Starbucks Corp, the coffeshop chain plans to close 600 stores,
or about 8.5% of its total stores, and eliminate as many as 12,000
jobs. The move is part of the coffee retailer's plan to turn around its
business, which has been hit by the consumer slowdown.
Apollo Group Inc Cl A upped its plan to buy back shares to $500M and reported quarterly earnings above analysts’ estimates.
Merrill Lynch downgraded the largest U.S. automaker General Motors Corporation to "underperform" from "buy" and lowered their price target for the automaker to $7 from $28 per share.
Pfizer Inc, the world's biggest drugmaker must defend a lawsuit
accusing it of misleading investors about the prospects of two chronic
pain relief drugs, Celebrex and Bextra, U.S. District Judge Laura
Taylor Swain said.
Stocks have climbed to their best levels of the afternoon. The Dow
Jones Industrial Average has poked its nose into the green, while the
S&P 500 ctrades just below the neutral line. The Nasdaq, though
well off its low, remains in the red.
Oil continues to trade above $142 per barrel.
«Euro
inflation is at about the same level as in the US at about 4%, and
long-term infl expectations are the same in the two areas also. More
flexible labour and product markets in the US may help the Fed contain
inflation, whereas the ECB faces an uphill struggle due to many
rigidities. Thus, the Fed's and the ECB's divergent policy paths may be
justified.»
Stocks have moved upward from their lows, but continue to trade with losses.
The recent weakness has been widespread with six of the ten economic sectors posting losses. The defensive-oriented utilities sector (+0.7%) is a relative leader, currently boasting the largest gain this session. Materials (-3.3%) is the worst performing sector. The sector's
recent declines have reversed its year-to-date advance. The sector is
now down 4.0% this year. Materials stocks such as Alcoa (-1.60) and Nucor (-6.96) are trading sharply lower.
The dollar fell to a two-month low against the euro as a report showed
U.S. companies shed more jobs last month than economists forecast,
reducing bets that the Federal Reserve will increase borrowing costs
next month.
The U.S. currency also weakened as economists predicted that the
European Central Bank will raise its main refinancing rate by a
quarter-percentage point tomorrow while the U.S. Labor Department will
say employers eliminated jobs in June for a sixth straight month.
``The pace of job losses has speeded up,'' said David Powell, currency
strategist in New York at Bank of America Corp. ``It points to the
downside risk of tomorrow's number. The dollar is likely to hit $1.60
once again over the coming days, if not tomorrow.''
Futures on the Chicago Board of Trade show a 20 percent chance the Fed
will raise its 2 percent target rate for overnight lending between
banks by a quarter-percentage point at its meeting on Aug. 5, compared
with 25 percent odds yesterday.
The European currency rose earlier after a newspaper reported that ECB
President Jean-Claude Trichet said there's a risk of inflation
``exploding'' if central banks aren't decisive and the European Union
said producer prices rose by a record 7.1 percent in May.
The Labor Department will report tomorrow that U.S. employers
eliminated 60,000 jobs including government positions last month,
according to the median forecast of 79 economists. The dollar weakened
1.2 percent against the euro and 1 percent versus the yen on June 6,
when the government reported that the U.S. lost 49,000 jobs in May.
Stocks have fallen deeper into negative territory. While the S&P
500 and the Dow Jones Industrial Average have losses near 0.6%, the
Nasdaq is down a more substantial 1.3%.
Some of the worst performing names in the Nasdaq include Microsoft (-0.50), which is allegedly seeking partners to chase Yahoo! (+1.07), and Intel (-0.41).
Stocks turn mixed late Wednesday morning as investors weighed volatile
oil prices, a weaker dollar and economic reports that showed improved
factory orders and worse private sector employment.
The Dow Jones industrial average and the broader Standard & Poor's
500 index both added a few points over 90 minutes into the session. The
tech-heavy Nasdaq composite lost 0.4%.
Stocks mustered gains Tuesday - with the Dow and Nasdaq recovering
after falling to bear market levels during the session - after GM
reported a June sales loss that was steep, but not as large as had been
expected. Stocks managed gains early Wednesday.
Oil prices volatile after report: U.S. light crude for August delivery
rose 33 cents to $141.30 a barrel on the New York Mercantile Exchange
after ending the previous session at an all-time closing high. Prices
are already up 50% this year in response to tight supply and tensions
in the Middle East.
