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U.S Market Update

Mon, Aug 10 2009, 17:47 GMT

TradeTheNews.com

- US Equity markets are digesting Friday's payrolls induced gains quite well, as stocks are slowly working up from opening losses to post marginal declines.  With no data on the docket lingering Q2 earnings results are the main focus.  Treasury prices are getting back a small portion of last week's declines but yields are consolidating at higher levels.  The 10-year remains above 3.8% while the long bond has dipped back below 4.6%.  Fed fund futures are recovering as well with the March contract now pricing in less than a 30% chance of a 0.75% fed funds rate in Q1 2010.  Those odds had spiked to above 50% post the payroll data on Friday.  Energy prices are posting modest gains and remain near early session highs while Gold has moved back below $950 as the Dollar continues to find some traction.

- Foodservice giant Sysco came in broadly in line with the Street in earnings this morning, with the company apparently dealing well with the broad downturn in consumer spending at restaurants. McDonalds reported July global comps at +4.3%, its weakest monthly showing since its +1.4% February comp. The company noted that its Asia sales were impacted by declines in China without elaborating on the point any further. Unemployment may have been down a hair on Friday but Spam is still a great way to beat the recession: Hormel Foods raised its full-year forecast thanks to stronger than expected results in the third quarter. HRL is up 7% on the guidance call, MCD is up 2% and Sysco is unchanged.
 
- In tech news, Microsoft officially announced the sale of its Razorfish online advertising unit to French ad giant Publicis for $530M. The move has been widely discussed over the last week, and seems to be a natural outcome of Redmond's shiny new pact with Yahoo. Dish Network faced a rough Q2, missing profit forecasts in a big way, although revenue met analysts' expectations and the company pulled of a stunning turnaround in subscriber additions. Investors seem to like the latter two points, sending shares of DISH up 10% in early trading. Priceline.com beat its Q2 top- and bottom-line estimates and guided higher than expected for next quarter. On the conference call executives said leisure travel demand was stronger than expected in the quarter, driven by lower prices.
 
- As noted during the European session, the overall theme in currency trading comes down to markets trying to determine whether the dollar is really decoupling from rising risk appetite. Markets continue to pick apart Friday's US employment reports as they await the results from the FOMC's policy meeting due Wednesday afternoon. The greenback for much of the morning grinded higher against its European pairs, with EUR/USD holding above the 1.4150 level - speculation there are plenty of euro sell stop lurking below this point. For the moment dealers are saying Middle Eastern names are buyers of euro ahead of this level. Just after 11AM ET Euro broke below that level electing some the purported sell stops down trading down to 1.4128.  The dollar is also shrugging off news that would have typically damaged sentiment, as the US Treasury projected that the current debt limit could be reached as early mid-October, citing a letter Secretary Geithner recently sent to lawmakers. Geithner wants Congress to increase the current $12.1T debt limit over the next two months, although the letter did not request a specific increase.
 

Published on  Mon, Aug 10 2009, 17:48 GMT