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 -- which are not favorable.
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 €10 billion to
recapitalize its banks, which have been hit hard by losses in Greek
government bonds.
On the domestic docket today, we will get the April Case-Schiller
home price index and the Conference Board's May Consumer Confidence
reading after the market opens. The Case-Schiller 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 a 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 those from
Morgan Stanley
(
MS
),
Goldman Sachs
(
GS
) and
JP 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.
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
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