Market Insider

Markets will take measure of the American consumer Thursday, when monthly retail sales for July are released and Walmart reports its quarterly earnings.

Retail sales, reported at 8:30 am New York time, will continue to show a consumer under pressure but could be slightly better than last month's number. Economists forecast that July sales will be up 0.8 percent. Excluding autos, it is expected to be up 0.1 percent.

Discounter Walmart reports earnings before the opening bell and is expected to show flat results of 86 cents per share. Other reports of note include weekly jobless claims and import prices, both at 8:30 am and business inventories at 10 am. Other earnings expected Thursday include Dr. Pepper Snapple, Estee Lauder, Kohl's, Urban Outfitters, Autodesk and Nordstrom.

Accounting rule maker FASB holds a board meeting Thursday that is getting a lot of attention for its potential impact on banks. FASB is expected to consider a proposal to have financial instruments carried on balance sheets at fair value. There is no immediate action expected on this proposal, but if it results in modification of the mark-to-market rule it could impact bank earnings.

Stocks Wednesday broke a two-day losing streak, with the Dow up 120 points, or 1.3 percent at 9361. The S&P 500 recovered 11 points, or 1.1 percent, to close at 1005. The financial sector was the best performer, up 2 percent.

The dollar, back in step with the "reflation trade," fell as the stock market moved higher.

Long-term Treasurys were weaker as the government auctioned $23 billion in 10-year notes, and the Fed said it would wind down its purchases of government debt in October. The yield on the 10-year rose to 3.72 percent from Tuesday's 3.67 percent.

On Thursday, the Treasury plans to auction another $15 billion in 30-years.

The Fed, in its post-FOMC statement Wednesday, also said the economy is leveling out and said it would keep its Fed funds rate near zero, as expected.

Traders were encouraged by late afternoon news that hedge fund manager John Paulson was loading up on bank stocks in the second quarter. In an SEC filing, Paulson & Co reported that it held 168 million Bank of America

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[BA  Loading...      ()   ] shares as of June 30. CNBC's Charles Gasparino was first to report the Paulson holdings.

Paulson's investments are closely watched since he predicted the collapse of the mortgage market and melt down in bank stocks. Paulson also reported holding 35 million shares of Regions Financial and 2 million shares of Goldman Sachs, among others.

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