What’s the Story?

by CC March 5, 2012 8:05 am • Commentary

Futures are down this morning as a couple of warning signs emerge out of Europe and Asia this morning. China announced a lower growth target for the next year and Europe reported slower manufacturing output. Here in the U.S. we’ll see some data at 10am. Even bigger data at the end of the week as we get the monthly jobs report. Can the U.S. continue to to buck the trend and differentiate itself from what’s going on in Europe? Will rising gas prices slow down the recovery? We’ll see.



U.S. stock index futures pointed to a lower open on Wall Street on Monday, ahead of data from the Commerce Department and the Institute for Supply Management.

The Institute for Supply Management will release its February non-manufacturing index at 10 a.m. New York Time. Economists surveyed by Reuters forecast a reading of 56.1, down from 56.8 in January. A reading above 50 indicates an expansion in the non-manufacturing sector.

Also on deck at 10 a.m., the Commerce Department releases factory orders for January. Economists surveyed by Reuters expect a drop of 1.5 percent, against a 1.1 percent rise in December.

There are no high profile earnings reports posted for Monday, either before or after the closing bell.


Chinese Premier Wen Jiabao cut his nation’s 2012 growth target to an eight-year low of 7.5 percent and made boosting consumer demand the year’s first priority as Beijing looks to wean the economy off its reliance on external demand and foreign capital.

He lowered the target from a longstanding annual goal of 8 percent, a move investors anticipated so that Beijing has some economic leeway to rebalance the economy and defuse price pressures in the run up to a leadership change later this year.

Lower growth will allow Beijing to reform key price controls without causing an inflation spike, so monetary policy can stay broadly expansionary to ensure a steady flow of credit to the small and medium-sized firms the government wants to encourage.

“We aim to promote steady and robust economic development, keep prices stable, and guard against financial risks by keeping the total money and credit supply at an appropriate level, and taking a cautious and flexible approach,” Wen said in his annual work report to the National People’s Congress (NPC), China’s annual parliamentary session.


European services and manufacturing output shrank in February more than earlier estimated, Markit Economics said, before a report that may show U.S. factory orders fell for the first time in three months. Greece’s private creditors decide this week whether to sign off on the country’s debt.


Stocks to Watch

Among the companies whose shares are expected to see active trade in Monday’s session are VeriFone Systems Inc., Casey’s General Stores Inc., and Nutrisystem Inc.

VeriFone is expected to report fiscal first-quarter earnings of 52 cents a share, according to analysts. Nutrisystem is forecast to post a loss of 2 cents a share in the fourth quarter, while Casey’s is estimated to report a profit of 44 cents a share in the fiscal third quarter.

After Friday’s closing bell, The Wall Street Journal reported that Citigroup Inc. Chairman Richard Parsons will not seek re-election at the bank’s annual shareholder meeting on April 17. Also, General Motors Co.  will reportedly halt production of its Chevy Volt electric car for five weeks.


Overnight Headlines (Links)

Election Year Poses Challenge for Stocks

Russian Stocks Rise on Putin Win

EU Banks Put Onus on Units

Economy Stats Have a Habit of Surprising

Oil Gives Economy Both Barrels

The Inside Track on the Market Rally

Financial Institutions

Lenders Stress Over Test Results

EU Banks Use Central-Bank Loans to Cut Risk of Ailing Euro-Zone Subsidiaries

Deal & Deal Makers

Yelp Deal Aside, IPO Pricing Pressures Remain

AIG to Sell $6 Billion In Asian Insurer’s Stock