Following yesterday's sell-off on renewed credit concerns, futures indicate a flat start for the mkt, but have swung from positive, to negative, and back to even over the course of the morning. After beginning higher, futures sold off with Europe on a number of headlines out overseas. The LIBOR climbed for an 11th straight session to fresh seven-year highs, which continues to underscore the contagion effect of the subprime fallout. However, the overnight deposit rate for euros fell as low as 4.05% after the ECB added an extra 42.25 bln euros ($57.7 bln) to money mkts for one day. German manufacturing orders in July fell 7.1% m/m, the biggest drop since 1991, amid a decline in demand for ships, trains and airplanes. Also, the ECB left their interest rate unchanged at 4.0%, as expected, while the BoE also held their interest rate steady at 5.75%, as expected, and issued a statement saying it was "monitoring closely" the disruption in the financial mkts. However, futures began rallying off lows as Aug same-store sales data came in. Notably, Wal-Mart (WMT) and Target (TGT) reported better than expected growth, which is welcome news after competitor Costco (COST) disappointed a day earlier. Overall, the retail sales numbers are decent and don't show any signs of a significant pullback by the consumer. Economic news gave futures a final push as Q2 Productivity was revised higher, checking in at 2.6% (consensus 2.4%) from a previous read of 1.8%. Also, with high levels of resource utilization still a Fed focal point, Unit Labor Costs falling to 1.4% (consensus 1.5%) from a preliminary read of 2.1% ease wage-based inflation worries. Separately, Initial Claims fell 19K to 318K (consensus 330K), the first w/w decline in 5 weeks.
Dow futures are currently +24;
Nasdaq futures are currently +2.8;
S&P futures are currently +1.9.
Notable pre-market
Calls include
Upgrades: RTP and AAUK at Bernstein, MRO, TSO, SUN and VLO also at Bernstein, TMA at RBC Capital;
Downgrades: APLX at First Albany and Sun Trust, HLTH at Friedman Billings... On the
Earnings calendar, 10 cos are confirmed to report after the close including HOV... On the
Economic calendar, Aug ISM Services (consensus 54.5) will be released at 10:00ET.
Gapping down on weak earnings/guidance: JCG -7.4%, TIBX -6.8% (also Merrill Lynch downgrade), CHINA -5.4%, XCO -4.4% (gained 8.5% after hours), CPB -4%...
Other news: ARII, -7.4% (initiated with a Hold at Keybanc), AIRN -6.7%, (files for a 14 mln share common stock secondary offering), NFLD -6.1% (profit taking after run-up on 9/4), MGG -(files for a 8.5 mln share common stock secondary offering), HLTH -2.7% (downgraded to Market Perform at FBR).
Gapping up on strong earnings/guidance/same store sales: VOL +10.5%, SYPR +9.9%, ADCT +7.1%, PSUN +7.0%...
M&A: ALAB +45.4% (to be acquired by RBC Centura for $80/share)...
Other news: CRDC +11.6% (seeing continued strength following yesterday's ~50%+ move higher), XNN +10.4% (co receives $1.5 mln NightHunter order), CTIC +5.7% (co says discussions with FDA on pixantrone EXTEND trial provide path for NDA submission), BZP +4.9% (announces successful oil test on CX11-14D well), IFX +4.8% (upgraded to Buy at Dresdner), TASR +4.2% (says California Highway Patrol orders 1,659 Taser X26 electronic control devices), RTP +3.3% (stock traded higher overseas on talk that BHP might team up with RIO in a joint bid for RTP).
Gapping up: CRDC +13.5%, CTIC +5.4%, PLCE +4.7%, IFX +3.7%, RTP +3.2%, WMT +2.2%, SAP +1.5%, ASML +1.4%, NOK +1.1%...
Gapping down: TIBX -10.7%, CHINA -4.0%, AAPL -1.9%, HBC -0.9%, DB -0.8%.
