SMF Notes End of Day Summary: Stocks Settle Near Session High for Solid Gain

SMF Notes Early Floor Talk: Drifting with modest losses

Futures are drifting with modest losses this morning (S&P futures -4, DJ futures -20), after paring overnight gains amid a pullback in the euro and some weaker data in Europe.

Futures were higher last night as Asian stocks showed gains (Nikkei +1.0%, Hang Seng +0.4%, Shanghai +0.2%). Headlines about a coordinated G7 conference call to discuss Europe may have helped the positive tone in Asia. While Europe/Spain/Greece will certainly be the topic of interest, we'd note that this meeting was said to be a part of normal meetings. The Reserve Bank of Australia cut key rates by 25bps to 3.5%, which boosted sentiment in the region (Australia's ASX closed +1.5%).

In Europe, stocks are mixed (DAX -1.0%, CAC +0.3%, IBEX +0.6%, FTSE closed) amid mixed/weaker data. German Service PMI data came in below expectations, and while eurozone PMI showed continued contraction, it was slightly better than expected. However, eurozone Retail Sales was below expectations. Germany's Finance Minister spoke favorably of Spain, stating they are doing everything right and current yields are unjustified. Last night after the close of U.S. trading, Egan Jones downgraded the UK to AA- from AA.

The euro had initially moved higher overnight, but has since given up its gains and is now -0.0079 at $1.2420. Commodities are mixed (oil -0.4%, gold +0.3%).

U.S. Corporate news is very light. DG is -3% this morning, giving up it's after-hours post-earnings gains when it announced a 25 mln share secondary offering. OPXT is +17.5% after saying the unsolicited offer to acquire the company for $1.40 is not superior to proposed merger with Oclaro (OCLR).

The only item on today's econ calendar is the May ISM Services reading at 10:00 ET. After the close, eight companies are scheduled to report earnings, including BOBE, ULTA and MFRM.

SMF Notes Overnight Summary -- World markets mixed, hope brewing from G7 emergency phone conf call

Talk of a coordinated G7 conf call to discuss Europe spurred hope into the markets early, as witnessed in the Asian session, with the major markets closing in the black today. It appears the timing of the call is 7am ET (unconfirmed). The Res. Bank of Australia cut key rates by 25bps to 3.5%. This gave a slight jolt to the region following the policy easing. China's Commerce Minister attempted to ease worries stating any slowdown in the nation would be with in expectations. In Europe, a mixed session is underway, seeing German Service PMI data came in below expectations. Eurozone Retail Sales also fell below expectations. Germany's Fin Min spoke favorably of Spain, stating they are doing everything right and current yields are unjustified. As such, the global equity mixed, awaiting its next sign of direction. Similar story with commodities, with Silver outperforming thus far.

SMF Notes S&P futures vs fair value: -6.00. Nasdaq futures vs fair value: -11.00.

Stock futures are down from their overnight highs, making for a moderately negative tone to premarket trade. The euro has also pulled back. It is now down 0.6% against the dollar... As for Europe's major bourses, they're somewhat mixed at the moment. Although some have been encouraged by potential actions to come out of a teleconference between G-7 members today, there is still the fact that last evening analysts at Egan Jones cut their debt rating on the UK to AA- from AA. Also, retail sales numbers for the broader eurozone came short of the consensus forecast, while PMI Service readings from the region varied relative to expectations... As an aside, participants will get the latest reading on domestic services activity with the latest ISM Non-manufacturing Index at 10:00 AM ET. There is no corporate news of consequence at this time.

SMF Notes CRM Salesforce.com: Doubling down on the salesforce.com marketing cloud - JMP Securities (133.71 +2.49) -Update-

JMP Securities reits their Outperform rating and $170 price target on salesforce.com after the company announced the acquisition of Buddy Media, one of the JMP Hot 100 private companies, for $689 million. Firm says this deal is expensive at about 14x their 2012 revenue estimate of $50 million and is expected to be dilutive in FY13. On the positive side, Firm says the acquisition enhances the company's "social enterprise" message and solidifies salesforce.com's leadership position in social marketing, Buddy Media is an attractive asset with bookings growth of over 200% in 2011, and they expect Buddy Media to benefit from salesforce.com's substantial distribution capabilities in much the same way Radian 6 appears to have benefitted.