Prices were choppy after the government said that crude supplies
dropped by 2 million barrels last week, topping forecasts for a drop of
1.2 million barrel. Gasoline stocks rose by 2.1 million barrels,
beating forecasts for a drop of 500,000 barrel. Distillates, used in
heating oil, rose by 1.3 million barrels versus forecasts for a rise of
2.4 million barrels.
Economic news: Factory orders rose 0.6% in May, after rising a revised
1.1% in April, the government reported. That was above economists'
forecasts for a rise of 0.5%, but was the weakest showing since
February, reflecting weaker demand for autos, heavy machinery and
steel.
Private sector employment slumped in June, with employers cutting
79,000 jobs from their payrolls after adding a revised 25,000 in May,
according to payroll services firm ADP. Economists expected employers
to cut 20,000 jobs, on average.
Corporate news: Dow component General Motors slipped 6% Wednesday
morning after Merrill Lynch downgraded it to "underperform" from "buy"
and cut the automaker's price target to $7 per share from $28 per
share. On Tuesday, GM said June U.S. sales fell 18%, versus forecasts
for a drop of 25%.
Microsoft has approached other media companies about the possibility
of partnering to buy Yahoo’s search business. News Corp. and
CNNMoney.com parent Time Warner were among the companies approached,
the paper said. In May, Microsoft abandoned its $47.4 billion bid for
Yahoo.
In other news, Starbucks said late Tuesday that it will close 600
stores, or 8.5% of its 7,100 stores, expanding an initial plan to close
100 stores. The coffee chain has been struggling amid the weak economy.
Shares tiptoed higher. Other markets: In currency trading, the dollar
fell versus the euro and the yen.
In the bond market, Treasury prices rose, lowering the yield on the
benchmark 10-year note to 3.97% from 4.00% late Tuesday. Bond prices
and yields move in opposite directions.
The stock market has been trading in a choppy manner, but is currently sporting a respectable gain for the session. Transportation components are hamstringing the Nasdaq. CH Robinson Worldwide (-1.06) and DryShips (-3.90), to name a couple, are weighing on the Index.
In a similar vein, the Dow Jones Transportation Average is currently down 1.5%, lagging the headline indices. The index is at its lowest point since mid-April.
Economist Steve Wood at Insight Economics: «Factory orders show
activity climbed in May for the third consecutive month. However, much
of these increases were due to higher food and energy prices.
Abstracting from the substantial volatility in recent months, new
orders are still climbing, albeit quite modestly. Thus production is
unlikely to grow fast».
Premarket sentiment has softened a bit, but futures continue to indicate a positive start to the trading session (S&P futures +2.8, Nasdaq futures +9.0).
Apollo Group announced its latest quarterly results, which topped earnings and sales estimates. Walgreen announced June sales climbed almost 10% year-over-year.
Mortgage applications for the week ending June 27 increased 3.6% versus
a 9.3% decline last week. The ADP Employment Change report showed a
loss of 79,000 jobs in June, compared with an expected loss of 20,000
jobs. Notably, the government's June unemployment rate will be
released tomorrow.
Economist Ian Shepherdson at HFE: « ADP report (-79K) is grim and if
the survey's recent relationship with the official payroll numbers
persists, you should expect a headline number near -200K tomorrow."
The
dollar traded near a two-month low against the euro before an industry
report that may show U.S. companies cut jobs in June, indicating the
economic slowdown is deepening.
The U.S. currency also weakened on speculation the European Central
Bank will start raising interest rates tomorrow, while the U.S.
government will probably say joblessness increased, prompting traders
to pare bets the Federal Reserve will lift borrowing costs.
``The risk environment isn't conducive for the dollar at the moment,''
said Kamal Sharma, a currency strategist in London at JPMorgan Chase
& Co. ``The ECB is likely to produce a quarter- point rise tomorrow
and the market is looking for more beyond that.''
Traders added to bets on higher euro-area interest rates as ECB
President Jean-Claude Trichet said inflation may ``explode'' if central
banks aren't decisive. The euro stayed stronger after the European
Union said producer prices in the region rose to a record 7.1 percent
in May.
