CNBC's Domm: Today's Agenda in the Markets
Stocks are ready to spring higher on the opening as economic data, earnings and some merger news gets investor attention this morning. GM's better-than-expected earnings report is adding a positive tone.
European stocks are on a tear this morning, heading toward their biggest one day gain in a year as worries fade about subprime and credit woes slowing the global economy. The FTSE is up 2.2% and the German DAX is up 2%. French stocks are up 1.8%. Asian markets were mixed with Japan closing lower and Hong Kong and Korea higher.
Data to watch today includes personal income, the employment cost index, construction spending, the Chicago PMI and consumer confidence.
General Motors, meanwhile, reported its third straight quarterly profit on improved performance in Europe and North America. The company earned $891 million, or $1.56 per share, compared to a loss of $3.4 billion or $5.98 per share a year earlier.
Wall Street's new favorite word made the rounds in a big way yesterday, in research notes and from pundits of all sorts, as the market shook off some of its credit-market phobia.
Today, Goldman Sachs' Abby Joseph Cohen reaffirmed her bullish stance on Squawk Box. She says the choppiness and credit worries may not be over, but the S&P should still make it to 1600 by year end, a 10% move. Cohen said earnings are strong and she sees no recession.
"My feeling is that the fundamentals supporting those stock markets are in very good shape," she said.
But she does say "there could be some more repricing by the way in both directions." She said there are now buying opportunities in some sectors. "From an earnings standpoint, we think the more cyclical side of the economy is where we're going to see more earnings momentum," she said.
One thing that could shake the markets again is when portfolio managers uncover some of the damage to their portfolios, she added.
Soothing to the market yesterday afternoon was Standard and Poor's upgrade of Morgan Stanley's credit rating. S&P said Morgan is better positioned to weather credit market turmoil than some of its Wall Street rivals. Also encouraging was the fact that GMAC Financial's earnings report was not as bad as feared and the fact that Citadel swooped in to grab hedge fund Sowood Capital's battered assets. Sowood lost 50% or $1.5 billion after declines in the credit markets.
All those things helped ease some of the market's concerns about credit and Wall Street, but it was the S&P upgrade that gave stock traders a real boost in confidence. "It was electrifying for the market," said CNBC's Bob Pisani.
The Dow finished up 93 points, or 0.7% after last week's 4.2% thrashing. The index traded in negative territory, down 46, before moving up to close higher. The Dow is down 0.4% for July and up 7.2% year to date.
Nasdaqjumped 21, or up 0.8% yesterday. For the month, Nasdaq is down 0.8% and is up 7% for the year. S&P 500 rose 15 or 1% to 1473. The index is down 2.0% for the month, and up 3.9% for the year to date.
"I think it was very good that today was boring," said Pisani after the close yesterday. "The corporate bond market is doing better. On a normal day, stock traders would never talk about the corporate bond markets." Pisani said the S&P comment on Morgan alleviated some of the fears that Wall Street is loaded with bad debt that will blow up balance sheets. After the news came out, the broker index jumped higher and the financials helped push the market to a higher close.
CNBC's Larry Kudlow also thought yesterday's market move and tone were positive. ""I thought the market's action was great, but it's awfully hard to know when you are in a correction mode. My view is play the positive economic and profit fundamentals. Buy stocks on the dip," says Kudlow.
Corporate buyers are pulling out their wallets as private equity sits on the sidelines for now in the deal arena.
Marathon Oil today said it would pay $6.2 billion for Western Oil Sands, plus it announced a $2 billion stock buyback. Investor Nelson Peltz's Triarc Co, the parent of Arby's, cranked up some excitement about Wendy's by saying it would pay $37 to $41 a share for the fast food chain.
Meanwhile, News Corp and Dow Jones edge closer to a deal. Both companies have board meetings today. The Bancroft family's final decision is awaited.
The FTC begins a two-day hearing on its lawsuit to stop the purchase of Wild Oats by Whole Foods .
Standard & Poor's Case Shiller monthly home price index is due at 9 a.m. New York time. CNBC real estate correspondent Diana Olick will report on the data. "It's been steadily dropping. Case Shiller does the top 20 metro markets, and that's where you see the big price drops anyway with the exception of Seattle and Portland which continue to rise."