Wall Street Greek: Business News Summary 11-12-09

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Business News Summary

Wal-Mart posted a profit gain this morning, but its sales missed forecasts and gave investors pause. The discount king benefits from recession as consumers shift downward en masse. However, if sales fell even at Wal-Mart, investors are apt to worry about the rest of retail, not to mention the implications to overall consumer spending and the economy. Add to this distressing news the fact that contracts for new home purchase are waning (mortgage activity analysis below) and folks are still losing their jobs, and the market moves cautiously to start the day.

Weekly Jobless Claims

See our detailed report here: Jobless Claims

Weekly Jobless Claims have held above a troubling 500K rate of labor market outflow, and a mess is piling up in the streets. This week's count kept up the trend, as the Labor Department reported that 502K folks filed for unemployment benefits in the week ending November 7. That compared against a revised prior week count of 514K, and economists consensus estimate for 512K.

Mortgage Activity Report

Usually reported on Wednesday, the Mortgage Bankers Association released its Weekly Mortgage Activity Report on Thursday this time around, due to Veterans Day. A trend matching last week's data continued in the week ending November 6, and intensified. Rates again moderated on contracted 30-year and 15-year mortgages. The 30-year average contract rate on fixed rate mortgages dipped to 4.90%, from 4.97%; 15-year contracts stuck at 4.33%.

Again, as last week, the Market Composite Index improved, this time by 3.2%, on Refinance Index gain of 11.3%. Just like last week though, Purchase Activity offered disturbing information. The Purchase Index fell 11.7%, and sits at its lowest mark since December of 2000.

Last week: For the week ended October 30, the overall Market Composite Index of mortgage activity increased by 8.2%. Purchase Activity, however, declined by 1.8% as American confidence waned. Contracted mortgages on 30-year fixed rate mortgages averaged rates of 4.97%, down from 5.04% the previous week. Rates on 15-year contracts dipped to 4.33% on average, down from 4.53%. Thus, the Refinance Index (+14.5%) drove overall activity.

Petroleum Status Report

Weekly oil inventory data will be reported at 10:30 today. Last week's report for the week ended October 30 noted a decrease in crude stocks of 4.0 million barrels. Still, inventory is near the upper range for this time of year. While this is due to "The Great Recession," OPEC expressed concern yesterday for the long-term demand for oil, given relatively high pricing and its after-effects.

Gasoline stores decreased by 0.3 million barrels in the last reported week, while distillate fuel inventories fell by 0.4 million. Heating oil plays a big role here, and warmer weather in the use-heavy Northeast should have traders expecting soft numbers next week (this report might indicate otherwise).

Corporate News Drivers

Several significant retailers reported results today, including Wal-Mart (NYSE: WMT) and Kohl's (NYSE: KSS). The nation's most important retailer (by far) reported results today, and again showed growth. Wal-Mart shares are up 1.0% to start the morning, as the retail giant managed 3.2% profit growth in its fiscal third quarter (Oct.). The major store operator has benefited throughout the recession, as consumers have shifted decisively down to discount. Wal-Mart beat estimates by three cents and guided higher, but some concern has stricken the rest of the market, because WMT's sales came in lower than forecasts (by Thomson Reuters). Combine this news with the mortgage activity trend and still high jobless filings, and investors are giving pause today.

EPS Reports

Look for data from Kohl's (NYSE: KSS), Wal-Mart (NYSE: WMT), 3SBio (Nasdaq: SSRX), Addus Homecare (Nasdaq: ADUS), AECOM (NYSE: ACM), AFC Enterprises (Nasdaq: AFCE), Air Transport Services (Nasdaq: ATSG), AmBev (NYSE: ABV), American Medical Alert (Nasdaq: AMAC), Asia Pacific Breweries (OTC: APBRF.PK), Asia Power (A03.SI), Banco de Chile (NYSE: BCH), Banks.com (NYSE: BNX), Benetton Group (OTC: BNGPY.PK), Blockbuster (NYSE: BBI), BluePhoenix Solutions (Nasdaq: BPHX), Brasil Foods (NYSE: BPA), Brooks Automation (Nasdaq: BRKS), China Automotive (Nasdaq: CAAS), eDiets.com (Nasdaq: DIET), EnCana (NYSE: ECA), EuroDisney (EDL.PA), Evolution Petroleum (NYSE: EPM), Gammon Gold (NYSE: GRS), Global Sources (Nasdaq: GSOL), Hong Kong Highpower (NYSE: HPJ), HSN, Inc. (Nasdaq: HSNI), Interleukin Genetics (NYSE: ILI), Key Tech (Nasdaq: KTEC), Lime Energy (Nasdaq: LIME), Matthews Int'l (Nasdaq: MATW), Meridian Bioscience (Nasdaq: VIVO), Nordstrom (NYSE: JWN), Point.360 (Nasdaq: PTSX), Rand Logistics (Nasdaq: RLOG), Repsol (NYSE: REP), Sapiens (Nasdaq: SPNS), Seahawk Drilling (Nasdaq: HAWK), Taseko Mines (TGB), Telefonica SA (NYSE: TEF), Urban Outfitters (Nasdaq: URBN), Vivendi (VIV.PA), Walt Disney (NYSE: DIS), WebMediaBrands (Nasdaq: WEBM) and more.