Trader Talk

Trading After The Obama Speech


This story was written by CNBC producer, Robert Hum.

Following its second best day of the year yesterday, the markets are poised for a slightly lower open, with little reaction to President Obama’s first speech to a joint session of Congress.

After the Fed Chairman’s comments moved the markets yesterday, traders will once again be keenly listening to Ben Bernanke’s 2nd day of testimony – this time in front of the House Financial Services committee.

Also on tap today - the National Association of Realtors’ existing home sales report will be released at 10:00am ET and the government’s bank stress tests are expected to begin today.

Two ECB officials have expressed reluctance for Eurozone interest rates to fall to zero. Miguel Angel Fernandez Ordonez believes that rates “shouldn’t reach zero, because it can create problems of stability for financial institutions.” Fellow ECB Governing Council member, Axel Weber, said that rates “of 1% is for me the lowest limit.” Both officials, however, still expect that rates will be lowered below its current 2% rate.

MBA mortgage applications fell 15.1% last week as 30-year fixed mortgage rates mortgage rates rose back above 5% to 5.07% from 4.99% the prior week. Refinancing applications fell 19.1% while applications for new mortgages fell 2.6%.

In other news:

Research firm Gartner lowered its forecast for global semiconductor sales for the third time since November. It now expects 2009 chip sales to fall 24% to $194.5 million. In December, it had projected a sales decline of 16%. Furthermore, it sees Q1 semiconductor sales falling 17% from last quarter, but warns that the drop might turn out worse than this current expectation.

J.M. Smucker Q3 earnings beat estimates by a penny, as higher prices helped the food company’s margins. Like many other companies of late though, it lowered its full-year earnings and revenue guidance below analysts’ estimates. The company now expects 2009 earnings to come in between $3.15 and $3.30, compared to the prior guidance of $3.45 to $3.50. Its sales outlook was lowered to $3.6 billion to $3.7 billion, down from prior guidance of $3.8 billion to $4.0 billion. Analysts were expecting the company to report full year earnings of $3.48 and revenues of $3.84 billion. It noted that the company’s sales would be hurt by an industry peanut butter recall earlier this year. However, its peanut products were not affected by the recall. The stock is down 7% in pre-market trading.

Allstateslashed its quarterly dividend from 41 cents to 20 cents in an effort to preserve capital. The company expects to save $450 million a year as a result of this action. The company’s stock is trading down 4% in light volume pre-open.

Dow component AT&T is up 2% in pre-market trading following a JPMorgan upgrade. Raising AT&T to overweight JPMorgan believes that AT&T’s current wireline guidance is conservative. This in turn could lead to “potential outperformance versus Street consensus estimates.”

Effective after the close on March 3, Hormel Foods (up 3% pre-open) will replace American Capital and Ventas (up 4% pre-open) will replace Jones Apparel in the S&P 500. As the smallest members of the large cap index, the two departing companies have seen their market caps dramatically plunge over the past 6 months, with both market caps now at levels below $350 million. 



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