Waning support for stock futures has left the cash market poised for a mixed open. A batch of better-than-expected earnings from a broad range of industry bellwethers had initially bolstered buying interest, but confidence was undermined when Europe’s major bourses moved lower in response to a drop by the euro below technical support levels despite satisfactory demand for the latest debt offerings from France and Spain.
Conviction among buyers was further challenged by a disappointing weekly initial jobless claims report. Still to come, monthly existing home sales numbers, the latest Philadelphia Fed Survey, and monthly Leading Indicators are all due at 10:00 AM ET.
New U.S. claims for unemployment benefits fell less than expected last week, according to a government report on Thursday that could dampen hopes of a pick-up in job creation in April after March’s slowdown.
Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 386,000, the Labor Department said. But the prior week’s figure was revised up to 388,000 from the previously reported 380,000.
The four-week moving average for new claims, considered a better measure of labor market trends, rose 5,500 to 374,750.
Economists polled by Reuters had forecast claims falling to 370,000 last week.
* Spain issues 2.5 bln euros of bonds
* France issues 7.97 billion euros
* Spanish yields up on previous auctions, French stable
* Both auctions covered between 2.2 and 3.3 times
France and Spain sold all the bonds they wanted at auction on Thursday, though for Spain the cost was rising yields, indicating growing concerns the government will not be able to tame its deficit.
After a brief respite fuelled by a trillion euros of cash the European Central Bank (ECB) lent Europe’s banks in December and February, markets are becoming nervous again about euro zone debt loads, with fears that Spain might follow Greece, Ireland and Portugal in needing a bailout from international lenders.
That has put pressure on bond yields in the region, notably for Spain and Italy.
The Spanish treasury said it sold 2.5 billion euros ($3.3 billion) of two bonds, taking its issuance to half its gross target for the year.
It received bids for 3.3 times the offer on the shorter of the two bonds, and 2.4 times the longer, both up on previous auctions, suggesting Spanish banks were making the most of the ECB’s bounty.
France shifted 7.97 billion euros of medium and long-term bonds, with investors bidding for nearly three times the amount on offer, despite jitters on the secondary market before a presidential election that polls suggest will be won by Socialist Francois Hollande in the second round on May 6.
Spain, which has seen debt costs jump since early March, when Prime Minister Mariano Rajoy abandoned the deficit target previously agreed with its European partners, sold 1.1 billion euros of a bond maturing Oct. 31, 2014, at an average yield of 3.463 percent.
It also tested market appetite for a longer-term benchmark bond, due Jan. 31, 2022, selling 1.4 billion euros at a yield of 5.743 percent, up from 5.403 percent at the last primary auction in January.
Yields on the 10-year bond also rose after the auction, suggesting investors remain concerned about the country’s long-term fiscal sustainability.
Bank of America [BAC 8.92 ] – The bank earned 31 cents per sharefor the first quarter, excluding certain items, compared to estimates of 12 cents. Revenue was also above consensus, with the bank’s provision for credit losses at the lowest levels since the third quarter of 2007.
Morgan Stanley [MS 17.66 ] – The firm earned 71 cents per share ex-items versus estimates of 44 cents, with revenues well above consensus. Morgan Stanley credits stronger wealth management revenue and lower costs.
Gilead Sciences [GILD 46.61 ] – Gilead’s experimental hepatitis C drug performed well in a clinical trial, possibly giving it a leg up in a rapidly growing market. Gilead acquired the drug when it paid nearly $11 billion to acquire drugmaker Pharmasset in November.
Travelers [TRV 59.47 ] – The insurer earned $2.01 per share, ex-items, for the first quarter, versus estimates of $1.52. The company says it was able to raise prices successfully without hurting its customer retention rate.
Southwest Airlines [LUV 7.89 ] – The airline lost 2 cents per share for the first quarter, a smaller loss than the 5 cents Wall Street analysts were anticipating. Southwest reported record revenue, with the AirTran acquisition contributing to that performance. CEO Gary Kelly tells CNBC that jet fuel costs were the overriding negative factor for the quarter.
Verizon Communications [VZ 37.66 ] – Verizon earned 59 cents per share for the first quarter, one cent above estimate. Its Verizon Wireless unit added 501,000 new customers during the quarter, below a Reuters estimate of 511,000.
DuPont [DD 53.27 ] – The chemical maker earned $1.61 per share for the first quarter, excluding certain items, six cents above estimates. Its bottom line was helped by higher prices, and strong sales of areas like herbicides and genetically modified seeds.
UnitedHealth [UNH 57.32 ] – The health insurer beat estimates by 14 cents in earning $1.31 per share for the first quarter. Its results were driven by a jump in health-plan membership. The company raised its full year outlook.
Human Genome Sciences [HGSI 7.17 ] – The drug maker has received an unsolicited $13 per share takeover bid from GlaxoSmithKline [GSK 46.37 ]. The deal would value Human Genome at about $2.6 billion, and represents a nearly 82 percent premium over yesterday’s close. Human Genome says, however, that the offer undervalues the company.
CVR Energy [CVI 27.87 ] – The company has struck a deal with investor Carl Icahn that lets him buy CVR for $30 a share if the majority of holders tender their shares.
Qualcomm [QCOM 66.985 ] – The smartphone chip maker disappointed investors with its current quarter forecast. It sees fiscal third quarter earnings of 83 cents to 89 cents per share, compared to Street estimates of 90 cents. Its second quarter profit of $1.01 per share did beat estimates by five cents. Qualcomm CEO Paul Jacobs says supply problems are the company’s biggest issue.
American Express [AXP 58.04 ] – American Express earned $1.07 per share for the first quarter, seven cents above estimates, with revenue also slightly above consensus. Credit-card customers spent more, although the company also set aside more money to cover bad loans.
Yum Brands [YUM 72.94 ] – The restaurant operator beat estimates by three cents in earning 76 cents per share for the first quarter. The parent of Taco Bell, Pizza Hut, and KFC benefited from growth in emerging markets like China, with U.S. results also showing improvement.
eBay [EBAY 35.87 ] – The company earned 55 cents per share for the first quarter, three cents above estimates, while revenue also came in above analyst forecasts. The company’s bottom line was driven by improved results for both its Marketplace and PayPal units.
VMWare [VMW 111.29 ] – The software maker reported first-quarter profit of 66 cents per share, six cents above estimates, with the company pointing to strong demand for its virtualization software and the growing popularity of cloud computing technology. VMWare also raised its full-year revenue target.
F5 Networks [FFIV 124.21 ] – The company beat estimates with earnings of $1.09 per share for its fiscal second quarter, compared to analyst forecasts of $10.7. But the networking gear maker’s third-quarter forecast is coming in slightly below estimates, sparking worries that the company’s streak of double-digit earnings growth may be coming to an end.
OpenTable [OPEN 39.66 ] – The online reservation service’s shares will replace Zoll Medical [ZOLL 92.87 ] in the S&P Small Cap 600 Index after the close of trading on April 20. Zoll is being acquired by Asahi Kasei in a deal that will be completed shortly.
LabCorp [LH 90.68 ] – The medical lab operator earned $1.74 per share for the first quarter, seven cents above estimates, with customer traffic levels rising due in part to mild weather.
Philip Morris International [PM 87.74 ] – The tobacco company earned $1.25 per share for the first quarter, six cents above estimates, aided by higher cigarette volume in Asia and other markets.
Boston Scientific [BSX 5.54 ] – The medical-device maker earned 15 cents per share for the first quarter, seven cents above estimates. It also forecast current quarter profits well above analyst forecasts, despite weak growth in the number of procedures performed with its devices, as well as pricing pressures.