The Day Ahead: Futures Showing Upside

 | Aug 12, 2011 | 8:30 AM EDT  | Comments
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Worldwide Headlines

Wall Street was trying to make it two in a row Friday, as futures showed upside action on the heels of Thursday's across-the-board gains. If worries about the European bank issues continue to ease, investors may turn their attention back to U.S. economic data, as some high-profile reports due out today.

European stocks followed Wall Street's lead from Thursday, notching big increases before today's open stateside. That's despite a report that France's economic growth stalled in the second quarter. France, Italy and Belgium have issued temporary bans on short-selling on financial stocks in an effort to stem panic selling on Europe's indices. Bank stocks were among those leading Europe higher on Friday. The euro edged higher vs. the dollar before Wall Street's opening bell.

There were indications of economic slowing in China, as well. The nation said its bank lending fell to its lowest level in seven months. Some analysts believe that Beijing, which has been tightening its monetary policy in recent months, may loosen the reins as global economies show signs of malaise.

Stocks in Asia finished Friday's session mostly higher. Japan's Nikkei slumped 0.29% as investors fretted about lingering economic pressures resulting from the March disasters.

Economic News on Tap

Today's round of economic news includes the Commerce Department's retail sales report for July. This tends to get a close look, since consumer spending is a key pillar of the U.S. economy. Economists expect a better pace of growth than occurred in June. The report is due out at 8:30 a.m. EDT. Consumers are again in the focus at 9:55 a.m., when the University of Michigan releases its closely watched consumer sentiment index, which doesn't always correspond to actual spending. Still, it gets a lot of attention. This first reading for August is expected to show a drop from July's final number of 63.7.

At 10 a.m., the Commerce Department is back, with its report on business inventories for June. The equities market generally pays scant attention to this one, partly because the data seem a bit stale by the time they're finally released. Economists expect an increase of 0.6% for the month.

 

Commodities Corner

Gold, which took a breather in Thursday's market rally, resumed its climb. The precious metal advanced $1.70 to $1,753.20 per ounce in early trade. Crude oil eked out a gain of $0.04 to $85.76 per barrel.

Off-Peak Earnings

With earnings season off its peak, Fridays are back to being slow days for corporate reports. The main attention-getter this morning should be JCPenney , expected to deliver second-quarter earnings per share of $0.06 on sales of $3.91 billion. The retailer's sales growth has been lackluster in recent quarters, and profit growth has decelerated. Heading into Friday, shares were down nearly 17% so far this year.

Early Movers

Early price movers Friday included Apple , which advanced $1.50, 0.40%, to $375.20. Samsung has a court date in Germany on Aug. 25 to appeal a ban from selling its Galaxy tablet in Europe. Apple has filed a patent infringement suit against Samsung, alleging that the Korean manufacture's products have copied the look and feel of the iPhone and iPad. Nvidia rocketed $1.59, 11.86%, to $15. Late Thursday, the graphics chipmaker delivered an upbeat second-quarter report and rosy revenue forecast for the current quarter. The company said its mobile business is growing at a fast clip.

Analyst Actions

Analyst moves ahead of Friday's open included a William Blair upgrade of data optimization specialist F5 Networks , whose price performance has been worse than dismal this year. Blair boosted the stock to Outperform from Market Perform, sending the benchmark index component $1.38 higher in early trade, a gain of 1.81% to $77.50. However, put this morning's move in context: F5 shares have plunged 41.52% year-to-date. Fellow S&P 500 stock AutoZone revved up on an Oppenheimer upgrade. The stock advanced $0.19 in the premarket, up 0.43% to $44.24 on Oppenheimer's promotion to Outperform from Perform. The analyst cited strong demand for aftermarket parts in its move.

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