Stock Futures Lower amid Economic Fears. Stocks to Watch: AAPL, BBBY, CAG, FB, JNJ, JPM, RAX, RAD, SUNH
Published on Thursday, 21 June 2012 07:26 Written by Christopher Lynn
New York, June 21st (TradersHuddle.com) – Stock futures were pointing to a lower open after the Fed failed to provide aggressive measures to stimulate sluggish growth in the world’s largest economy. Weak data in Germany and China, coupled with new signs of stress in Spain’s bond yields sparked a risk aversion trade. Several key data points in the U.S. will come later this morning.
In Asia, most stocks fell after the Fed failed to impress investors that were expecting more aggressive stimulus and only extended its operation twist with another $267 billion and as China’s HSBC PMI slowed for the eight-straight month. The Nikkei climbed 0.82%, boosted by exporters, as participants shrug off the Fed policy statement and China’s weaken manufacturing survey. Meanwhile, the Shanghai Composite lost 1.4% amid worries over a hard landing in the country’s economy.
In Europe, markets were trading into negative territory as stocks give up gains from the prior session after Chinese and German weak data, and after the Federal Reserve failed to announce more aggressive stimulus to jump-start a sluggish U.S. economy. German Manufacturing PMI reading of 44.7 was below expectations and once more showed contraction, while the HSBC flash Chinese PMI was 48.1, showing contraction for the eight straight month. The debt crisis in Spain was also impacting trade, with the country’s short and medium term yields surging to a record high after a bond auction and on reports that the country will announce its bank stress tests results later this morning after the European close.
The euro was falling against the Dollar, but trading above the $1.26 level. Crude oil was losing 0.95% to $80.68 per barrel. Also in the energy complex, natural gas was jumping 2.07% to $2.569 per MMBtu. Gold was sliding 0.88% to $1601.50 an ounce, and silver was falling 1.6% to $27.935 an ounce. Meanwhile, copper was retreating 1.33%.
On economic news, at 8:30 am, the Labor Department will release its Weekly Jobless Claims report and at 9:00 am the Flash Manufacturing PMI reading will be available. At 10 am, May Existing Home Sales figures will be released, June Philadelphia Fed index reading will be available, and the May Leading Economic Indicators will be available. And at 10:30 am, the Energy Department will release its weekly natural gas inventory report.
Today’s Stocks to watch: Apple (NASDAQ: AAPL), Bed Bath & Beyond (NASDAQ: BBBY), ConAgra Foods (NYSE: CAG), Facebook (NASDAQ: FB), Johnson & Johnson (NYSE: JNJ), JP Morgan (NYSE: JPM), Rackspace (NYSE: RAX), Rite Aid (NYSE: RAD), and Sun Healthcare (NASDAQ: SUNH).
Apple (NASDAQ: AAPL), the maker of iPads and iPhones, was sliding 0.34% to $583.755 in pre-market, as the stock struggles as it gets closer to its calculated resistance of $588.50. Earlier in the week, the stock closed above its 50day moving average at the $578 level, but it now seems that it has settled in a tight trading range with a declining 50day moving average as support and the upper level of the range at the calculated resistance level.
Bed Bath & Beyond (NASDAQ: BBBY), the home furnishings retailer, will be in focus as the stock tumbled 10.6% in after hours as participants reacted negatively to the company’s quarterly results. The retailer beat earnings expectations by $0.05 per share but missed revenues consensus, while adding to its woes by issuing downside earnings guidance for its fiscal second quarter and reaffirming fiscal 2013 outlook. Canaccord Genuity lowered its target price to $71 from $73.
ConAgra Foods (NYSE: CAG), the maker of packaged foods like Chef Boyardee and Peter Pan peanut butter, will be in focus as the company is schedule to report its quarterly results later this morning. . On average analysts expect a profit of $0.50 per share on revenues of $3.38 billion. Last quarter, the company posted a 4.1% upside earnings surprise as it earned $0.51 per share.
Facebook (NASDAQ: FB), the social media Company, was unchanged in pre-market after losing nearly 1% in the prior session and failing to break above heavy resistance near the $32 per share level. On Tuesday, the company announced changes to improve its payment systems, launching an option of subscription payments for apps, while last week it unveiled a new advertising model that will be rolling out in the next few weeks. The stock has a record low of $25.52 that was hit on June 6th. According to reports, Facebook and Yahoo have asked a court for more time to reach a settlement on their patent suits.
Johnson & Johnson (NYSE: JNJ), the consumer health care products company maker of Tylenol and Sudafed, will be in focus after the Wall Street Journal reported that the company was near to reaching a settlement with the U.S. Justice Department over allegations it promoted anti psychotic drug Risperdal for unapproved uses. According to the Journal, the settlement will cost the company between $1.5 billion to $1.7 billion.
JP Morgan (NYSE: JPM) will be in focus in the session after Bloomberg reported that Blue Mountain Capital is helping the lender to unwind the London Whale’s position that generated the $2 billion trading loss. Yesterday, the stock rallied 3% on news that the bank has exited 65-70% of this position, reducing risk for further losses.
Rackspace (NYSE: RAX), the IT provider of hosting and cloud computing solutions, might see an upside bias after a Bloomberg article speculated that the company could be a potential takeover target for the likes of an AT&T (NYSE: T) or IBM. The biggest Amazon’s competitor on cloud competitor will likely fetch more than $60 per share, according to the article.
Rite Aid (NYSE: RAD), the drugstore chain operator, will be in focus after the company posted quarterly results that were inline with consensus, while raising fiscal 2013 earnings guidance to inline with consensus and lowering fiscal 2013 revenue guidance to inline with consensus. The company said that same store sales for the quarter increased 2.5% from the year ago period.
Sun Healthcare (NASDAQ: SUNH), the operator of nursing, long-term care and assisted living facilities, will be in focus following news that the company will be acquired by Genesis Healthcare for $8.50 per share in cash. The transaction is valued at about $275 million net of cash and debt acquired. Genesis is paying a 38.4% premium from SUNH yesterday’s close.
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