After concluding last week with their fourth straight weekly
drop, the major market indexes are set to kick off the
holiday-shortened week on a high note. Historically, the bulls have
fared well during the
week following Memorial Day
, with the S&P 500 Index (SPX ) averaging a 1.15% return since
the start of the new millennium. Fueling optimism ahead of the bell
are rising expectations for a second Greek bailout, which has also
helped to soften the dollar and push crude oil futures further
north of the century mark. On the equities front, a freshly debuted
laptop from Intel Corp. (INTC) is aiding the blue chips' early
lead, while merger-and-acquisition news from both Ashland Inc. (
ASH
) and KKR & Co. (
KKR
) is bolstering sentiment about the collective corporate purse
strings. Against this backdrop, the Dow Jones Industrial Average
(DJIA ) is flirting with a 95-point lead, while the SPX is up
roughly 11.3 points.
In equities news, Intel Corp. (INTC - 22.21) is set to open
roughly 1.7% higher, after the blue chip debuted a new category of
"Ultrabook" laptops. At the Computex trade show in Taipei, the firm
admitted it was "late" to the tablet game, but said it's catching
up with the introduction of the lightweight, high-performance
processor that it expects to account for 40% of consumer laptop
sales by the end of next year. "There'll be some confusion if you
look at the fold factor; when you open it you'll see a PC but if
you're on the go, just fold it and suddenly it's a tablet. Is it a
PC? Is it a tablet? I think it doesn't matter," said Intel V.P.
Mooly Eden.
Meanwhile, Ashland Inc. (ASH - 61.04) agreed to purchase
chemical supplier International Specialty Products Inc. for $3.2
billion in cash. Ashland expects the deal to close by the fourth
quarter, and anticipates the acquisition to immediately contribute
to earnings. Should ASH fail to shore up financing, ISP is entitled
to a $413 million termination fee. "This defining transaction
enables us to significantly expand our market positions in higher
margin, higher growth and less cyclical global markets like
personal care and pharmaceuticals," said Ashland Chairman and CEO
James J. O'Brien. At last check, ASH is up about 3.1%.
Finally, KKR & Co. (KKR - 17.12) agreed to buy Academy
Sports + Outdoors for an undisclosed sum. The transaction is
expected to close in six to eight weeks. "This transaction with KKR
will help accelerate Academy's continued growth and provide even
greater flexibility to achieve our strategic goals," said Academy
Sports President Rodney Faldyn. In pre-market trading, KKR is
hovering just north of breakeven.
Earnings Preview
Today's earnings docket will feature reports from Lions Gate
Entertainment (
LGF
) and E-House China Holdings Ltd. (
EJ
), to name a few. Keep your browser at
SchaeffersResearch.com
for more news as it breaks.
Economic Calendar
The economic schedule kicks off today with the
S&P/Case-Shiller home-prices survey for March, the Chicago
purchasing managers' index, the Dallas Fed manufacturing survey,
and the Conference Board's consumer confidence index for May. On
Wednesday, reports on construction spending and vehicle sales, as
well as the Institute for Supply Management's (ISM) survey of
manufacturers, will hit the Street, though investors will likely
pay closer attention to ADP's monthly employment report. On
Thursday, the government's weekly jobless figures will take center
stage, along with reports on April factory orders and first-quarter
productivity. Finally, the economic calendar goes out with a bang
on Friday, with the highly anticipated release of Uncle Sam's
nonfarm payrolls report.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (
CBOE
) saw 956,998 call contracts traded on Friday, compared to 484,234
put contracts. The resultant single-session put/call ratio docked
at 0.51, while the 21-day moving average inched lower to 0.64.
The spring 2011 issue of
SENTIMENT
magazine is now available here.
Overseas Trading
Stocks in Asia gained ground today, with upbeat economic data
out of Japan setting a bullish mood. Industrial output in the
quake-crippled country increased 1% in April, and many
manufacturers are predicting continued growth in May and June. The
data helped to offset a downgrade warning from Moody's, which
cautioned that the fiscal fallout from the March 11 earthquake and
tsunami is "magnifying the adverse effects imparted by the global
financial crisis." Meanwhile, Chinese equities finally broke an
eight-session slump, with alternative energy issues leading the
charge after Germany announced plans to shut down all of its
nuclear reactors by 2022. By the close, South Korea's Kospi rose
2.3%, Hong Kong's Hang Seng tacked on 2.2%, Japan's Nikkei gained
about 2%, and China's Shanghai Composite added 1.4%.
European shares are also moving higher, led by financials.
Traders seem enthusiastic about the bailout prospects for Greece,
after Jean-Claude Juncker -- chairman of a group of euro-zone
finance ministers debating the fiscal emergency -- said he was
"quite optimistic" about the progress made toward an aid package. A
total restructuring of Greek debt is now viewed as unlikely,
providing a boost for the euro (and, in turn, commodities and
energy stocks). At last check, the German DAX is up 1.9%, the
French CAC 40 has gained 1.6%, and London's FTSE 100 has crept
about 1% higher.
Currencies and Commodities
The greenback has continued its slide amid easing fears about
Greek debt, with the U.S. dollar index down about 0.5%. Elsewhere,
black gold has extended its run higher on escalating geopolitical
tensions in the Middle East, as well as reports of a temporary
closure of a pipeline transporting oil to Cushing, Okla. At last
check, the front-month contract has added $1.63, or 1.6%, to linger
near $102.22 per barrel. Meanwhile, gold and silver futures have
continued to power higher, with the front-month contracts up 0.1%
and 2%, respectively.
Unusual Put and Call Activity:
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