SMF Notes ISM Non-Manufacturing Index Shows Small Acceleration in May

The ISM Non-manufacturing Index increased from 53.5 in April to 53.7 in May. The Consensus expected the index to fall to 53.1. After slowing in April, business activity growth accelerated in May as the respective index increased from 54.6 to 55.6. The pickup was driven by an acceleration in the new orders index, which rose to 55.5 from 53.5, and steady backlog growth, which stayed at an expansion level of 53.0 for the second consecutive month. The employment index dropped from 54.2 in April to 50.8 in May. That move is in-line with the lackluster payroll data from the May employment report. Inflation pressures eased as businesses reported a contraction in prices for the first time in 34 months. The price index fell from 53.6 in April to 49.8 in May.

SMF Notes  AAPL Apple: Overall iPhone sales are tracking in line with their June quarter est of 27 mln units (-23% QoQ) - Canaccord Genuity (564.29 )

Canccord Gneuity's May channel checks indicated the iPhone 4S remained the top selling smartphone in the U.S. market despite gradual share losses at each carrier with the iPhone 4S now eight months old. Despite seasonally slower iPhone sales, they maintain their belief Apple is well positioned for strong C2012/13 sales and earnings growth driven by new product introductions, including the new iPad, the pending refresh of MacBook Air/Pro, an LTE iPhone 5 by October, and iTV in 2013; $775 tgt.

SMF Notes European Yields: 10-yr: -08/32..1.563%..USD/JPY: 78.72..EUR/USD: 1.2446

Yields are mixed across Europe after this morning's admission by Spanish Budget Minister Cristobal Montoro in which he indicated Spanish lenders are in need of outside assistance. This is a significant stage in the European debt crisis as it marks the first time Spain has publicly asked for help. Spanish yields are little changed this morning with the 10-yr easing 5 bps to 6.324% as traders buy Spanish paper on hopes the country will receive assistance. Elsewhere in the periphery, Italian yields are on the rise with heavy selling running longer dated yields up as much as 12 bps. A 9 bp rise in the Italian 10-yr yield has it back up to 5.572%. Meanwhile, a light bid in German Bunds has the 10-yr yield down 2 bps at 1.211%. Britain's debt market is closed for the Queen's Diamond Jubilee. 

SMF Notes S&P futures vs fair value: -4.30. Nasdaq futures vs fair value: -7.50.

Trade in Europe is somewhat mixed at the moment. Traders there await the outcome of a conference call between G-7 finance ministers ahead of the latest European Central Bank announcement tomorrow. The final Services PMI reading for the eurozone improved incrementally to 46.7 from 46.5 in the preliminary post. However, retail sales for the eurozone declined during April by 1.0%, which follows a 0.3% increase in the prior month. Spain's IBEX is presently up 0.8% after the country's Treasurer discussed the consequences of high borrowing costs for the country ahead of a debt auction later this week, but Germany's Finance Minister went on record to say that Spain's yields are unjustified since the country is doing everything right. Germany's DAX is down for a 0.8% loss, which puts it on pace for its fifth straight loss. Deutsche Bank (DB 33.68, -0.59) has been a heavy drag after it performed well in the prior session. Deutsche Telekom and E.ON have also cast a heavy weight on broader action. Strength is limited to only a handful of names -- Henkel AG, Metro AG, Fresenius, Commerzbank, Adidas, and Infineon Tech are the only members of the German bourse in positive territory, but their gains are varied. The country's Services PMI reading for May came in at 51.8, which is down from the 52.2 that was posted in the preliminary report. France's final Services PMI reading for May was trimmed to 45.1 from 45.2. The country's CAC 40 is currently up 0.7% amid strength in Total (TOT 42.95, +0.35), BNP Paribas, and Societe Generale. Britain's FTSE has fallen to a 1.1% loss. Last evening analysts at Egan Jones cut the debt rating on the UK to AA- from AA. Vedanta Resources, Evraz Plc, and ITV Plc are in the worst shape. Tullow Oil and Xstrata aren't much better off. However, BP Plc (BP 36.71, +0.13), Man Group Plc, and Lloyds Group (LYG 1.55, +0.00) are in strong shape, leading a short list of advancing issues.

