Today was not a good day to be in Sugar, Cotton, or Coffee futures, down 4.5%, 4.3%, and 2.4%, respectively. The US$ was moderately lower, losing ground against EUR as U.S. traders shrugged off losses overnight. USD/JPY fell 50 pips to 80.43, after touching a low of 80.28.
Crude Oil futures were up slightly. Natural Gas futures reclaimed and closed above the $2-handle – gaining 1.8% on the session. Heating Oil, though, suffered steep declines of 1.7%.
Earnings tomorrow morning will be the focus. Here’s a list of the most prominent companies reporting before the bell:
– Coca-Cola (KO)
– Goldman Sachs (GS)
– Johnson & Johnson (JNJ)
– Northern Trust (NTRS)
– State Street (STT)
– TD Ameritrade (AMTD)
– U.S. Bancorp (USB)
After the bell, traders will look to IBM, Intel (INTC), and Yahoo (YHOO) for more corporate earnings news.
Markets digested upbeat retail sales figures this morning that were followed by disappointing manufacturing and housing reports. Additional housing data will be out later this week – tomorrow (housing starts) and Thursday (existing home sales) – which will paint a more complete picture of the overall market.
In currency markets, EUR/USD is at session highs after concerns over Spain’s fiscal situation pushed the pair below 1.30 early in the session. A daily close on the pair below the Ichimoku Cloud at 1.3054 could indicate further selling pressure in the sessions ahead. Gold is weaker on the session as well, down 0.7% to $1,649.10 per ounce.
Natural Gas has regained a $2-handle, trading up 1.3% at $2.007. Crude Oil is down 0.4% to $102.47.
My thinking is that we are basically done trading for the day. All-in-all, markets will look towards earnings reports tomorrow morning before the bell and to the Europe situation.
Meanwhile, the economic picture in the U.S. looks a little better this morning. March retail sales showed a 0.8% increase, compared with expectations of 0.3% and following a 1% increase in February. According to the report, electronics, clothing, and furniture stores were among the main beneficiaries.
Equities are discounting the European situation, with the S&P and NASDAQ front-month futures trading higher by 0.6%, while the DJIA futures gained 0.7%. Crude oil futures are trading flat on the session, and Natural Gas futures gained 0.3%.
In conjunction with an emphasis on Spain, EUR/USD is lower in trade, falling below 1.30 for the first time since January. If EUR/USD closes below the Ichimoku Cloud – 1.3054 on the daily chart – it could spur additional selling in the pair.
In earnings news, Citigroup (C) reported this morning that sales and profits were lower than analysts forecast. Quarterly earnings per share were at $0.95, compared with expectations of $1. Despite this, C was able to keep expenses flat year-over-year. Tomorrow will be a blockbuster day for earnings, with Coca-Cola (KO), Goldman Sachs (GS), and State Street (STT) among the heavy hitters reporting before the bell.
– Under Armour (UA) price target moved to $106 from $104: Canaccord Genuity
– F5 Networks (FFIV) price target moved to $151 from $137: Mizuho
– Nokia (NOK) senior debt downgraded to Baa3 from Baa2: Moody’s
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In sum, today reversed most of yesterday’s rumor-inspired gains since, afterall the rumor proved false. S&P futures are closing near their lows of the day with traders removing positions before the weekend. S&P futures closed down 1.25%, with DJIA losing 1% as well.
Traders moved into the typical correlations with the decline in equities: Gold down 1.5%; Crude Oil down 0.75; US$ Index up 0.8%; 30-year bonds gained 0.8%; 10-year notes up 0.3%.
Looking ahead to next week, we’ll see earnings, earnings, and earnings. Citigroup (C) reports first thing Monday morning, with analysts expecting EPS of $1.01. Also, Monday morning, Charles Schwab (SCHW), Gannett (GCI), and Mattel (MAT) report.
Tuesday is when earnings really kick into gear with Coca-Cola, (KO), Goldman (GS), Harley-Davidson (HOG), Johnson & Johnson (JNJ), State Street (STT), U.S. Bancorp (USB), IBM (IBM), Intel (INTC), and Yahoo (YHOO) among a range of others.
Below, check out the weekly performance among equities, commodities, bonds, and currencies:
– Gold +1.6%
– 30-year Bond +1%
– 10-year Note +0.4%
– US$ flat
– EUR flat
– Crude Oil -0.4%
– DJIA futures -1.3%
– S&P futures -1.6%
– NASDAQ -2%
– Natural Gas -4.8%
This afternoon, markets will keep one ear open to Chairman Bernanke’s comments, due out at any minute. We do not expect any fireworks there – but it is certainly possible.
In markets, S&P and DJIA futures are down 1%, while the NASDAQ futures have lost 1.3%. For the first time since December, Apple (AAPL) is negative for the third consecutive day, down 2.2% and below $610. Financials are really taking a brunt of the losses. JPMorgan (JPM) and Wells Fargo (WFC) reported earnings that were better-than-expected on the headline, but markets are not taking it as good news. WFC is down 2%, JPM losing 2.6%, and BAC, which reports April 19, is off 3.7%.
Along with the decline in equities, the CBOE Volatility Index (VIX) is up 10% after a 14% decline yesterday. The US$ is also getting a bid from earlier levels, with EUR/USD falling from highs above 1.32 to 1.3080 currently. AUD, GBP, and NZD are also seeing similar declines against US$.
Treasury markets are seeing a bid – 30-year bond prices are up 0.8% and 10-year note futures are up 0.5%.
Chart Glance: CSTR based at a $40.58 early this year, before starting a rally. CSTR closed above the Ichimoku cloud on January 24, but did not indicate a strong buy until it broke above a downward trend line that connects highs from November 2010 with July 2011 and October 2011, on February 12.
A close above $67.56, the high from November 2010, is key to further upside movement.
Coinstar said increased revenue guidance was driven mainly by stronger than anticipated consumer demand at Redbox throughout the quarter. The company also raised its guidance for the full year 2012. Coinstar reported that popularity of movies, such as “Moneyball,” “Puss and Boots,” and “50/50,” as well as lower-than-expected card processing fees helped Q1 earnings.