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SMF Notes Early Floor Talk: Modest pullback following late day rally; same concerns remain around Europe
U.S. futures are hovering around morning lows, down after Asian stocks sold off and as European debt worries remain rampant. S&P futures are -5 vs. fair value and DJ futures are -40. The early losses follow a sharp rebound in yesterday's session, which left the major averages with a -0.1% to -0.4% close, after dropping as much as ~1.5% at yesterday's open. A downtick in the dollar helped energy and materials stocks rebound, while financials showed relative strength throughout the day. However, today's early pullback wipes out a good portion of the afternoon rally.
Today, ongoing contagion concerns around Portugal , Spain and Italy has led to incremental pressure on the sovereign debt of those countries (translating to higher yields), and is weighing further on the euro, which is at another multi-month low vs. the dollar (currently -0.0108 at $1.3017). However, European stocks have performed relatively well today in the face of these issues, trading flat to +0.6% (DAX +0.6%, FTSE +0.1%, CAC flat). Asian stocks, on the other hand, sold off sharply overnight, with Japan 's Nikkei sinking -1.9%, Hong Kong's Hang Seng -0.7% and China 's Shanghai Comp -1.6%. A stronger yen alongside continued concerns about additional actions China may take to cool inflation weighed on stocks there.
U.S. corporate news has picked up a bit today, with a few items of interest on the M&A front. In announced deals, industrial motor supply co Baldor Electric (BEZ) will be acquired by ABB (ABB) for $63.50 per share in cash. The $4.2 bln deal represents a ~41% premium to yesterday's close. M&A speculation remains high too, with reports overnight suggesting that SYMC (+3% on light volume) hired advisors to explore strategic alternatives. Also, stories continue to circulate suggesting that GOOG is acquiring Groupon for as much as $5-6 bln, although neither company has yet made any comments. Finally, STX is -4.4% after announcing yesterday afternoon that it ended its going-private talks.
Economic data resumes today, with the release of Case-Shiller home price data at 9:00 ET, followed by Chicago PMI and Consumer Confidence at 9:45 and 10:00 ET, respectively. This precedes a busy remainder of the week, which includes ADP employment data tomorrow (along with ISM and construction spending), weekly jobless claims data on Thursday and the November Employment Report on Friday. Finally, it's worth noting that end-of-month positioning could add another dynamic to today's trading.
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