The Early Look

Early Analysis: Data in Focus

Good Morning

The Early Look

Data out on Tuesday confirmed that the U.S. economy is on a firm path to recovery as reports showed that manufacturing data neared a four and a half year high in September.

The nation’s flash PMI was 57.9 in September, unchanged from August’s reading. However, the U.S. housing market still appeared to be struggling as a separate report showed that home prices eased in July.

Economists are predicting that the U.S. economy made strong gains in the third quarter with GDP estimates ranging between 3-4 percent. Though the housing market remains a concern, many believe that falling prices could stimulate demand and help the sector correct itself.

Top News

In news around the markets:

Oil Prices Predicted To Decline Even More

Iran’s oil ministry website contradicted OPEC members’ predictions that oil prices will rebound in the coming days, saying that oil prices are expected to continue the downward decline through the remainder of the year. Mohsen Ghamsari, the director of National Iranian Oil Company, said he believes the current supply and demand climate indicates that prices will continue to drop, possibly as low as $90 per barrel.

Bill Ackman Threatens Allergan With Lawsuit

Activist investor William Ackman threatened to sue Allergan Inc. (NYSE: AGN) over the company’s proposed acquisition of Salix Pharmaceuticals Ltd (NASDAQ: SLXP). Ackman, who, through his hedge fund, owns around 10 percent of Allergan shares, says he will take legal action if the Salix take over goes through without a shareholder vote.

U.S. Launches First Airstrikes In Syria

On Tuesday, the U.S. began its first wave of airstrikes in Syria, backed by its Arab allies. The strikes are the first of many, according to the Pentagon, as the U.S. moves forward with a military offensive against Islamic militants. The 160 bombs and missiles released in Syria are said to have destroyed several key targets, including buildings used by ISIS as command centers and weapons storage.

Financial Institutions Try To Recover From Data Breach

Banks and credit unions have their work cut out for them as they scour financial transactions looking for fraudulent charges in connection with the Home Depot (NYSE: HD) data breach. The company revealed that 56 million credit cards may have been compromised, making this incident larger than Target’s 40 million card compromise over the holidays. Now, fraudulent charges stemming from Home Depot’s data breach ranging from prepaid cards to groceries are being detected across the U.S.

Asian Markets

Asian markets were mostly higher; the Shanghai composite rose 1.50 percent, the KOSPI was up 0.33 percent, the Shenzhen composite gained 1.41 percent and the Hang Seng index rose 0.35 percent. The NIKKEI was lower, down 0.24 percent.

European Markets

Europe’s markets were mostly lower with the exception for the CAC 40, which gained 0.04 percent. The FTSE was down 0.14 percent, the STOXX 600 fell 0.11 percent, the DAX lost 0.15 percent and the IBEX fell 0.81 percent.

Commodities

Energy futures were modestly higher on Wednesday; Brent futures gained 0.08 percent and WTI futures were up 0.20 percent. Gold rose 0.22 percent, but silver was down 0.28 percent and industrial metals were also mixed. Copper gained 0.18 percent and zinc was up 0.67 percent, but aluminum lost 0.51 percent.

Currencies

The euro was steady at $1.2851 and gained 0.04 percent against the pound, but lost 0.26 percent to the yen. The dollar was also lower against the yen, down 0.31 percent, and fell 0.45 percent against the Australian dollar.

Earnings

Notable earnings released on Tuesday included:

  • Carnival Corporation (NYSE: CCL) reported third quarter EPS of $1.58 on revenue of $4.95 billion, compared to last year’s EPS of $1.38 on revenue of $4.73 billion.
  • CarMax Inc. (NYSE: KMX) reported second quarter EPS of $0.70 on revenue of $3.60 billion, compared to last year’s EPS of $0.62 on revenue of $3.25 billion.
  • Bed Bath & Beyond Inc. (NASDAQ: BBBY) reported second quarter EPS of $1.17 on revenue of $2.94 billion, compared to last year’s EPS of $1.16 on revenue of $2.82 billion.
  • Steelcase Inc. (NYSE: SCS) reported second quarter EPS of $0.27 on revenue of $786.70 million, compared to last year’s EPS of $0.24 on revenue of $757.60 million.

#PreMarket Movers

Stocks moving in the #PreMarket included:

  • Newmont Mining Corp (NYSE: NEM) was up 0.88 percent in premarket trade after losing 4.19 percent over the past five days.
  • Apple Inc. (NASDAQ: AAPL) was down 0.38 percent in premarket trade after gaining 1.56 percent on Tuesday.
  • Facebook Inc. (NASDAQ: FB) fell 0.31 percent in premarket trade after rising 2.90 percent over the past five days.
  • Hewlett-Packard Co (NYSE: HPQ) was own 0.28 percent in premarket trade after falling 1.86 percent on Tuesday.

Earnings

Notable earnings expected on Wednesday include:

  • Accenture PLC (NYSE: ACN) is expected to report fourth quarter EPS of $1.10 on revenue of $7.62 billion, compared to last year’s EPS of $1.01 on revenue of $7.09 billion.
  • Jabil Circuit, Inc. (NYSE: JBL) is expected to report fourth quarter EPS of $0.00 on revenue of $3.82 billion, compared to last year’s EPS of $0.56 on revenue of $4.81 billion.
  • Paychex, Inc. (NASDAQ: PAYX) is expected to report first quarter EPS of $0.46 on revenue of $662.63 million, compared to last year’s EPS of $0.44 on revenue of $607.90 million.
  • KB Home (NYSE: KBH) is expected to report third quarter EPS of $0.40 on revenue of $646.76 million, compared to last year’s EPS of $0.30 on revenue of $548.97 million.

Economics

Wednesday’s economic calendar will be relatively light compared to Tuesday’s release of European PMI scores. Notable economic releases will include Germany’s Ifo business climate index, U.S. new home sales, Italian consumer confidence and U.S. oil inventory data.


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Good luck and good trading.

Benzinga News Desk

About the Author

David Moenning is the Chief Investment Officer at Sowell Management Services. Dave began his investment career in 1980 and has been an independent money manager since 1987. Thus, Dave has been live on the firing line and investing for a living for more than 29 years.