What’s the Story?

by CC March 26, 2012 9:16 am • Commentary

Bloomberg

Federal Reserve Chairman Ben S. Bernankesaid accommodative monetary policy is still needed to spur jobs.

Bank of America Corp. (BAC) and Dell Inc. (DELL) advanced at least 1.4 percent to pace gains among the largest companies. Lions Gate Entertainment Corp. (LGF) surged 4.3 percent as “The Hunger Games” collected $155 million in weekend sales in the U.S. and Canada, a record for the month of March.

S&P 500 futures expiring in June added 0.6 percent to 1,402.60 at 8:45 a.m. New York time. Dow Jones Industrial Average futures rose 80 points, or 0.6 percent, to 13,112. Equities extended gains after Bernanke said that while he’s encouraged by the unemployment rate’s decline to 8.3 percent, the economy still needs help.

The drop in unemployment may reflect “a reversal of the unusually large layoffs that occurred during late 2008 and over 2009,” Bernanke said in a speech today in Arlington, Virginia. “To the extent that this reversal has been completed, further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies.”

Futures also rose as Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel. European finance ministers will meet on March (SPX) 30 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region’s financial firewall.

Marketwatch

The improvement in the labor market since last fall may only be a reversal of large layoffs during the recession, and further improvement may depend on faster economic growth, said Federal Reserve Board Chairman Ben Bernanke on Monday. “We cannot yet be sure that the recent pace of improvement in the labor market will be sustained,” Bernanke said in a speech to the National Association for Business Economics. The Fed chairman said that weak demand is the primary factor behind the weak labor market, and not structural issues like lack of skills, As a result, the Fed’s current ultra-low interest rate policy can help, he said. “What will lead to more hiring and, consequently, further declines in unemployment? The short answer is more-rapid economic growth,” Bernanke said.

WSJ

Dow futures are up 83 points, while S&P 500 futures gain 9 points. U.S. stock futures traded around the flat line prior to Bernanke’s speech.

Euro spikes against the dollar, gold and silver rise, oil edges up and Treasurys move off session lows. The only loser this morning is the U.S. dollar.

The market is clearly interpreting today’s speech as evidence that a third round of quantative easing, or QE3, remains a serious option in the Fed’s arsenal.

WSJ

Economics

Monday

Pending home sales index, Dallas Fed manufacturing survey, 4-week bill announcement, 3-month bill auction, 6-month bill auction

Tuesday

ICSC-Goldman Store Sales, Redbook, S&P Case-Shiller home-price index, consumer confidence, Richmond Fed manufacturing index, 4-week bill auction, 2-year note auction

Wednesday

MBA purchase applications, durable goods orders, EIA petroleum status report, 5-year note auction

Thursday

Fourth quarter GDP (third reading), jobless claims, EIA natural gas report, Kansas City Fed manufacturing index, 3-month bill announcement, 6-month bill announcement, 52-week bill announcement, 7-year note auction

Friday

Personal income, Chicago PMI, consumer sentiment

 

Earnings

Monday

Apollo Group

Cal-Maine

Landec

Tuesday

Charming Shoppes

Christopher & Banks

EXFO

Lennar

McCormick

Neogen

Oxford Indus

PVH

Robbins & Myers

Sealy

Synnex

Walgreen

Wednesday

Commercial Metals

Family Dollar Stores

H.B. Fuller

Huntington Ingalls

Lindsay

Mosaic

Paychex

Progress Software

Red Hat

Resources Connection

Texas Indus

UniFirst

Thursday

Best Buy

Cache

Finish Line

Movado

Pep Boys

Research In Motion

Saba Software

Shaw

SORL Auto Parts

TIBCO Software

Worthington Indus

Xyratex

Friday

Nothing of note