Overnight U.S. Stock News

• June S&Ps this morning are trading -5.80 points on negative news from Merrill Lynch and on continued earnings worries. The US stock market yesterday rallied sharply and closed at 1-week highs (Dow +2.08%, S&P 500 +2.27%, Nasdaq Composite +2.80%).

• Bullish factors for stock prices yesterday included (1) the 5.8% gain in Intel as the world's biggest chipmaker said Q2 sales will be $9 billion to $9.6 billion, ahead of street estimates of $9.25 billion, (2) the 6.7% gain in JPMorgan Chase after the bank reported Q1 profit of 68 cents a share, beating analysts' estimates of 64 cents a share despite $5.1 billion of writedowns and provisions linked to the collapse of the subprime mortgage market and bad home-equity loans, (3) the 4.3% rise in Wells Fargo after the bank said it earned $2 billion or 60 cents a share in Q1, topping analysts' estimates of 57 cents, (4) the 3.7% gain in CSX as the 3rd largest US railroad said Q1 profit increased to 85 cents a share, beating analysts estimates of 74 cents, and (5) the 7.2% gain in Monsanto, the world's biggest seed producer, after Goldman Sachs raised their 2008 and 2009 earnings estimates for the company and lifted their share-price target to $140 from $135.

• Bearish factors for stock prices yesterday included (1) the greater than expected drops in housing starts and building permits in March to 17-year lows, (2) the Fed's Beige Book that stated that the economy "weakened" since February, (3) the 6.8% drop in SLM as the largest US educational lender was cut to "underweight" from "equal-weight" by Morgan Stanley saying "the market is underestimating the double impact on earnings from reductions in government subsidies and disrupted capital markets," and (4) the 29% plunge in Talbots as the women's clothing store chain said HSBC Holdings Plc and Bank of America are canceling their letters of credit to the company.

• Merrill Lynch (MER) is down 2% in European trading this morning after reporting a loss of $2.20 per share, which was larger than the market consensus of $2.06 per share and was the third consecutive quarterly loss.

• Motorola (MOT) is down 1% in European trading this morning on negative Nokia earnings news. Nokia today reported net income of 1.22 billion euros, which was less than the market consensus of 1.38 billion euros. Revenue of 12.66 billion euros was below the analyst consensus of 12.75 billion euros.

• US Steel (X) this morning is down -0.3% after Citigroup cut its rating to "hold" from "buy" after US Steel reached the Citigroup's stock target price and as the analyst said that margins were "likely to lag."

• International Business Machines (IBM) rallied over 3% in after-hours trading yesterday and is up +2.3% this morning as the world's biggest computer company said Q1 profit climbed to $1.65 a share, topping analysts' estimates of $1.46 a share. IBM raised its 2008 EPS guidance to $8.50 a share from $8.25 in February.

• Pfizer (PFE) this morning reported Q1 EPS ex-items of 61 cents, which was below the analyst consensus of 66 cents.

• SLM Corp (Sallie Mae) (SLM) today reported a loss of 28 cents, which was less than the analyst consensus of 34 cents.

• United Technologies this morning reported Q1 EPS ex-items of $1.05, which was stronger than the market consensus of $1.00.

• CIT Group (CIT) this morning announced that it will cut its dividend and sell $4.6 billion in asset-based loan commitments.

• Altera (ALTR) surged 10% in after-hours trading yesterday as the 2nd biggest maker of programmable chips said Q2 sales will rise 1 to 4% to as much as $349.5 million, ahead of analysts' projections of $337.1 million.

Today's U.S. Market Focus

• June 10-year T-notes this morning are trading -3 ticks on continued downside momentum from yesterday. June T-notes yesterday sold off after mid-morning and closed down -26 ticks at a 1-1/4 month low. Bearish factors for T-note prices yesterday included (1) the sharp rally in the equity market which took away the flight-to-safety trade, (2) the hawkish comments from Philadelphia Fed President Plosser that interest rates are "currently accomodative" and that "inflation is a concern and that concern hasn't gone away," (3) inflation concerns from the Fed's Beige Book that stated "all districts continue to report increases in input costs and output prices," and (4) comments from San Franciso Fed President Yellen that leaving interest rates low for too long "could lead to higher inflation expectations and an erosion of our credibility." Bullish factors for T-note prices yesterday included (1) the greater than expected drops in March housing starts and building permits to 17-year lows (housing starts -11.9% to 947,000 versus expectations of -5.2% to 1.010 mln and building permits -5.8% to 927,000 versus expectations of -1.4% to 970,000), and (2) the statement in the Fed's Beige Book that the economy "weakened" since February.

• The dollar/yen is up +0.50 yen this morning and the euro/dollar is down -0.21 cents. The dollar index yesterday sold off and closed at a 4-week low. The euro rallied yesterday to an all-time high against the dollar at $1.5979. Bearish factors for the dollar yesterday included (1) the greater than expected drops in US housing starts and permits in March to 17-year lows, increasing odds of further Fed rate cuts, (2) the larger than expected rise in Euro-Zone CPI for Mar to a 15-3/4 year high, further diminishing hopes of ECB interest rate cuts, and (3) the Fed'd Beige Book that stated that "Economic conditions have weakened since the last report" and have been hurt by "anemic" real estate markets and a slowdown in consumer spending.

• May crude oil prices this morning are trading +5 cents a barrel and May gasoline is trading +2.23 cents a gallon. May crude oil prices yesterday rallied to an all-time high of $115.21 per barrel and closed up +$1.14 a barrel at a record high close. May gasoline closed up +5.80 cents a gallon and posted an all-time high of $2.9457 per gallon. Bullish factors for crude oil prices yesterday included (1) the unexpected drop in crude oil inventories and bigger than expected decline in gasoline stockpiles in yesterday's DOE inventory report (crude oil -2.36 mln bbl versus expectations of +1.75 mln bbl and gasoline -5.52 mln bbl versus expectations of -1.8 mln bbl), (2) the -1.6 drop in the refinery capacity rate to 81.4%, the lowest since Oct of 2005, as refiners have no incentive to process crude oil into gasoline as demand is anemic and refinery margins are poor, and (3) the ever-slumpimg dollar. Bearish factors for crude oil prices yesteday include (1) the unexpected gain in distillate inventories in the latest DOE inventory report (distillates +52,000 bbl versus expectations of -1.5 mln bbl), and (2) US recession fears as housing starts and permits declined to 17-year lows.

Today's U.S. Earnings Reports

Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): GOOG-Google (BEST earnings consensus $4.52 per share), PFE-Pfizer (.66), UTX-United Technologies (1.00), BK-Bank of New York Mellon (.73), MER-Merrill Lynch (-2.06), BAX-Baxter International (.72), SYK-Stryker (.69), DHR-Danaher (.88), PNC-PNC Financial Services Group (1.15), NUE-Nucor (1.31), COF-Capital One Financial (1.44), BBT-BB&T (.73), TXT-Textron (.85), ISRG-Intuitive Surgical (.98), IGT-International Game Technology (.35), MAR-Marriott International (.33), PPG-PPG Industries (1.11), AMTD-TD Ameritrade Holding (.31), LUV-Southwest Airlines (.00), KEY-Keycorp (.37), HOG-Harley-Davidson (.77), SHW-Sherwin-Williams (.60), SNDK-SanDisk (.26)

Global Financial Calendar