Amid the action of Europe the euro has retreated to a 0.5% loss against the greenback. It was last quoted at $1.244.

Overnight action in Asia was generally upbeat, helping lift Japan's Nikkei to a 1.0% gain. Mazda Motor was strong after suffering a sizable loss in the prior session, but Nippon Sheet Glass and Kawasaki Kisen Kaisha were the top two performers, respectively. Fast Retailing had the dubious distinction of being the day's worst performer, based on percentage lost. Hong Kong's Hang Seng advanced 0.4%. China Public Healthcare was a top performer. Financials and banking plays generally performed well, too, but China Telecom and and Evergrande Real Estate Group were both pressured. Mainland China's Shanghai Composite eked out a mere gain of 0.1%. Anhui Liuguo Chemical, China Merchants Bank, Shanghai Duolun Industry, and Huidian Power International garnered some of the strongest buying interest. Citic Securities, Haitong Securities, and Founder Securities both encountered selling. China Petroleum (SNP 88.15, -0.02) had a lackluster performance, but after the close it was upgraded by analysts at Jefferies.

Note: ticker quotes reflect US premarket prices.

SMF Notes  FAST Fastenal making news lows following May sales results, currently down 8.6% (39.70 -3.71) -Update-

Peers GWW -7.5%, MSM -6.6% and AIT -5.5%  are also under pressure.

SMF Notes Market View:

Small-cap gold miners ETF GDXJ +1.75% a notable outperformer to GDX into midday trade with top-weighted, U.S. traded GDXJ fund holdings EXK, TRX, GSS, MUX, THM, PZG, AXU, VGZ, & RIC in play

SMF Notes Stocks/ETFs making 52 week highs/lows - New lows (106) outpacing new highs (24)

Stocks making 52 week highs: AFSI, AKRX, AUBN, AUTH, AUXL, BLIN, DUK, FLO, GYRO, ISTA, KOF, KONG, NLS, NSM, PCYC, PNW, RDEA, REED, SNTA, SNTS, UNFI, WNI, WTR, XEL

Stocks making 52 week lows: ABFS, ACH, ACM, AEZS, AIR, ANAD, ANX, ARUN, AVG, AVP, AZN, BIN, BMJ, BORN, BSPM, BWEN, CCMP, CCO, CDZI, CHRW, CNIT, CTRP, CVVT, CWTR, DBLE, DOM, DXR, ECT, ECTY, EGI, ENG, EROC, ESEA, FSYS, FTE, GEOY, GERN, GLF, GMCR, GROW, GST, GURE, HEK, HRT, IDCC, IDRA, INVE, IVAN, JRJC, K, KDN, KEYN, LPHI, LRE, MCZ, MGLN, MHGC, MLP, MNDO, MPO, MRVC, MXT, NAV, NBG, NEI, NINE, NRT, NTL, NTT, NURO, OCZ, OPXA, ORB, ORCC, PLCM, PPO, PRGN, PRMW, PRSS, QBC, RDY, REDF, REVU, SDR, SHI, SI, SKYW, SLCA, SNCR, SOL, STRI, STV, SUPN, TI, TIV, TLAB, TWIN, UBNT, UEC, UQM, WBNK, YZC, ZBB, ZHNE, ZNGA, ZQK

ETFs making 52 week highs: none

ETFs making 52 week lows: EPOL, FAN, GREK, RJA, UHN

SMF Notes European Markets Closing Prices

European markets are now closed; stock markets across Europe performed as follows:
UK's FTSE: Closed
Germany's DAX: -0.1%
France's CAC: + 1.0%
Spain's IBEX: + 0.4%
Portugal's PSI: + 0.4%
Italy's MIB Index: + 0.8%
Irish Ovrl Index: -1.2%
Greece ATHEX Composite: -5.1%

