Mad Market Report + Hot Stocks

The market is decidedly lower to start the day Thursday. The SPDR S&P 500 (NYSE: SPY) is down just short of 1%, and the SPDR Dow Jones Industrial Index (NYSE: DIA) is lower by about as much on the latest concerns about the global economy and business of industrials and materials companies. The PowerShares QQQ (Nasdaq: QQQ) is underwater 1.5% today on the latest concerns about the chip business, and what seems a lull for electronics based on Best Buy (NYSE: BBY) action of late.

Market Report

Overseas
The Euro STOXX 50 is off 0.7% and the FTSE 100 is lower by 1.0%. The Hang Seng fell 2.0% and the Nikkei 225 drifted 1.5%. The Bank of Japan (BOJ) kept monetary policy in place since rates have no room to go lower. The BOJ noted the issues of other markets, as it expressed content with economic activity in Japan mostly driven by reconstruction efforts. However, the BOJ increased the degree of its asset purchase program to provide economic stimulus.

Commodity Futures
Oil is under $85 on the New York Mercantile Exchange, as demand expectations are ratcheted lower for 2013. Global economic warning signs have the market discounting commodities, except for agriculture today. Nearest contract corn futures are up 2.5% again today. Nick at Bay Ridge Bakery tells us he’s concerned about the impact to the profit margins of his New York City bakery if it doesn’t rain in the Midwest soon. Gold is down about 1% to 1,559.50 per troy oz.

Economic Data
Not a week since the ugly Employment Report, the latest Weekly Jobless Claims Report showed new claims for unemployment benefits decreased 26,000 to 350K. That’s fantastic news, but the market will wait to see if it is first not revised and second the start of a trend. The market and I both doubt the labor situation is taking a miraculous turn as economic activity deteriorates. The four-week moving average also managed an impressive improvement, declining 9,750, to 376,500. Some are saying the improvement is due to factories putting off maintenance work for later.

Deflation is the word today. The latest Import and Export Prices Report (for June) showed export prices fell 1.7% month-to-month on a decline in agricultural prices. Obviously that will change moving forward. Import prices fell 2.7% month-to-month, against economists’ expectations for a 1.9% decrease, due to a steep decline in fuel prices.

The Bloomberg Consumer Comfort Index arrives this morning. Last week’s measure of the consumer mood declined 1.4 points to negative 37.5. We’ve been tracking a slide in consumer confidence and spending, and have selected a few stocks that we think will serve the market well.

The EIA Natural Gas Report is up for release at 10:30 AM. Last week’s data covering the period ending June 29 showed a 39 Bcf inventory increase. Gas stores were 573 Bcf above the 5-year average for this time of year.

The monthly Treasury Budget is due for release at 2:00 PM. Economists are looking for a June deficit of $75 billion. In May, the budget ran at a deficit of $124.6 billion. San Francisco Fed Bank President John Williams will address a group in Portland, Oregon at 3:40 PM EDT.

Hot Stocks
Supervalu (NYSE: SVU) shares fell 45% Thursday morning as analysts cut their price targets and forecasts following the grocer’s poor results. The third largest supermarket chain suspended its dividend and is exploring its options, as competition from Wal-Mart (NYSE: WMT) and Kroger (NYSE: KR) weighs against it.

Merck (NYSE: MRK) is looking up more than 4% this morning on news that its novel bone drug seems to reduce the risk of bone fracture, according to a third party. On that party’s recommendation, Merck is halting a trial that began in 2007 to prepare for FDA and other approval.

Delta Air Lines (NYSE: DAL) shares are down about 4% in early going, on a downgrade by Goldman Sachs (NYSE: GS), an FAA fine and as it was mentioned as a possible partner for American Airlines. Many analysts believe American’s best option is a combination with U.S. Airways (NYSE: LCC) due to complementary routes and their comparable sizes.

Marriott International, Inc. (NYSE: MAR) is looking lower today after its revenue result fell short of analysts’ consensus view and it raised concern about its Asian growth. Marriott still met on the EPS line, and raised its full-year EPS expectation to above the consensus of analysts.

Yahoo (Nasdaq: YHOO) has its annual shareholder meeting with many expecting a new CEO to be announced. The day’s earnings schedule has AngioDynamics (Nasdaq: ANGO), Bank of the Ozarks (Nasdaq: OZRK), Commerce Bancshares (Nasdaq: CBSH), Emmis Communications (Nasdaq: EMMS), Fastenal (Nasdaq: FAST), Home Loan Servicing Solutions (Nasdaq: HLSS), Resources Connection (Nasdaq: RECN) and Trinity Biotech (Nasdaq: TRIB).

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