Today's Stock Market Buyer's Guide

U.S. futures are looking lower on positive economic and corporate data that was just not good enough, keeping economic questions in focus. For instance, while Housing Starts were reported at their highest point since June of 2008, Building Permits slowed in June. Also, while mortgage data was strong on record low mortgage rates, it came solely in refinancing and was questionable due to the play of the July 4th holiday. While Intel and Bank of America reported well, one warned about the future while the other’s gains came on cost cuts. Meanwhile, the market is not excited about the U.S. Fed chief’s second day of testimony on the Hill today. In Europe, a warning from Angela Merkel and expressed concern by the Bank of England set the euro lower across the pond. The SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones Industrial Average (NYSE: DIA) and the PowerShares QQQ (NYSE: QQQ) were each lower in early trade.

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Stock Market Guide

Overseas:
Euro STOXX 50: +0.34%
German DAX: +0.24%
FTSE 100: +0.13%
Hang Seng: -1.1%
Nikkei 225: -0.32%


Bank of England released the minutes of its early July meeting today, showing that its members voted 7 to 2 to increase asset purchases. The pound fell against the dollar for the first time in four days. In other news, Germany and Finland offered debt at below zero yields. It was the first time German debt had sold at a yield below zero. The euro remains pressured after Germany’s Merkel said the “European project” is at risk unless partners work harder.

Gold is slipping in trade Wednesday, after rising ahead of the Fed Chairman’s testimony yesterday. However, without a solid statement of new Fed action, the dollar held and gold fell. Gold is lower, with 24-Hour Spot Gold at 1575.50 at 8:25 AM EDT. The SPDR Gold Trust (NYSE: GLD) is down 0.8% in premarket movement. The dollar and yen gained against most other currencies ahead of the U.S. Fed Chairman’s second trip to Congress today.

Federal Reserve Chairman Bernanke gives his second day of testimony on the Hill, this time addressing the House Financial Services Committee. Yesterday, the Chairman put on his best impression of SNL character Debbie Downer, driving stocks lower in morning trade. We hope today, he might reassure the Fed is on the case of the stumbling economy.

Economic Data - The U.S. economic calendar has four data points set for the wire.
The Weekly Mortgage Application Survey produced by the Mortgage Bankers Association covered the period just after the July 4th holiday. I believe it was probably not perfectly adjusted for, especially considering the mid-week falling of the holiday. Still, record low mortgage rates may have had something to do with the reported 22% gain in the MBA’s Refinance Index. The Market Composite Index gained by a lesser 16.9%, as mortgage applications tied to the purchase of homes fell fractionally.

Housing Starts data were reported this morning by the Department of Housing & Urban Development. The government said Starts rose to an annual rate of 760K in June, up from May’s revised 711K. However, Building Permits fell to an annual rate of 755K, down from May’s revised 784K pace. The housing market will likely hold yesterday’s gain on the Housing Market Index reported by a builders’ group. The SPDR S&P Homebuilders (NYSE: XHB) gained fractionally yesterday, but individual builder leaders like PulteGroup (NYSE: PHM) did better.

At 10:30 AM EDT, look for the EIA’s regular Petroleum Status Report. Last week’s data covering the period ending July 6, 2012 showed crude oil inventories fell by 4.7 million barrels, but remained above the upper limit of the average range for this time of year. Total motor gasoline stocks increased by 2.8 million barrels, though were in the lower limit of the average range. Oil prices were lower shortly after 8:00 AM, down fractionally on little new catalyst as yet. That will change at 10:30.

The Federal Reserve’s Beige Book of regional indicators is set for release at 2:00 PM EDT today. The data should offer further insight into economic conditions, but I do not expect it to drive stocks immediately.

Corporate Drivers Today:
Bank of America (NYSE: BAC) posted EPS of $0.19, beating the street by four cents and confirming our expectation for the EPS and likely short-term gain for the stock. The shares were up roughly 0.9% in the early pre-market and look set for a pop Wednesday. BofA benefited mostly from cost reductions, as loans slipped and non-interest income was unremarkable. The bank says it will save $8 billion annually by 2015.

Intel (Nasdaq: INTC) is nearly a point lower in early morning trade, after the semiconductor maker reported earnings last evening. The company beat the street’s view by two cents, earning $0.54 per share this quarter. However, Intel offered cautionary note about the forward quarter, warning that Europe and the U.S. environment were tougher. The company cut its 2012 revenue guidance to 3% to 5% growth, down from high-single digits and analysts’ expectations for 4.8% for the year. The company’s Q3 revenue outlook was set at approximately $14.3 billion, versus analysts’ views for $14.6 billion. Due to Intel’s importance to the PC industry, serving a great majority of the market, the shares of Dell (Nasdaq: DELL) and Hewlett-Packard (NYSE: HPQ) may come under pressure as well Wednesday.

The rest of Wednesday’s earnings reports will highlight news from A.O. Smith (NYSE: AOS), Abbott Laboratories (NYSE: ABT), American Express (NYSE: AXP), Amphenol (NYSE: APH), Arrow Financial (Nasdaq: AROW), Astoria Financial (NYSE: AF), Bank of America (NYSE: BAC), Bank of NY Mellon (NYSE: BK), BlackRock (NYSE: BLK), Check Point Software (Nasdaq: CHKP), China Technology Development (Nasdaq: CTDC), Crown Holdings (NYSE: CCK), East West Bancorp (Nasdaq: EWBC), eBay (Nasdaq: EBAY), First Cash Financial (Nasdaq: FCFS), First Republic Bank (NYSE: FRC), Hanesbrands (NYSE: HBI), Honeywell (NYSE: HON), Kinder Morgan Energy Partners (NYSE: KMP), Kinder Morgan Management Partners (NYSE: KMR), Knight Capital (NYSE: KCG), Media General (NYSE: MEG), Meta Financial (Nasdaq: CASH), Navios Maritime Partners (NYSE: NMM), New Frontier Media (Nasdaq: NOOF), Noble (NYSE: NE), Northern Trust (Nasdaq: NTRS), PacWest Bancorp (Nasdaq: PACW), Peoples Financial (Nasdaq: PFBX), PNC Financial Services (NYSE: PNC), Popular (Nasdaq: BPOP), Qualcomm (Nasdaq: QCOM), SEI Investments (Nasdaq: SEIC), St. Jude Medical (NYSE: STJ), Stanley Black & Decker (NYSE: SWK), Stryker (NYSE: SYK), Top Ships (Nasdaq: TOPS), TT Hellenic Postbank (TT.AT), U.S. Bancorp (NYSE: USB), W.W. Grainger (NYSE: GWW), Weis Markets (NYSE: WMK), Winmark (Nasdaq: WINA), Xilinx (Nasdaq: XLNX), Yum! Brands (NYSE: YUM) and Zhone Technologies (Nasdaq: ZHNE).

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