EUR/USD: from $1.5785 gained to $1.5850 before fell to $1.5775. Later in the day the pare rebounded to session high GBP/USD: traded within $1.9930/70 before fell back to $1.9850, currently trading around $1.9907. Offers now seen
placed between $1.9925/35, stronger between $1.9945/55. USD/JPY: got support at Y105.80 before reached Y106.70.
US May Factory orders are due at 14:00GMT
02.07 11:30
US: Challenger reports 81,755 layoffs in June, down from 103,522 in May, but up sharply from 55,726 in June 2007.
The
dollar traded near a two-month low against the euro before an industry
report that may show U.S. companies cut jobs in June, indicating the
economic slowdown is deepening.
The U.S. currency also weakened on speculation the European Central
Bank will start raising interest rates tomorrow, while the U.S.
government will probably say joblessness increased, prompting traders
to pare bets the Federal Reserve will lift borrowing costs.
``The risk environment isn't conducive for the dollar at the moment,''
said Kamal Sharma, a currency strategist in London at JPMorgan Chase
& Co. ``The ECB is likely to produce a quarter- point rise tomorrow
and the market is looking for more beyond that.''
Traders added to bets on higher euro-area interest rates as ECB
President Jean-Claude Trichet said inflation may ``explode'' if central
banks aren't decisive. The euro stayed stronger after the European
Union said producer prices in the region rose to a record 7.1 percent
in May
ADP Employer Services will say U.S. companies cut 20,000 workers in
June, based on the median forecast in a Bloomberg News survey of
economists before the report at 8:15 a.m. in New York. After accounting
for government workers, the U.S. lost 60,000 jobs last month, a
separate Bloomberg survey showed before Labor Department figures
tomorrow.
The dollar weakened 1.2 percent against the euro and 1 percent versus
the yen on June 6 when the government reported the U.S. lost 49,000
workers in May.
``The concern is that the numbers could be worse than expected and the
risk is that we could see the euro move to $1.60 relatively quickly,''
Simon Derrick, chief currency strategist in London at Bank of New York
Mellon Corp., said in a Bloomberg Television interview. ``I'd be short
dollar going'' into the data. A short position is a bet a currency will
decline.
Futures on the Chicago Board of Trade show a 25 percent chance the Fed
will raise its 2 percent target rate for overnight lending between
banks by a quarter-percentage point at its meeting on Aug. 5, compared
with 38 percent odds a week ago.
Resistance 3: Y108.60
Resistance 2: Y108.40
Resistance 1: Y107.20
Current price: Y106.76
Support 1: Y105.00 Support 2: Y104.50
Support 3: Y103.80
Comments: Above Y106.50 and Y107.20
resistance comes at yesterday's peak of Y108.20. Rise above may extend Y108.50/60. Below Y105.00, support is around
Y104.50. Lower correction may reach Y103.80.
FTSE-100 back in the black, with AstraZeneca a top gainer after a US district court judge ruled in favour for its patent for bipolar disorder treatment Seroquel. However, housebuilders taking the brunt of the selling, with Barrat Developments, Persimmon and Bovis Homes all lower after Taylor Wimpey fails to raise funds. M&S is also a notable decliner on sales profit warning. CAC-40 is up 0.77%, Xetra-DAX up 0.66% and FTSE-100 up 0.71%.
Resistance 2: Chf1.0300
Resistance 1: Chf1.0220
Current price: Chf1.0221 Support 1: Chf1.0130
Support 2: Chf1.0020
Support 3: Chf0.9950
Comments: Resistance comes at former support around Chf1.0220,
break above to open a way to Chf1.0350. Further level comes on Chf1.0430. The
nearest support at today's Chf1.0130
(50% Chf0.9650-Chf1.0620) and Chf1.0020 (61.8% Chf0.9650-Chf1.0620).
Resistance 3: $2.0190
Resistance 2: $2.0020 Resistance 1: $2.000
Current price: $1.9849 Support 1: $1.9850
Support 2: $1.9800 Support 3: $1.9660
Comments: The nearest support is $1.9850 and $1.9800 (50% of the resent rally). A break under will open the way to $1.9670/60 (June 25 low) and Monday low at $1.9580. Resistance spotted at $1.9995/00 (upper bound of the rising channel since June 13). A break above the latter level to open the way for a test of $2.0000/20 area.
