Ahead of Wall Street - September 27, 2012 - Ahead of Wall Street


Shutterstock photo

Thursday, September 27, 2012

A decidedly weak set of domestic economic data and concerns about budgetary developments in Spain provide the backdrop for today's trading action. While market sentiment ahead of the open was on the positive side, it may be hard to sustain the gains given this uncertain news flow. The trading action of the last few days suggests that Investors are stepping back from these day-to-day developments to get a sense of big picture. Next week's economic releases promise to provide useful clues about that big picture, but it will most likely be the coming third quarter earnings season that will provide the definitive directional nudge to this market.

We will find later today how decisive and determined the Spanish authorities are in tackling the country's fiscal situation in the face of widespread public protests. A credible budget plan coupled with decisive structural reforms will likely be reassuring enough for the Euro-zone authorities to back-stop the country's finances. Watch for comments from the Euro-zone officials about the details that Spain announces today.

The overall tone of economic releases on the home front was decidedly weak this morning, with the final read on the second quarter GDP and monthly Durable Goods coming in weaker than expected, while the weekly initial Jobless Claims data coming in better than expected. The GDP revision may not carry that much punch as it was the third look on that reading, but the Durable Goods drop is definitely something to worry about as it raises doubts about the outlook for corporate capital spending. Granted the headline drop pertained primarily to lower aircraft deliveries from Being ( BA ), but even the 'core' measure that strips out the transportation components fell for the third straight month.

What this tells us that even though consumer confidence may be improving lately as shown by the Conference Board and University of Michigan measures, business confidence seems to be waning. Hard to tell whether it reflects the advance effects of the looming 'Fiscal Cliff' or something else, but it's definitely something to keep an eye on. We will get the first look at the third quarter GDP report in about a month, though next week's data on jobs and the ISM indexes will set the tone for the broader economic discussion.

On the earnings front, we got a better than expected report from Discover Financial ( DFS ). Nike (NKE ) and Research In Motion ( RIMM ), the maker of blackberry, will report after the close today.

Sheraz Mian
Director of Research

BOEING CO (BA): Free Stock Analysis Report
DISCOVER FIN SV (DFS): Free Stock Analysis Report
NIKE INC-B (NKE): Free Stock Analysis Report
RESEARCH IN MOT (RIMM): 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

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks , US Markets
Referenced Stocks: BA , DFS , NKE , RIMM

More from Zacks.com




Equity Research
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com