Overnight U.S. Stock News

• June S&Ps this morning are trading -4.40 points today on lower European stocks and on nervousness ahead of today's raft of earnings reports. The US stock market yesterday closed with moderate losses (Dow -0.68%, S&P 500 -0.45%, Nasdaq Composite -0.52%).

• Bearish factors for stock prices yesterday included (1) the 15% drop in Yahoo after Microsoft abandoned its $50 billion bid for the company and as Citigroup downgraded Yahoo to a "sell," (2) the 2.7% drop in Berkshire Hathaway as Warren Buffet's company said Q1 operating earnings were $1,247 a share, below analysts estimates of $1,430 as falling rates cut returns from the company's insurance operations and the firm marked down the value of derivative contracts, (3) the 8.9% drop in Ambac as Warren Buffet said the world's second-largest bond insurer may not deserve its AAA credit rating, and (4) the over $3 a barrel surge in crude oil to another record high.

• Bullish factors for stock prices yesterday included (1) the unexpected strength seen in the Apr ISM non-manufacturing index, (2) the 11% gain in Sprint Nextel as the third-biggest US mobile telephone carrier may be taken over by Deutsche Telecom, according to a German newspaper, (3) the 2.3% gain in Google after Microsoft pulled its bid for Yahoo, and (4) the 9.4% rally in Marvel Entertainment as the movie and comic book producer increased its 2008 EPS to $1.35 to $1.55 on sales of $370 to $400 million from $1.30 to $1.50 on revenue of $360 to $400 million.

• Target rallied 1.4% in after-hours trading yesterday after news that JPMorgan Chase will buy 47% of Target's credit-card loans for $3.6 billion, which will give Target extra cash to fund its capital investment and stock buyback plans.

• Cisco is slightly lower by -0.1% in European trading this morning ahead of Cisco's earnings report today.

• Merck (MRK) rallied +0.3% in after-hours trading yesterday after announcing that it will cut 1,200 sales jobs in the US as part of a cost-cutting plan.

• El Paso (EP) rallied 3% in after-hours trading yesterday a report that it found oil in an offshore field off the coast near Bahia, Brazil.

• Navistar (NAVZ) may receive a boost today after news that the truckmaker received a $1.28 billion contract to build Army military vehicles.

Today's U.S. Market Focus

• June 10-year T-notes this morning are trading -2 ticks. June T-notes yesterday traded on either side of unchanged before closing up +3.5 ticks. Bullish factors for T-note prices yesterday included (1) the fall in the stock market which induced flight-to-quality buying of Treasuries, (2) the Fed's quarterly loan survey which showed the credit crunch has deepened as the net amount of US domestic banks reporting tighter lending standards rose to near "historical highs," and (3) carryover support from the European debt markets which rallied after May Euro-Zone Sentix investor confidence came in weaker than expected. Bearish factors for T-note prices yesterday included (1) the unexpected gain in the Apr ISM non-manufacturing index (+2.4 to 52.0 versus expectations of -0.5 to 49.1), (2) supply pressures ahead of this week's $21 billion in 10-year T-notes and 30-year T-bonds to be auctioned for the May refunding, and (2) inflation concerns with the rally in crude-oil to a record high.

• The dollar is trading slightly lower today with the dollar/yen down -0.02 yen and the euro/dollar up +0.09 cents. The dollar index yesterday closed lower. Bearish factors for the dollar yesterday included (1) speculation that the ECB will keep interest rates at a 6-year high policy makers meet this Thursday, (2) comments from ECB President Trichet who said that the risk of inflation is "significant," strengthening the euro, and (3) the comment from former Fed Chairman Greenspan that the US has slipped into an "awfully pale recession" and may continue to languish for the rest of the year. Bullish factors for the dollar yesterday include (1) the unexpected rise in the US Apr ISM non-manufacturing index, and (2) the weaker than expected May Euro-Zone Sentix investor confidence.

• June crude oil prices this morning are trading -34 cents a barrel and June gasoline is trading -0.69 cents a gallon on some technical selling after yesterday's sharp advances. June crude oil prices yesterday rallied sharply and closed up +$3.65 a barrel and June gasoline closed +8.650 cents a gallon. June crude oil yesterday posted an all-time high of $120.36 per barrel. Bullish factors for crude oil prices yesterday included (1) the unexpected rise in the US Apr ISM non-manufacturing index, which reduced recession concerns, (2) the weekend militant attacks on a Royal Dutch Shell oil-transfer facility in Nigeria, forcing the company to halt 170,000 bbl a day of crude oil exports, and (3) the weak dollar. Expectations for tomorrow's DOE inventory report are for a +2.1 mln bbl rise in crude oil inventories, a +250,000 bbl gain in gasoline stockpiles, a +1.0 mln bbl rise in distillate inventories and a +0.7 rise in the the refinery capacity rate to 86.1%

Today's U.S. Earnings Reports

Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): CSCO-Cisco Systems (BEST earnings consensus $0.36 per share), DIS-Disney (.51), EMR-Emerson Electric (.71), FNM-Fannie Mae (-.64), COV-Covidian (.58), PEG-Public Service Enterprise Group (.75), NYX-NYSE Euronext (.82), PCP-Precision Castparts (1.89), SE-Spectra Energy (.46), VNO-Vornado Realty Trust (1.60), PCG-PG&E (.66), MGM-MGM Mirage (.44), PRGO-Perrigo (.41), UPL-Ultra Petroleum (.58), SLE-Sara Lee (.24), TAP-Molson Coors (.28), Q-Quest Communications (.10), LM-Legg Mason (-.38), EL-Estee Lauder (.47), PBI-Pitney Bowes (.64), RRD-RR Donnelley (.69), VTR-Ventas (.17), ACAS-American Capital Strategies (.77), XEC-Cimarex Energy (1.55), HSIC-Henry Schein (.55), REG-Regency Centers (.38), DHI-Dr Horton (.06)

Global Financial Calendar