SMF Notes Market Update: Gains Remain Modest

Despite leadership from Financials, the broad market has spent the past few hours bouncing back and forth between the flat line and a modest gain... The tone ahead of the open was relatively cautious as market participants made note of some rather mixed data from Europe, but weighed the potential outcome of a teleconference between G-7 finance ministers, all while remaining mindful that the European Central Bank will make its latest announcement tomorrow. However, market participants had a positive response to the latest ISM Services Index, which improved incrementally in May to 53.7 from 53.5 in the prior month, besting the reading of 53.1 that had been generally expected among economists polled. Although stocks were bid up in the wake of the ISM number, almost every sector except Financials has struggled to sustain gains. The Financial sector is currently up in excess of 1% amid strength in shares of regional lenders, investment banks, diversified financial services players, and insurance outfits. The performance comes after Financials fell 1% in the prior session and 3.7% this past Friday... The broad market has been reluctant to follow the Financial sector's lead, however. Instead it has spent most of the session chopping along only marginally above the neutral line... Broad market action has been closely correlated with currency movements in recent weeks, but yesterday market participants seemed to shrug off strength in the euro. The euro has reversed course today; it is currently down 0.5% against the greenback. Dow +0.1%, Nasdaq +0.2%, S&P 500 +0.3%

SMF Notes The tone ahead of the open was relatively cautious as market participants made note of some rather mixed data from Europe, but weighed the potential outcome of a teleconference between G-7 finance ministers, all while remaining mindful that the European Central Bank will make its latest announcement tomorrow.

SMF Notes St. Louis Fed's Bullard discussed U.S. monetary policy and housing bubble -Update-

Federal Reserve Bank of St. Louis President James Bullard discussed "The Aftermath of the Housing Bubble" during an event jointly hosted by the Bipartisan Policy Center's Housing Commission and the Jack Kemp Foundation. "Recovery from this event is ongoing and will ultimately take many years," he said, noting that households are saddled with far too much mortgage debt compared with historical norms. "Monetary policy has been ultra-easy during this period, but cannot reasonably encourage additional borrowing by households with too much debt," he added... "While the U.S. data has been mixed in recent weeks, Bullard noted that "the outlook for 2012 has not changed significantly so far," with many expecting a stronger second quarter than first quarter in terms of real GDP growth and a stronger second half of 2012 than first half... Bullard noted that the situation in Europe has driven U.S. interest rates lower. "Both nominal and real interest rates have fallen substantially over the last year in the U.S.," he said.

SMF Notes End of Day Summary: Stocks Settle Near Session High for Solid Gain

The stock market overcame a lackluster start and some underwhelming data from the eurozone to score a solid gain by settling near its session high... A mixed batch of Services PMI readings from Europe and a downturn in eurozone retail sales made many participants cautious this morning. It had been hoped that a teleconference between G-7 finance ministers would provide progress in addressing the persistently precarious conditions facing the eurozone, or especially Spain, given the country's recent struggles. Reports indicated that macro developments in and potential policy responses were discussed, but nothing monumental came of it. That has left many looking to the European Central Bank, which will make its latest announcement tomorrow morning... The latest ISM Services Index, which improved incrementally in May to 53.7 from 53.5 in the prior month to best the consensus call of 53.1, was released after the open and met with a positive response. However, the broad market had a hard time extending the move... Financials ran up to an early lead with help from regional lenders, investment banks, diversified financial services players, and insurance outfits. The sector settled with a 1.7% gain, which helped it recoup some of the outsized losses that it had suffered in the previous two sessions... Most other stocks were reluctant to follow Financials higher, but an afternoon advance by Tech -- the largest sector by market weight -- provided the necessary push to drive the broad market higher. Tech settled the session with a 0.7% gain... Telecom stocks were at the opposite end of things. The defensive-oriented sector outperformed in the past couple of sessions, but today it slid to a 0.2% loss. Consumer Staples, the only other sector that suffered a loss, also fell 0.2%, collectively... While limited weakness helped the broad market book a solid gain, the performances of small-caps and mid-cap stocks were even more impressive. A willingness to take on their risk helped both the Russell 2000 and S&P 400 book gains greater than 1%... For the second straight session little regard seemed to be given to the euro, which was a key catalyst for stocks in recent weeks. The currency dropped to a 0.4% loss against the greenback after it had scored a strong gain in the prior session.