A lower-than-expected rise in consumer prices sent the dollar a tad lower, but did little to move futures. The government reported October CPI rose 0.2 percent, slightly below the 0.3 gain expected by economists. Meanwhile core prices (ex food and energy) were unchanged, below the 0.1 percent gain that was expected.
Meanwhile, a couple of lackluster data points on the housing front this morning, which could put pressure on homebuilding stocks this morning. (More pessimism: Home Prices Will Keep Falling, Says LendingTree Economist)
October housing starts fell a dismal 11.7 percent, far exceeding the 1.6 percent decline that the Street expected. The October reading was its lowest level since April 2009. At the same time, the September reading was also revised lower to down 4.2 percent from up 0.3 percent. Additionally, building permits rose to 550,000, less than the 570,000 that was expected by economists.
Meanwhile, the Mortgage Bankers Association reported that mortgage applications fell 14 percent in the last week as the 30-year fixed mortgage rate jumped to 4.46 percent, up from 4.28 percent. Refinancing activity fell the most, down a sharp 17 percent, while mortgage applications to purchase homes dropped 5 percent.
1) Target rises 1 percent after Q3 earnings topped estimates ($0.74 vs. $0.68 consensus). Revenues were inline as comps rose 1.6 percent. Also helping results, stronger credit card operations, which saw a 64 percent decline in bad debt expenses and a reduction in delinquencies.
Looking ahead, CEO Gregg Steinhafel is optimistic as the holiday season approaches, projecting that Q4 comps “will be the best of any quarter in the last three years.”
2) BJ’s Wholesale is up 3 percent after reporting stronger-than-expected Q3 earnings ($0.43 vs. $0.36 consensus). The wholesale club saw revenues grow 4.9 percent (inline with expectations) as membership fees rose 6 percent from higher annual membership dues and comps (excluding gasoline sales) rose 1.5 percent.
Guidance for the year was raised to $2.48-$2.52 above $2.45 the Street was expecting.
3) GlaxoSmithKline rises 2 percent after a FDA panel recommended approval for lupus drug Benlysta, which is being co-developed by Glaxo and Human Genome Sciences . The FDA agency is now set to vote on December 9 on whether to approve the drug, which could generate $2.2 billion in sales by 2014.
4) Potash rises 1 percent after announcing a $2 billion stock repurchase plan. The buyback program comes after BHP Billiton abandoned its bid for the Canadian fertilizer company.
5) Consulting firm Booz Allen Hamilton priced its IPO at the low end of its expected pricing range. The firm priced 14 million shares at $17, compared to the target range of $17-$19. The company, which is owned mostly by private equity firm Carlyle Group, will trade at the NYSE.
6) Meanwhile, General Motors announced it will increase the common shares available by 31 percent in response to strong demand from investors. That would cut the government’s stake down to 33 percent from 61 percent. Raising an expected $22.7 billion, GM’s listing would be the biggest U.S. IPO ever, surpassing Visa’s $19.7 billion listing in 2008. With trading expected to start at the NYSE tomorrow, GM’s pricing will come tonight, while the current terms are 478 million shares at $32-$33 per share.
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