The Day Ahead: Data Deluge

 | Sep 01, 2011 | 8:04 AM EDT  | Comments
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In the Headlines

It's the first day of a new month -- and September is not known for being kind to long investors.

NYSE and Nasdaq futures indicated a lower open Thursday, ahead of a boatload of economic data.

Many investors are probably happy to get a fresh start today, following head-spinning volatility in August. Despite significant gains in the past two weeks, all major indices ended the month with sizable losses.

Asian stocks closed mostly higher Thursday. Despite an uptick in China's Purchasing Managers' Index, Shanghai closed lower. Traders elsewhere followed Wall Street's lead, and sent stocks to a positive finish.

European traders, though, veered from the script, with indices throughout the region showing declines before U.S. markets opened. Poor manufacturing data from several countries, and lower-than-expected demand in a Spanish bond auction, contributed to the downbeat sentiment.

The euro was trading lower early Thursday.

Early Thursday, crude oil fell by a quarter, to $88.56 per barrel.

Gold, which edged lower in Wednesday's session, continued its move to the downside, slipping $8.10 per ounce to $1,823.60.

Economic Docket

Today is the weekly report on jobless claims from the Labor Department. Nearly every week, economists see a decline in new claims, and that's the case again this time around. Analysts are eying a drop to 407,000 for last week, down 10,000 from the prior number. The data are due out at 8:30 a.m. EDT.

At 10 is the Institute for Supply Management's August manufacturing index. Though it gauges sentiment (rather than tallying actual goods made), it typically gets a close look from the market. Economists expect a decline for the month, to 48.8 from July's reading of 50.9.

Also at 10 is the Commerce Department's July construction spending report. This is not usually a market-mover, partially because the data seem stale by the time they are released. An increase of 0.1% is expected.

Throughout the day, actual businesses, rather than government agencies and think tanks, report August results. Retailers report their sales figures. Back-to-school sales are expected to suffer a hit because of the East Coast hurricane, but sales of hurricane-related supplies are seen offsetting those losses.

Warehouse club Costco (COST), generally the first off the block, got an early start today. Its same-store revenue rose 11% for the month, beating views. The company also said CEO Jim Sinegal is stepping down.

Also today are the automakers' August sales reports. Here, Irene is seen causing a slowdown.

Earnings

There aren't many high-profile earnings reports slated for today. Before the open, Toronto Dominion Bank (TD) beat third-quarter earnings views, delivering income of $1.72 per share. Revenue of $5.3 billion was slightly on the low side.

The company raised its dividend, and cited strength in its commercial and personal banking units.

After today's close is a first-quarter report from battered fiber-optics-gear maker Finisar (FNSR). The stock, which was a growth leader in 2010, broke down this year, going into Thursday's session with a 2011 decline of 37.82%.

Analysts expect earnings of $0.18 a share on revenue of $228.34 million. That would mark a year-over-year decline in earnings, but an increase in sales.

Market Movers

Early price movers included Dow Jones Industrial Average component AT&T (T), advancing $0.02, a fractional gain, to $28.50. The rebound follows Wednesday's heavy-volume decline of 3.8% on the Justice Department's surprise announcement that it would sue to block AT&T's proposed merger with T-Mobile.

Sprint Nextel (S), which bolted nearly 6% Wednesday on the AT&T news, continued its upward trajectory. The stock was among the biggest premarket movers in the S&P 500 Thursday, gaining a dime, 2.66%, to $3.86.

Downside movers included tech and engineering outsourcing firm SAIC (SAI), which focuses on government clients. The company reported disappointing second-quarter results after Wednesday's close, citing reduced federal spending.

The stock fell $1.22, a loss of 8.13%, to $13.78 in early trade.

Analyst Actions

Among analyst moves this morning was a Needham upgrade of IT outsourcer Cognizant Technology Solutions (CTSH) to Strong Buy from Buy. The analyst said checks showed continued healthy demand for the company's services.

Shares rose $0.14, 0.22%, to $63.59 ahead of the bell.

Columnist Conversations

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