Resistance 3:$1.5950
Resistance 2: $1.5900
Resistance 1: $1.5840
Current price: $1.5786
Support 1: $1.5720
Support 2: $1.5630 Support 3: $1.5460
Comments: The nearest resistance
comes – at June highs $1.5830/40. Stronger level is around $1.5900. The closest supports are $1.5720and $1.5630. The stronger one comes at on $1.5540 with a break under will open the
way to $1.5460 (last week low).
The
dollar fell to the lowest in more than two months against the euro
before an industry report today that economists say will show U.S.
companies cut jobs in June for the first time in four months.
The U.S. currency was also near a three-week low versus the yen before
government data tomorrow that may show employers including the
government reduced staff numbers in the world's biggest economy for a
sixth straight month, prompting traders to pare bets the Federal
Reserve will raise interest rates.
``Buying the dollar now seems to be the wrong move,'' said Masanobu
Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda
Harlow Ltd., Japan's largest currency broker. ``Weak numbers from the
labor market are sure to push the dollar lower. You can't deny that
there are sufficient reasons to worry that the U.S. economy will slow.''The Australian dollar approached a
25-year high after retail sales grew at the fastest pace in six months,
adding to speculation the central bank will increase borrowing costs.
EUR/USD: from $1.5785 gained to $1.5850 before fell to $1.5820. GBP/USD: traded within $1.9930/70 before fell back to $1.9900, currently trading around $1.9907. Bids noted toward $1.9880, a
break below to open a deeper move toward $1.9850/40. Offers now seen
placed between $1.9925/35, stronger between $1.9945/55. USD/JPY: got support at Y105.80 before reached Y106.30.
Eurozone May industrial PPI is due at 0900GMT and is
expected to rise 0.8% m/m, 6.7% y/y. At 0910GMT, ECB Executive Board
member Gertrude Tumpel-Gugerell is due to give a speech on "The future
of cards and payments," in London.
Nikkei 225 extending its losing run to ten
sessions - its wort run since 1965. The Nikkei was down 178.63 points,
or 1.31%, to stand at 13286.37. The broader-based TOPIX was down 18.92
points at 1301.15.
"The data (industrial orders) is likely to reinforce the ECB's
belief that the euro zone's economy is fundamentally sound and that it
can press ahead with raising its key interest rate from 4 percent to
4.25 percent at its 3 July meeting to try to ensure that current
elevated inflationary levels and pressures are not sustained over the
medium term."
However, traders say volumes are muted ahead of the
jobs data due Thurs and Friday's holiday. The S&P Sep contract was
last down 2.0 points at 1284.20, with the Nasdaq Sep contract 2.75
points lower at 1866.25.
Resistance 3: Y108.40
Resistance 2: Y107.20
Resistance 1: Y106.50
Current price: Y105.89
Support 1: Y105.00 Support 2: Y104.50
Support 3: Y103.80
Comments: Above Y106.50 and Y107.20
resistance comes at yesterday's peak of Y108.20. Rise above may extend Y108.50/60. Below Y105.00, support is around
Y104.50. Lower correction may reach Y103.80.
Resistance 3: Chf1.0350
Resistance 2: Chf1.0300
Resistance 1: Chf1.0220
Current price: Chf1.0207 Support 1: Chf1.0130
Support 2: Chf1.0050
Support 3: Chf0.9950
Comments: The
nearest support at resent lows Chf1.0130
(50% Chf0.9650-Chf1.0620) and Chf1.0050.Resistance comes at former support around Chf1.0220,
break above to open a way to Chf1.0350. Further level comes on Chf1.0430.
Resistance 1: $1.9960
Current price: $1.9941 Support 1: $1.9800
Support 2: $1.9660
Support 3: $1.9580
Comments:
cable posted serious gains. The pare retains positive mood and trades near resistance spotted at $1.9960. A break above the latter level to open the way for a test of $2.0000/20 area.The nearest support is $1.9800 (50% of the resent rally). A break under will open the way to $1.9670/60 (June 25 low) and Monday low at $1.9580.
Resistance 3:$1.5900
Resistance 2: $1.5840
Resistance 1: $1.5820
Current price: $1.5806
Support 1: $1.5720
Support 2: $1.5650 Support 3: $1.5460
Comments: The nearest resistance
comes at $1.5820,
then – at June highs $1.5840. Stronger level is around $1.5900. The closest supports are $1.5720and $1.5630. The stronger one comes at on $1.5540 with a break under will open the
way to $1.5460 (last week low).
