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Reports US

US stock market, economy and companies update (May 15, 2014)

May 15, 2014, Thursday, 15:38 GMT | 10:38 EST | 19:08 IST | 21:38 SGT
Contributed by Trade The News

- The slide in European and US equity indices has bottomed out mid-morning, although European indices are ready to close at their lows. Poor first-quarter European GDP reports and a surprise decline in the April US industrial production report obscured a couple of decent US datapoints and drove a very risk-averse atmosphere. As of writing, the DJIA is down 1.07%, the S&P500 is down 1.00% and the Nasdaq is down 1.30%.

- Just as more and more European leaders have been crowing about the end of the euro crisis, a European GDP and peripheral bond squall has smacked global markets pretty. Advance Q1 GDP data from many European states - and from the Eurozone as whole - missed expectations. Besides Germany and Poland, every European state that reported missed expectations and all the peripheral states reporting saw negative q/q growth. Then reports made the rounds just before the US open that Greece would retroactively apply a 33% tax on capital gains from certain bond sales. The combined effect was to drive up peripheral yields, send the 10-year bund yield momentarily below 1.30% and drive the benchmark 10-year UST to equal lows from last October around 2.47%. Yields have moved away from these levels mid-morning after the Greek Finance Ministry came out and denied the story was true.

- EUR/USD has made a round trip from 1.3715, down to 1.3650 and back to 1.3710 or so over the last eight hours. The US data was good: initial claims dipped below the 300K for its lowest reading since May 2007, the Philly Fed survey was strong (the employment component was excellent) and the Empire Manufacturing survey was very strong. However, the April industrial production report gave participants pause after weeks of analyst commentary to the effect that while the winter was bad, the spring would see a big bounce higher. The rise in the April CPI data was the greatest since June last year and added to March's 0.2% rise, although the y/y measure remains well short of Fed targets.

- After several quarters of offering weak guidance, Cisco is gaining this morning after its topped expectations in its fourth quarter and managed to offer first quarter guidance that was in-line with (EPS) or better than expected (revenue). Nevertheless, the company still saw declines in earnings and revenue in its fourth quarter even if it managed to top its own guidance and consensus targets. After gaining 6% in the post market, shares of CSCO are up 8% presently, at their highs.

- Walmart missed both earnings and revenue expectations in its first quarter and reported modest y/y declines in comps. Even worse, the retail giant offered second quarter guidance that was subpar. Executives blamed the weather for the underperformance, saying storms subtracted $0.03 from quarterly earnings. WMT is down 2%. Department store Kohls also missed expectations and reported negative comps in its first quarter. Shares of KSS are down 2% as well.

- It's ASCO season and a ream of abstracts have been released ahead of the conference, which takes place at the beginning of June. Pharma names large and small are moving on the data. Most notable is Bristol-Myers Squibb, as analysts express doubt over its Nivo+Yervoy combo after some tepid numbers. BMY is down 7%.

- Kindred Healthcare made an unsolicited offer to buy Gentiva Health Services for about $514 million in cash and stock. Kindred offered $7 a share in cash and $7 a share in stock, though it was also willing to pay all cash. At that price, the bid represents a 64 percent premium to Gentiva's closing price on Wednesday. Gentiva has already rebuffed a private offer from Kindred, but Kindred said it was ready to take the offer to shareholders directly.

***Looking Ahead***
- 11:30 (IL) Israel Apr CPI M/M: 0.7%e v 0.3% prior; Y/Y: 1.5%e v 1.3% prior
- 12:30 (CA) Bank of Canada Dep Gov Schembri speaks in Quebec
- 15:00 (AR) Argentina Apr National Urban CPI M/M: 1.9%e v 2.6% prior
- 15:00 (AR) Argentina Apr Wholesale Price Index M/M: No est v 2.4% prior; Y/Y: No est v 25.8% prior
- 18:00 (CL) Chile Central Bank Interest Rate Decision: Expected to leave Overnight Rate Target unchanged at 4.00%
- 19:00 (US) Fed's Yellen speaks to U.S. Chamber of Commerce in Washington

***Economic Data***
- (PT) Portugal Q1 Labour Costs Y/Y: 1.5% v 0.5% prior
- (RU) Russia Gold and Forex Reserve w/e may 9th: $471.1B v $471.6B prior
- (BR) Brazil May FGV Inflation IGP-10 M/M: 0.1% v 1.2% prior
- (PL) Poland Apr CPI Core M/M: 0.3% v 0.5%e; Y/Y: 0.8% v 0.8%e
- (PL) Poland Current Account Balance: +€0.5B v -€0.2Be; Trade Balance: +€0.5B v -€136Me
- (BR) Brazil Mar Retail Sales M/M: -0.5% v 0.0%e; Y/Y: -1.1% v -0.5%e; Broad Retail Sales Y/Y: 5.7% v -4.4%e
- (RU) Russia Advance Q1 GDP Y/Y: 0.9% v 0.7%e
- (US) May Empire Manufacturing: 19.01 v 6.00e
- (US) Apr CPI M/M: 0.3% v 0.3%e; Y/Y: 2.0% v 2.0%
- (US) Apr CPI Ex Food and Energy M/M: 0.2% v 0.1%e; Y/Y: 1.8% v 1.7%e
- (US) Apr CPI NSA: 237.072 v 237.095e; CPI Core Index: 237.163 v 236.914e
- (US) Initial Jobless Claims: 297K v 320Ke (lowest level since May 2007); Continuing Claims: 2.667M v 2.69Me
- (CA) Canada Mar Manufacturing Sales M/M: +0.4% v -0.3%e
- (US) Mar Net Long-term TIC Flows: $4.0B v $40.0e; Total Net TIC Flows: -$126.1B v +$175.9B prior
- (CA) Canada Apr Existing Home Sales M/M: 2.7% v 1.0% prior
- (PL) Poland Apr YTD Budget Balance (PLN): -21.3B v -17.B prior; Budget Balance Performance YTD: 44.8% v 36.8% prior
- (US) Apr Industrial Production M/M: -0.6% v 0.0%e; Capacity Utilization: 78.6% v 79.1%e; Manufacturing Production: -0.4% v +0.3%e
- (US) May Philadelphia Fed Business Outlook: 15.4 v 14.0e
- (US) May NAHB Housing Market Index: 45 v 49e
- (US) Weekly EIA Natural Gas Inventories: +105 bcf vs. +97-101 bcf expected range