Market Insider/Wednesday Look Ahead
Stocks are trudging along and have held up fairly well in the face of some not so good news and ahead of the barrage of next week's earnings reports.
Disappointing after-the-bell news from United Parcel Servicecould linger early Wednesday, a day with little data expected. Wholesale trade is reported at 10 a.m.
Also on the corporate front, NBC News reports Boeing is expected to announce a delay to its 787 Dreamliner when it gives an update on the aircraft tomorrow at 11 a.m. Earnings news is also due from Circuit City , the weaker of the major electronics retailers.
Stocks in the News
UPS late Tuesday lowered its first quarter guidance, slashing its earnings per share range to $0.86 to $0.87 from $0.94 to $0.98. United Parcel blamed fuel costs, the weak economy and a drop in volume. As a result, it saw a drop in its stock in the after hours session and shares of rival FedEx fell in sympathy.
There could also be some carry through in shares of Dell. The company said late Tuesday that a Dubai government-owned company was in talks to make an investment in the computer company. Also, Procter and Gamble boosted its dividend by 14 percent late Tuesday. Both stocks were on the move after hours.
Citigroup was reported late Wednesday to be close to a sale of $12 billon in leveraged loans to private equity firms.
Fed speakers Wednesday include Fed Chairman Ben Bernanke who speaks on financial literacy at 9:30 a.m. and Dallas Fed President Richard Fisher speaks in San Antonio at 1:30 p.m.
As the Senate mulls housing legislation this week, the House Financial Services Committee Wednesday at 10 a.m. starts two days of hearings on the economic, mortgage and housing rescue plan. Fed Governor Randall Kroszner and Sheila Bair, head of the FDIC, are expected to speak.
The FOMC minutes were less than cheerful but stocks mostly held their ground after the 2 p.m. release Tuesday. Members of the Fed's policy committee were clearly concerned at their last meeting that the economy could fall into a deeper slide. Fed staff forecast the economy was actually contracting in the first half of the year and that it will have a "slow rise" in the second half. Because of the deteriorating view, the FOMC believed substantial easing was justified in March.
"The bottom line is the Fed is worried and they're not done," said Joe LaVorgna, chief U.S. economist at Deutsche Bank. "The Fed and the market are more on the same page than they have been in a long time."
LaVorgna says based on the Fed's comments, he is sticking with his view that the Fed will cut rates another half point when it meets April 30. "The minutes certainly warned of real downside risk to growth with not a lot of certainty."
"I think the trade number this Thursday, and the retail sales number on Monday will clearly be very important in the Fed's calculus. What may happen is they may wind up being a little less pessimistic on the first half, but they may be more pessimistic on the second half."
What About Market Mayhem?
The market's usual wild volatility has been sidelined this week. The Dow Jones data group tells us that Tuesday's 81.50 point range in the Dow is the smallest this year, since Dec. 26. The Dow finished off 35.99, or 0.3 percent to 12,576.44. The Dow is down 5.2 percent year to date but it's up 7.1 percent from its lowest close of the year. The Dow is also 0.02 percent above the level it was at exactly one year ago.
The S&P 500 was down 7 points or 0.5 percent and the Nasdaq was off 16 or 0.7 percent.
The dollar, meanwhile, was weaker but nearly unchanged against the euro. At 1.5708 per euro, it is down 7 percent year-to-date.
Oil and gasoline inventory data is due at 10:30 a.m. A MasterCard survey showed a decline in weekly gasoline consumption of 2.5 percent for the week ended April 4. Gasoline stocks are expected to fall by 2.3 million barrels, according to Dow Jones. Oil prices Tuesday fell 0.5 percent to $108.50, and gasoline fell 3.31 cents per gallon to $2.7504.
Former Fed Heads
We heard from two former Fed chairmen Tuesday, and they were not cheery. Former Fed Chairman Alan Greenspan said on Closing Bell that we're in the "throes of recession."
Greenspan, in the interview, defended his legacy after taking heat from critics who say his Fed let interest rates stay too low for too long. Greenspan says he has no regrets and would make the same decisions again. Greenspan also fired back. As in the op-ed he wrote in the Financial Times this week, he laid blame in part on Wall Street. He said the voracious demand for mortgage-backed securities helped lead to the lending excesses that created the subprime meltdown.
Former Fed chairman Paul Volcker was also speaking Tuesday, and he says we're in a dollar crisis. He also said the Fed was at the "very edge" of its legal authority with the rescue of Bear Stearns and the $29 billion loan to the firm may be sending the wrong message.
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