Tuesday, June 26, 2012
Today's housing and consumer confidence reports on the home
front will likely not be enough to offset the market's
Europe-centric worries even though pre-market indications have been
modestly on the positive side. It's a headline driven market and
the key headlines are from Europe.
In headlines from across the pond today, the German chancellor
seems to trying to tamp down expectations for this week's Euro-zone
summit even as government bond auctions in Spain and Italy resulted
in the highest yields this year on those maturities. This is having
an impact in the secondary markets as well, where yields on
benchmark 10-year instruments for those two countries inched up. A
rating agency's downgrade of Spanish banks doesn't help mattes
either. In other Euro-zone news, Cyprus became the fifth country to
ask for an EU bailout when the small island nation asked for a €10
bailout to recapitalize its banks which have been hit hard by
losses in Greek government bonds.
On the domestic data docket today, we will get the April
Case-Shiller home price index and the Conference Board's May
Consumer Confidence reading after the market opens. The
Case-Shiller index is expected to show a 2.5% drop from the
year-earlier period after a 2.6% drop in March. But a number of
other more timely home price indicators are showing signs of
stabilization in home prices. The consumer confidence measure is
expected to show a modest pullback from April's 64.9 level,
reflecting the recent run of soft labor market and other data.
In corporate news,
News Corp
(
NWSA
) is reportedly contemplating splitting itself into two companies -
one focused on the company's entertainment businesses, while the
other housing its publishing assets. While a number of major
companies have been going this route lately to capitalize on the
market's appreciation of such moves, the catalyst for News Corp is
reportedly the regulatory scrutiny that the company's British
newspaper assets have received lately due to a well publicized
phone-hacking scandal. This move is expected to help the company
segregate the broader company from the negative U.K.-centric news
flow arising from that scandal.
In other news,
Facebook
(
FB
) appears on track to receive a lot more research coverage from
Wall Street firms in the next few days. Analysts at brokerage
houses that were part of the company's underwriting team were
barred from covering the stock for the initial 40-day quiet period,
which comes to an end today.
This means that about two dozen analysts, including analysts at
Morgan Stanley
(
MS
),
Goldman Sachs
(
GS
), and
J.P. Morgan
(
JPM
) will come out with their recommendations and research on the
social network giant from Wednesday onwards. While some may
discount the recommendations from underwriting firms given the
less-than-stellar performance of the IPO, historically the
favorable recommendations of many such underwriting analysts have
been beneficial to the stock. It will be interesting to see if we
will see a similar trend play out in the case of Facebook shares in
the next few days as well.
Sheraz Mian
Director of Research
FACEBOOK INC-A (FB): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
Report
MORGAN STANLEY (MS): Free Stock Analysis Report
NEWS CORP INC-A (NWSA): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research
Want the latest recommendations from Zacks
Investment Research? Today, you can download 7 Best Stocks for the
Next 30 Days. Click to get this free report