Thursday Look Ahead
Now that the Fed's June meeting is out of the way, the focus on economic data will intensify as investors try to find a road map for the markets.
There are a few economic headlines expected Thursday. Weekly jobless claims are at 8:30 am New York time as is first quarter real GDP. Existing home sales for May are released at 10 am.
The direction of oil and the dollar will also factor in. Two disappointing after the bell tech earnings reports could pressure Nasdaq.
Research in Motion earnings of $482.5 million and $2.24 billion in revenues were double, but the company missed analysts' estimates by a penny. The company also put its current quarter earnings at the low end of analysts' range and said it would increase spending to support new products. RIM's stock was punished in the after hours. Remember, there had been a lot of bullish street talk from analysts going into this report.
Oracle's net rose to $2.04 billion from $1.6 billion, but it too talked down expectations and its stock sold off.
Dow a Dud
The stock market initially moved higher after the Fed announced it was leaving rates unchanged Wednesday afternoon. In its statement, the Fed showed increased concern about inflation. The Dow finished up just 4 points to 11,811 after a triple digit rally fizzled, while the Nasdaq finished up 32 points or 1.2 percent. The S&P 500 was up 7 points or 0.5 percent. Oil moved off its lows after the Fed decision, finishing the day down $2.45 at $134.55 per barrel. The dollar was off 0.67 against the euro at $1.5676.
Traders also said there was some confusion over the Fed statement. The Fed clearly showed the next time it moves, it will be to raise rates. It is worried about inflation, particularly from energy, but its statement also said it saw some signs of "firming" in household spending, which some traders point out was clearly not reflected in the consumer confidence data this week.
Boris Schlossberg, senior currency strategist at DailyFX.com said he thinks the Fed was not tough enough in its statement. Schlossberg, in fact, had said before the announcement that a Fed rate hike would be the medicine markets need to get the dollar moving higher and oil lower.
"The Fed missed its opportunity to act decisively on inflation and strike a blow to stubbornly high oil prices," he wrote to us. "As we noted earlier with ECB (European Central Bank) nearly assured of increasing interest rates next week, the rate differential in the EURUSD (euro/U.S. dollar) will inevitably widen, providing more fuel for a euro rally."
There are a few earnings reports expected ahead of Thursday's open from Rite Aid, Lennar, Discover Financial and ConAgra. Micron reports after the bell.
Other stocks in the news include Anheuser-Busch, which the Wall Street Journal says will fight InBev's bid with a plan of its own. InBev reaffirmed that offer earlier Thursday in a letter to Bud.
Activist hedge funds say they believe they secured four CSX board seats in a preliminary count and Countrywide shareholders approved acquisition by Bank of America.
Money and Politics
General Motors CEO Richard Wagoner is set to meet with Democratic hopeful Sen. Barack Obama Thursday, the day before the GM ceo meets with Republican Sen. John McCain. Obama met with Ford CEO Alan Mullally Wednesday in Chicago.
Interestingly, Procter and Gamble's CEO AG Lafley gave an interview to the Financial Times in which he said the candidates should be careful about talking the economy into worse shape. "In my business, we don't need excessive negativism," he said.
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