The Dow Jones Industrial Average looks set for a higher open this morning. In today's Morning Movers, we...
•...note that a Fed rate hike today is almost a sure thing; •...explain why H&R Block (HRB) is down nearly 20%; •...highlight an RBC Capital cut of Lam Research (LRCX).
Can we just go to sleep until the Fed meeting starts? Because the market certainly seems to be somnambulant.
S&P 500 futures have risen 0.1%, while Dow Jones Industrial Average futures have advanced 31 points, or 0.1%. Nasdaq Composite futures have gained 0.2%.
There's really no reason for the market to be too excited before the Fed releases its statement at 2pm today. Yes, we had some data--the producer-price index hit 3.1%, beating forecasts for 2.8%--but not enough to change the Fed's plans. "With price pressures still building gradually throughout the economy, the Fed will be compelled to continue raising interest rates once a quarter, which is why we expect the fed-funds rate to reach 2.75-3.00% by the middle of next year," writes Capital Economics economist Michael Pearce. Tell us something we don't know.
And of course, the ECB is meeting tomorrow, and has a better chance of shaking up the markets. The reason: There's a good chance it will announce the end of its bond buying. "We believe the ECB may be in a hurry to close the QE chapter," writes BofA Merrill Lynch's Gilles Moec. "We think this is essentially political, as the ECB would not want its monetary policy to be affected by claims of supporting or conversely impairing the new policy course in Italy. The economic justification of ending QE is not a surprise."
Surprise or not, the markets may not like it.
Earnings & News
21st Century Fox (FOXA) is up 7.6% to $43.60 after a judge ruled in favor of AT&T's(T) $85 billion acquisition of Time Warner (TWX), as this will encourage a competing bid from Comcast (CMCSA) to challenge Disney's (DIS) offer. CBS (CBS) and Viacom (VIAB) were also trading up 4% and 3%, respectively, as the ruling bolstered their merger hopes. AT&T is down 3.8% to $33.06 on the news.
H&R Block (HRB) is down 19.2% to $23.91 after reporting fourth-quarter earnings. The tax preparer earned $5.43 a share on revenue of $2.39 billion; analysts were looking for earnings of $5.27 a share on revenue of $2.34 billion. The company, however, said it would close 400 underperforming stores, and increase spending on technology.
Pivotal Software (PVTL) is up 10.6% to $23.45 after reporting first-quarter earnings. The cloud-based software maker lost a dime a share on revenue of $155.7 million. Analysts were looking for a loss of 13 cents per share on revenue of $140.41 million. For the full year, it expects to lose between 39 cents and 37 cents a share, compared with the consensus estimate for a loss of 45 cents per share.
Boston Scientific (BSX) has dropped 6.6% to $31.60 after Stryker (SYK) said it hasn't engaged in merger talks with the company. Stryker has gained 7.1% to $174.00.
- Teresa Rivas
Upgrades & Downgrades
Applied Materials (AMAT) is down 1.4% to $50.15 after RBC Capital Markets downgraded it to Sector Perform.
Hershey (HSY) is down 2.1% to $91.44 after Credit Suisse downgraded it to Underperform.
Lam Research (LRCX) is down 1.5% to $184.20 after RBC Capital Markets downgraded it to Sector Perform.
Sprint (S) is up 2.6% to $5.45 after Raymond James upgraded it to Outperform.
Yelp (YELP is down 3.3% to $41.25 after Aegis Capital downgraded it to Sell. - T.R.
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