The U.S. trade deficit fell 3.8% in May to $48.7 billion largely because of lower oil imports, while exports rose slightly, the Commerce Department reported Wednesday. Imports in May fell 0.7% to $231.8 billion on a seasonally adjusted basis. Exports rose 0.2% to $183.1 million, with all of the increase occurring on the services side of the economy. Exports of goods were unchanged at $130.7 billion. Exports of goods to China climbed by 5.2% and exports of goods to the European Union rose by 2.6%, mainly because of increased trade with France. Imports of crude oil dropped $2.82 billion in May to $27.42 billion. In April, the trade deficit was revised up to $50.6 billion from $50.1 billion.
Treasury prices slipped Wednesday, pushing yields up from their lowest level in about five weeks, ahead of the government’s sale of benchmark 10-year notes.
The Federal Reserve, meanwhile, is slated to release minutes from its latest monetary-policy meeting.
Spain has announced a fresh set of public spending cuts and tax increases amounting to €65bn over the next two-and-a-half years as the government of Mariano Rajoy struggles to achieve its budget deficit reduction targets with an economy mired in recession.
As part of the measures, announced on Wednesday by Mr Rajoy in parliament, value added tax will be increased from 18 per cent to 21 per cent, unemployment benefits will be reduced and an attempt will be made to rationalise Spain’s sprawling local governments.
Shares of Abercrombie & Fitch were gaining ground in Wednesday’s pre-market action after The New York Post reported the company is planning to launch a “massive” buyback program.
The stock was up nearly 5% ahead of the open after the report, which cited undisclosed sources as saying the repurchase authorization would be a “material increase” over the casual apparel retailer’s current 12.9 million share program.
The article also said that Abercrombie CEO Mike Jefferies is considering pulling back on the company’s aggressive expansion efforts in Europe. The stock closed Tuesday at $32.77, down more than 30% so far in 2012.
UBS initiated coverage of Apple with a buy rating and a 12-month price target of $740, saying it sees the release of the iPhone 5 as another positive catalyst for the stock, which it views as being reasonably priced.
“Apple is creating a tech empire that likely has not reached its zenith.” the firm said. “Our Wave Principle teaches that empires don’t last. We recommend the stock, however, because the relatively low valuation seems to discount a too-pessimistic future given moderate smartphone and tablet penetration as well as potential new products.”
UBS said it believes long-term earnings per share could top $70 vs. the current consensus estimate for a profit of $48.84 in fiscal 2012.
“Apple’s strategic approach is powerful: it creates new categories with a focus on the job to be done, disrupts from above, and builds integrated platforms,” the firm said. “Its execution is quirky but has resulted in the leading mobile device vendor. Future products may include a TV, learning assistant, and perhaps consumer robots.”
As for near-term earnings, UBS does see some potential bumps in the road.
“Two bullish keys to financial results are (1) the iPhone, which is two-thirds of profit, and (2) Asia, which was 40% of profit growth last year,” the firm said. “The next couple quarters have some risk due to the iPhone transition, but Apple’s capex plans suggest upside to our unit estimates.”
Apple shares closed Tuesday at $608.21, up more than 50% so far in 2012.
The bank is reportedly planning to follow through on CEO Jamie Dimon’s threats to claw back stock compensation from the employees responsible for the disastrous trade in the Dow component’s synthetic credit portfolio that’s led to at least $2 billion in losses.
According to The Wall Street Journal, Ina Drew, the former chief investment officer at the company who resigned in the wake of the bad trade’s disclosure, is among those who will be subject to a clawback, a scenario that Dimon said was possible during recent appearances on Capitol Hill to discuss the so-called London Whale hedging debacle.
Investors are likely to get more details on JPMorgan’s plans when the bank reports its second-quarter results on Friday morning. The stock closed Tuesday at $34.25, up 2.4% so far in 2012. The shares were sitting above $40 just prior to disclosure of the bad trade.
VOXX International reported a fiscal first-quarter loss of $9 million, or 20 cents a share, on sales of $194 million after Tuesday’s closing bell. The average estimate of analysts polled by Thomson Reuters was for a profit of 10 cents a share in the May-ended period on revenue of $207.8 million.
Shares of the Hauppauge, N.Y.-based consumer electronics company, formerly known as Audiovox, closed Tuesday at $9.77, and the stock was quoted down 16% at $8.22 during after-hours action on Tuesday.
hhgregg joined the warning parade after Tuesday’s closing bell, saying it now expects earnings of 90 cents to $1.05 a share in its fiscal year ending in March 2013. The Indianapolis-based consumer electronics and appliance retailer had previously forecast a profit of $1.12 to $1.27 a share for the year, and Wall Street’s current consensus view is for earnings of $1.20 a share.
Shares of the company, which now sees a loss of 16 to 17 cents a share for its fiscal first quarter mainly because of weakness in video sales, were down more than 20% in late trades. The news was also impacting shares of fellow retailer Best Buy(BBY_), whose stock was off nearly 5%.
Shares of the Canadian precious metals company could see active trading after the company lowered its full-year 2012 gold production outlook to 2.35 and 2.45 million ounces from a previous guidance of 2.6 million ounces. The company cited “operational issues” at its Red Lake and Peñasquito mines for the change.
As a result, Goldcorp boosted its total cash cost guidance to $310 to $340 per ounce of gold on a by-product basis and $625 to $650 per ounce on a co-product basis vs. a previous guidance of $250 to $275 per ounce on a by-product basis and $550 to $600 per ounce on a co-product basis.
“”We are disappointed with reducing production guidance due to operational issues at our two most important mines,” said Chuck Jeannes, the company’s president and CEO, in a statement. “Our focus is on addressing these issues promptly and in a manner supporting the long-term opportunities at these key assets.”
The stock closed Tuesday at $36.75, and was quoted down nearly 4% in Tuesday’s after-hours action.