Overnight U.S. Stock News

• June S&Ps this morning are trading down -1.40 points as the market is nervous about today's pending home sales reports and as the market faces another large batch of Q1 earnings reports. The US stock market yesterday overcame early weakness and closed higher (Dow +0.40%, S&P 500 +0.77%, Nasdaq Composite +0.78%).

• Bullish factors for stock prices yesterday included (1) the +8.9% gain in Fannie Mae after the largest US mortgage-finance company said regulators will loosen restrictions on Fannie Mae's capital once the company has raised $6 billion, (2) the 9.4% gain in Anadarko Petroleum after the second-largest independent oil producer in the US reported Q1 profit that was 20% more than analysts estimated, (3) the 7.9% rally in Hess as Murti upgraded the fifth-largest US oil company to "buy" from "neutral" and (4) the 7.4% rally in Molson Coors Brewing after the third-largest US beer maker reported Q1 profit that was 13% higher than analysts estimated.

• Bearish factors for stock prices yesterday included (1) the 10% drop in Legg Mason after the company posted a bigger-than-estimated quarterly loss, its first in 25 years as a public company, after pumping $517 million into money-market funds hurt by subprime mortgage related investments, (2) the 16% plunge in Perrigo as the biggest US maker of non-prescription store-branded drugs increased the lower end of its 2008 profit forecast to $1.55 from $1.50, meaning quarterly profit will be less than analysts' estimates, (3) the 4.1% drop in Sunoco after Goldman Sachs downgraded the largest refiner in the US Northeast to "neutral" from "buy," saying they prefer refiners Valero Energy and Frontier Oil, and (4) the 10% drop in Scotts Miracle-Gro as the maker of consumer lawn and garden products said annual earnings could be as low as $2 a share, below analysts' $2.34 a share estimate, because of a slow start to the growing season and a "weak consumer environment."

• Cisco Systems is up +0.7% in European trading this morning on a stronger than expected fiscal Q3 earnings and sales report.

• Sprint Nextel is up +11% in European trading this morning after the company announced that it will develop its planned high-speed wireless network with Clearwire Corp and that the joint venture will receive $3.2 billion in funding from Intel, Comcast, Time Warner Cable and Google.

• Disney (DIS) rallied 2.4% in after-hours trading yesterday and is up +2.3% in European trading this morning after the company reported Q2 profit of 58 cents a share, handily topping analysts' estimates of 51 cents as the early Easter spurred more US Disney resort visitors while international travelers took advantage of a drop in the dollar. In addition, the Disney film "National Treasure 2" scored a hit.

Today's U.S. Market Focus

• June 10-year T-notes this morning are trading -6.5 ticks on supply overhang ahead of today's 10-year T-note auction and on Kansas City Fed Thomas Hoenig's statement that inflation may force the Fed to raise interest rates. June T-notes yesterday rallied into mid-morning but then gave up the gains and closed down -7.5 ticks at a 2-1/4 month low. Bearish factors for T-note prices yesterday included (1) supply pressure ahead of today's $15 billion 10-year T-note auction and tomorrow's $6 billion 30-year T-bond auction, (2) continued strength in the equity market, and (3) inflation concerns with the surge in the energy complex to all-time highs for crude oil, gasoline and heating oil. Bullish factors for T-note prices yesterday included (1) the wider than expected quarterly loss for Fannie Mae, the largest US mortgage-finance company, raising concern that systemic risk from the subprime crisis may continue as Fannie Mae forecasts 2009 credit losses to be larger than 2008 losses, (2) the comment from Fed Chairman Bernanke that accelerating home foreclosures may hurt the US economy, and (3) the $96.6 billion in bids received, the most ever, for the Fed's $75 billion TAF auction, showing that the inter-bank lending crunch continues.

• The is trading higher today with the dollar/yen up +0.53 and the euro/dollar down -0.96 cents. The dollar was boosted by Kansas City Fed President Hoenig's statement that inflation may force the Fed to raise interest rates. The euro was hurt today by the weak Euro-Zone retail sales report. The dollar index yesterday continued Monday's losses and closed lower. Bearish factors for the dollar yesterday included (1) the larger-than-expected $2.19 billion loss for Fannie Mae, indicating the worst of the financial market turmoil may not be over, (2) the rise in Mar Euro-Zone PPI to a 1-1/2 year high of +5.7% y/y, strengthening the euro, (3) the 49% y/y increase in US business bankrutcy filings in April, according to Jupiter eSources LLC, as the slowing economy prompts more companies to shut down, and (4) comments from Fed Chairman Bernanke that rising US mortgage foreclosures may push home prices down, hurting the broader economy.

• June crude oil prices this morning are trading -46 cents a barrel and June gasoline is trading -1.22 cents a gallon on some long liquidation pressure. June crude oil prices yesterday continued their foray into record territory and closed up +$1.87 a barrel and June gasoline closed +5.260 cents a gallon. June crude oil yesterday posted an all-time high of $122.73 per barrel, June gasoline posted a record high of $3.1260 per gallon and June heating oil posted an all-time high of $3.3712 per gallon. Bullish factors for crude oil prices yesterday included (1) the prediction by Goldman Sach that crude oil prices may rise to between $150 and $200 a barrel within two years because of a lack of adequate supply growth, (2) the weekend attacks by militants on a Royal Dutch Shell oil-transfer facility in Nigeria, forcing the company to halt 170,000 bbl a day of crude oil exports, (3) the forecast from the State Information Center of China that Chinese Q2 GDP will rise to 10.8%, keeping overall Chinese energy demand firm, (4) the prediction by the IEA that high oil prices won't cut demand as "China and India are transforming the energy markets by the sheer size of their populations," and (5) the weak dollar. Expectations for today's DOE inventory report are for a +1.5 mln bbl rise in crude oil inventories, an unchanged reading for gasoline stockpiles, a +1.0 mln bbl rise in distillate inventories and a +0.6 rise in the refinery capacity rate to 86.0%

Today's U.S. Earnings Reports

Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): NWS-News Corp (BEST earnings consensus $0.32 per share), DVN-Devon Energy (2.33), RIG-Transocean (3.30), DTV-DirecTV Group (.31), AGN-Allergan (.52), MMC-Marsh & McLennan (.47), EXPD-Expeditors International (.31), CTSH-Cognizant Technology Solutions (.33), FWLT-Foster Wheeler (.73), PXD-Pioneer Natural Resources (.82), NFS-Nationwide Financial Services (1.11), HSP-Hospira (.54), KWK-Quicksilver Resources (.25), USM-US Cellular (.95), FRT-Federal Realty Investment Trust (.49), DNB-Dun & Bradstreet (1.12), RESP-Respironics (.53), HK-Petrohawk Energy (.15), TDS-Telephone & Data Systems (.61), PWR-Quanta Services (.14), NCR-NCR Corp. (.16), HCN-Health Care REIT (.33), LAMR-Lamar Advertising (-.07), TEG-Integrys Energy (1.67), ALD-Allied Capital (.30), HANS-Hansen Natural Corp. (.37), FCN-FTI Consulting (.47)

Global Financial Calendar