Stock Futures Flat Despite China and ECB Rate Move. Stocks to Watch: AAPL, AN, BAC, COST, FB, LTD, SNY, STO, TGT
Published on Thursday, 05 July 2012 08:16 Written by Christopher Lynn
New York, July 5th (TradersHuddle.com) – Stock futures were pointing to a flat open after a mixed overseas session. China and the ECB announced rate cuts to boost economic growth, but the recent rally anticipating central bank stimulus measures had the rate decision largely priced in. Participants were also waiting for key economic data, as retailers report their June same store sales.
In Asia, stocks closed flat after earlier gains fizzled ahead of the ECB policy decision, in which participants widely expect an interest rate to boost growth in the region. The Nikkei lost 0.27% in light trade, coming off a two-month high, while the Shanghai Composite lost more than 1%, with energy and material stocks weighing the most, amid ongoing demand worries. Earlier this morning, China’s central bank left its reserve ratio unchanged, but cut its key interest rate by 25 basis points to 3% and benchmark lending rate by 31 basis points to 6%.
In Europe, markets were moving to the upside, extending the recent strong rally, as participants reacted to China’s and the ECB rate move. The ECB cut rates by 25 basis points to 0.75%, as expected. The central bank also cut the Marginal Lending Rate by 25 basis points to 1.50% and Deposit facility by 25 basis points to 0.00%. Earlier, Spain had a bond auction that yielded mixed results and the Bank of England left interest rates unchanged at 0.5%, while it expanded its asset purchase program by 50 billion pounds to 375 billion pounds, as expected.
The euro was falling against the Dollar, trading just above the $1.25 level. Crude oil was gaining 0.52% to $88.12 per barrel. Also in the energy complex, natural gas was adding 0.09% to $2.901 per MMBtu. Gold was losing 0.33% to $1616.50 an ounce, and silver was dropping 0.44% to $28.155 an ounce. Meanwhile, copper was retreating 0.44%.
On economic news, at 8:15 am, June ADP private employment report will be available. At 8:30 am, the Labor Department will release its weekly jobless claims report, and at 10 am, the reading of the June ISM Services Index will be available. At 10:30 am, the natural gas inventories will be released and at 11 am, the crude oil and distillates inventory report from the Energy Department will be released. Throughout the day, same store sales from national retailers will be released.
Today’s Stocks to watch: Apple (NASDAQ: AAPL), AutoNation (NYSE: AN), Bank of America (NYSE: BAC), Costco Wholesale (NASDAQ: COST), the Facebook, (NASDAQ: FB), Limited Brands (NYSE: LTD), Sanofi SA (NYSE: SNY), Statoil ASA (NYSE: STO), and Target (NYSE: TGT).
Apple (NASDAQ: AAPL), the maker of iPads and iPhones, was climbing 0.43% to $602 in pre-market after topping $600 on Tuesday’s session for the first time since April. According to a report from the Wall Street Journal, the company was preparing to launch a smaller tablet computer later this year. The Journal said that the screen size would be around 7 inches in an effort to maintain its edge in an increasingly crowded market. According to the report, unnamed sources as saying that component parts manufacturers had been ordered to gear up for mass production of the tablets in September. On Tuesday, A U.S. judge blocked a request by rival Samsung Electronics to lift a ban on sales of its Galaxy Tab 10.1.
AutoNation (NYSE: AN), the auto and auto parts retailer, will be in focus after announcing that new vehicle unit sales in June 2012. For AutoNation's operating segments sales were 7,066 units for Domestic, up 25% versus June 2011; 11,579 units for Import, up 56% versus June 2011; and 4,217 units for Premium Luxury, up 20% versus June 2011.
Bank of America (NYSE: BAC) was climbing 0.50% to $8.10 in pre-market, ahead of key economic data in the U.S., which will provide the final look at the U.S. labor market ahead of tomorrow’s key employment report for the month of June. On Tuesday, the biggest U.S. banks submitted Living Wills to regulators, providing a road map for how the government could break up and sell off their assets if they are in danger of failing.
Costco Wholesale (NASDAQ: COST), the owner and operator of wholesale membership warehouses, will be in focus after announcing that same store sales for June climbed 3% versus consensus of 4%. Sales in domestic stores gained 3%, while international stores added 2%. The retailer reported net sales of $9.18 billion for the month of June, an increase of 6% from $8.69 billion during the similar period last year. Foreign currencies had a negative impact. Excluding these effects, comparable sales climbed 5% overall and 3% domestic and 8% international. Last month, the company announced that its was acquiring the 50% stake it didn’t own of Costco de Mexico from partner Controladora Comercial Mexicana in a transaction is valued at $10,650 million pesos or about $760 million.
Facebook (NASDAQ: FB), the social media Company, was climbing 0.16% to $31.25 after the stock lost 5.5% last week and dropped another 1% on Monday’s session. Mixed ratings from analysts following the expiration of the IPO quiet period and ongoing worries over its advertising revenue growth spurred a pullback from the $33 per share level. On Tuesday, the Microsoft news over the prospects of its online services unit has little impact on the stock price, which ended with a 1.4% gain.
Limited Brands (NYSE: LTD), the operator of specialty stores like Victoria Secret and Bath and Body Works, will be in focus after reporting that June same store sales jumped 7% versus consensus of a gain of 2.5%.
Sanofi SA (NYSE: SNY), the Paris, France based global pharmaceutical company, was falling 0.42% in pre-market. According to reports, the company was planning to cut between 1,000 to 2,000 jobs in France, in the latest cost cutting effort. The jobs targeted appear to be in the areas of areas of research, the manufacturing operations of the company's Pasteur vaccines unit and certain support operations at Sanofi's headquarters.
Statoil ASA (NYSE: STO), the Norwegian energy giant, was tumbling 3.7% to $23.72 in pre-market after the company was preparing to halt production on the Norwegian continental shelf following a notice of a lockout. The Norwegian Oil Industry Association announced that a lockout will be imposed on all members of Industry Energy, the Organization of Energy Personnel and the Norwegian Organization of Managers and Executives who are covered by the offshore pay agreements. The announced lockout will take effect on Monday 9 July. For Statoil, the shortfall in production will be around 1.2 million barrels of oil equivalent per day. The announcement of the production halt coupled with Iranian tensions on the rise was supportive of crude oil prices, which were extending their recent rally.
Target (NYSE: TGT), the discount retailer, was tumbling 3.3% to $55.86 after reporting that its June same store sales climbed 2.1%, below consensus of 2.8%. The company also reaffirmed its second quarter earnings guidance.
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