companies and the Federal Reserve meeting are expected to keep investors busy. Stocks are expected to rally and the bull market is anticipated to keep going higher as the Federal Reserve is not likely to taper its stimulus program soon. 3rd quarter earnings are forecasted to be better than anticipated, despite the economic data showing signs of a slowdown in growth as a result of the government shutdown. The Fed is scheduled to begin is two-day FOMC policy meeting on Tuesday and conclude on Wednesday afternoon. Chairman Ben Bernanke is expected to hold a press conference after the meeting and the central bank is not expected to make any policy changes until March or June of 2014 thanks to the debacle in Washington which has stunted growth. Third quarter earnings season continues and thus far, technology and energy have been the best performing sectors. According to Thompson Reuters, of the 243 companies that have reported earnings, 68% have beaten on earnings estimates and 54% have beaten on revenue estimates. This week, about 24% of S&P 500 companies are scheduled to report earnings, including names like Exxon Mobile, Chevron, Valero, General Motors, Visa, Apple and Facebook. The economic data this week is expected to be in line with forecasts. On the economic calendar this week is pending home sales, regional Fed data from the Dallas and Chicago Federal Reserve banks, producer price index & consumer price index, a first reading on 3rd quarter GDP, consumer confidence and a number of treasury auctions. However, the weekly jobless claims data will be in focus as there was a spike in claims numbers last week due to the lock down in Washington. Investors will be watching if the impact from the impasse continues to affect the labor market. Also, retail sales for September will be out on Tuesday and market participants will be looking for the impact from the government shutdown on the sector.
- On CNBC today, Charles Kantor, Neuberger Berman Portfolio Manager, talked about the challenges the Federal Reserve faces since the agency did not taper its $85 billion a month bond-buying program last month. Kantor is concerned with how the Fed will meet its long term goal without change. He is also worried about how the central bank will use its mulligan as financial markets have low expectations. Revenues and earnings will be in line with expectations and equities remain the best option among choices of asset classes to invest. Kantor added, the markets and the Federal Reserve have a challenge now as the markets have priced in that the Fed will not scale back its asset purchases until the beginning of 2014.
- Have a great day!
Friday’s Close
DJIA up 61.07 pts/+0.39%/ 15,570.28
S&P up 7.70 pts/+0.44%/ 1,759.77
Nasdaq up 14.40 pts/+0.37%/ 3,943.36
Monday’s Futures
Dow Futures up 17.00 pts/+0.11%
S&P Futures up 2.50 pts/+0.06%
Nasdaq Futures up 5.50 pts/+0.15%
Overseas Markets
FTSE -0.04%
CAC 40 -0.47%
NIKKEI 225 +2.19%
HANG SENG +0.48%
Overseas: World stock markets are mixed today after stocks in the US climbed to all-time highs last week on speculation the Federal Reserve will maintain its stimulus.
Economic Reports: Industrial Production (0.4% expected) at 9:15 a.m.; Pending Home Sales (0.0% expected) at 10:00 a.m.
Top Headlines:
- Cable television network AMC Networks (AMCX) said it agreed to buy Chellomedia, the international content unit of Liberty Global Inc <LBTYA.O>, for about $1.04 billion
- According to sources, The National Football League is studying whether to auction the media rights for a new slate of regular-season games, a process that has ignited fierce bidding wars.
- Reports indicate, Consol (CNX)will sell five mines for $850m in cash, $184m in value of future payments to Murray Energy. The deal also includes $2.4B in liabilities.
- Vivendi SA, the French conglomerate selling assets to refocus on media businesses, is in talks with Lagardere SCA to find an agreement for the ownership structure of their jointly owned television unit Canal Plus France
Commodities/Currency:
Gold:down $0.70 to $1,351.80
Oil:down $0.15 to $97.70
EUR/USD 1.3798 -0.0001
USD/JPY 97.6375 +0.0825
GBP/USD 1.6185 +0.0012
Volatility Index (VIX): As of the close of business Friday, October 25, 2013 the VIX is down 0.11 at 13.09.
Companies Reporting Quarterly Earnings:
Merck reports Q3 adjusted EPS 92c, vs. Est. 88c and Q3 revenue $11.0B, vs. Est. $11.12B
Burger King reports Q3 adjusted EPS 23c, vs. Est. 21c and Q3 revenue $275.1M, vs. Est. $266.59M
Armstrong World reports Q3 adjusted EPS 87cc, vs. Est. 86c and Q3 revenue $729.7M, vs. Est. $744.17M
Roper Industries reports Q3 adjusted EPS $1.42, vs. Est. $1.45 and Q3 adjusted revenue $837M, vs. Est. $862.54M
Today’s Opening and Closing Bells:
Charles Schwab Investment Management Visits the New York Stock Exchange to Celebrate the Recent Launch of its Schwab Fundamental Index* ETFs. Marie Chandoha, President and CEO, Charles Schwab Investment Management will ring the opening bell.
Owens Corning Celebrates 75th Anniversary. Chairman and CEO Michael H. Thaman will ring the closing bell.
Giuseppe Montefinese
Corporate Actions & Market Watch
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