Overnight U.S. Stock News

• June S&Ps this morning are trading +3.30. The US stock market yesterday traded higher until the FOMC announcement and then sold-off into the close and ended the day lower (Dow -0.09%, S&P 500 -0.38%, Nasdaq Composite -0.55%).

• Bearish factors for stock prices yesterday included (1) the somber sounding Fed as the post FOMC statement said "tight credit conditions and the deepening housing contraction are likely to weigh" on economic growth, (2) the 4% drop in Citigroup as the biggest US bank by assets is selling $4.5 billion of stock to raise capital depleted by mortgage losses, (3) the 5.1% drop in Colgate-Palmolive as the world's biggest toothpaste maker said gross margin will be "flat to slghtly up" this year because of higher fuel and agricultural-commodity costs, after previously forecasting gross margin would widen by as much as 1.25%, and (4) the 9.3% fall in MEMC Electronic Materials after JPMorgan Chase lowered its recommendation on the maker of silicon wafers to "neutral" from "overweight," citing the risk of weaker demand from Europe.

• Bullish factors for stock prices yesterday included (1) the slightly higher than expected growth in US Q1 GDP, (2) the lower than expected rise in the Q1 employment cost index, (3) the unexpected gain in the April Chicago purchasing managers index, (4) the 9.4% gain in GM after the automaker reported a Q1 loss of 62 cents a share, narrower than the $1.52 a share forecast by analysts, and (5) the 3.2% gain in Dean Foods as the biggest US dairy producer reported Q1 profit of 23 cents a share, topping analysts' estimates of 18 cents a share.

• Las Vegas Sands (LVS) dropped almost 10% in after-hours trading yesterday as the world's largest casino company by market value reported an unexpected Q1 loss on expenses from borrowing money to develop resorts in Macau, China.

• Itron (ITRI) gained 5.5% in after-hours trading yesterday as the largest US maker of electric-utility meters said yearly profit could be as high as $3.45 a share, more than analysts' estimates of $3.36 a share.

• Tyco International (TYC) may get a boost this morning after the company said Q2 profit rose 66% on higher sales and that 2008 profit will be higher than its previous forecast. Tyco said Q2 earnings were 67 cents a share, higher than analysts' estimates of 58 cents, and also raised its full-year profit forecast by 5 cents a share

Today's U.S. Market Focus

• June 10-year T-notes this morning are trading +1.5 ticks. June T-notes yesterday traded with small gains into the FOMC announcement and then rallied into the close and settled +13.5 ticks. Bullish factors for T-note prices yesterday included (1) the smaller than expected increase in the Q1 employment cost index (+0.7% versus expectations of +0.8%, (2) the smaller than expected increase in the Q1 GDP price index (+2.6% versus expectations of +3.0%), and (3) the action by Fitch Ratings to overhaul the way it assesses risk on $110 billion of collateralized debt obligations (CDOs) based on company debt in a move that may lead to more downgrades of the securities. Bearish factors for T-note prices yesterday included (1) the unexpected increase in employment in the ADP April employment change (+10,000 versus an expected drop of -60,000), (2) the greater than expected increase in US Q1 GDP (+0.6% versus expectations of +0.5%), (3) the unexpected increase in the Chicago April purchasing managers index (+0.1 to 48.3 versus expectations of -0.7 to 47.5), and (4) speculation that the Fed is nearing an end to its rate-cutting cycle as policy members said "substantial" easing to date should promote economic growth.

• The dollar/yen is trading +0.15 yen this morning and the euro/dollar is -0.88 cents. The euro/dollar this morning is trading at a 5-week low as investors bet on a pause in the Fed's rate-cutting regime, although currency moves today may be exaggerated due to today's Labour Day Holiday in Europe. The dollar index yesterday rallied to a 1-month high but sold-off after the FOMC announcement and ended the day lower. Bearish factors for the dollar yesterday included (1) the prediction by Bank of America, the second largest US bank, that the Fed will cut the funds rate to 1.5% by the end of August, and (2) market disappointment that the Fed wasn't more hawkish in their post FMOC meeting statement after cutting the funds rate and the discount rate an as expected 25 bp and saying the economy "remains weak." Bullish factors for the dollar yesterday include (1) the unexpected rise in employment in the ADP April employment change, (2) the slightly higher than expected gain in US Q1 GDP, (3) the smaller than expected rise in the Q1 employment cost index, (4) the unexpected rise in the April Chicago purchasing managers index, and (5) the fall in Euro-Zone April economic confidence to a 2-1/2 year low.

• June crude oil prices this morning are trading -28 cents a barrel and June gasoline is trading -0.63 cents a gallon. June crude oil prices yesterday continued Tuesday's sell-off and closed down -$2.17 a barrel and June gasoline closed -0.800 cents a gallon, both at 1-1/2 week lows. Bearish factors for crude oil prices yesterday included (1) the greater than expected increase in crude oil stockpiles and the unexpected increase in distillate inventories in yesterday's DOE inventory report (crude oil +3.85 mln bbl versus expectations of +950,000 and distillates +1.13 mln bbl versus expectations of -400,000 bbl), and (2) the return to work by striking Nigerian oil workers as part of the bargaining agreement between Exxon Mobil and the workers to end the 7-day long strike. Bullish factors for crude oil prices yesterday included (1) the comments from OPEC members Kuwait, Libya and Qatar that crude oil prices have soared because of investors speculating on commodities and that OPEC has no plans to hold an emergency meeting before its scheduled September meeting, and (2) the comments from the former Saudi Arabian Oil Minister Yamani that OPEC has to increase production as they are "keeping commercial stocks as dry as possibe and are producing only enough for consumption.

Today's U.S. Earnings Reports

Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): XOM-Exxon Mobile (BEST earnings consensus $2.13 per share), CMCSA-Comcast (.19), CVS-CVS Caremark (.55), APA-Apache (3.02), MET-Metlife (1.48), MRO-Marathon Oil (.83), TRI-Thomson Reuters (.35), CHK-Chesapeake Energy (.93), FE-FirstEnergy (.82), ADP-Automatic Data Processing (.75), WMB-Williams Companies (.51), CAH-Cardianl Health (1.02), NBL-Noble Energy (1.67), AOC-Aon (.62), JAVA-Sun Microsystems (.19), WYNN-Wynn Resorts (.68), CI-Cigna (.96), CAM-Cameron International (.53), NRG-NRG Energy (.43), KIM-Kimco realty (.36), RRI-Reliant Energy (.15), XEL-Xcel Energy (.33), NMX-Nymex Holdings (.82), EQT-Equitable Resources (.68), MLNM-Millennium Pharmaceuticals (.05), AIZ-Assurant (1.51), HOLX-Hologic (.28), CLX=Clorox (.76), DNR-Denbury Resources (.38), EXPE-Expedia (.22)

Global Financial Calendar