Jobs and manufacturing data combine this morning to tell the tale of the consumer and manufacturing pillars of the economy for a market set on moving higher. Stock futures are moving up after markets around the world start the month of June with gains.
The employment report for May is due at 8:30 Eastern time and will have a big impact on direction. ISM manufacturing numbers are reported at 10 a.m. and will be watched closely to see if the trend of strengthening manufacturing, seen in other data, is confirmed there.
Takeover activity bubbles this morning with a surprise turnaround from Dow Jones' controlling Bancroft family, which now says it will meet with News Corp. to discuss its bid as well as consider other offers and options. After resisting News Corp.'s overtures, the family now says it believes, after a detailed review, that the "the mission of Dow Jones may be better accomplished in combination or collaboration with another organization, which may include News Corp."
THE MAY PLAY For a month that took the stock market on a record run, May ended yesterday with an unspectacular finale. The Dow finished down five, the S&P 500 was up just 0.39 points to 1530 .62 (another record) and the Nasdaq rose 11 points to reach a 6-1/4 year high at 2604.
The Dow, at 13627, is up 4.3% for the month and 9.3% for the year to date. The S&P 500 was up 3.3% in a month it which it set its first new closing high in seven years. It is up 7.9% year to date. The Nasdaq chugs along with a 3.1% advance for the month and an 7.8% gain for the year.
CRYSTAL BALL GAZERS As we head into the last month of the second quarter, we look to the market mavens for their view on where this rally is heading. Goldman Sachs analyst Abby Joseph Cohen told Maria Bartiromo on Closing Bell yesterday that stocks remain underpriced and will continue to move higher. She puts a target of 14,000 on the Dow and 1600 on the S&P by year end. Prudential's Ed Keon, in a note yesterday, says the S&P finally hit his end 2006 target of 1530 and for 2007, he expects it to hit 1650.
Keon jokes in his report that his 2006 forecast was not wrong, just "premature." He also says "the main driver of returns in this bull market has been that stocks offer terrific value, especially versus bonds and household real estate, ie, it's fundamentals."
WAL-MART We will also be watching the Wal-mart annual meeting today. Our Margaret Brennan will be there to cover how Wal-Mart management is handling the many challenges facing the company.
DING DONG Dell! Dell stock popped 7% after the bell yesterday when the company announced earnings and revenue above analysts' expectations and said it would chop 10% of its workforce. Dell said its margins would be under pressure in the second quarter, compared to the first.
HURRICANE SEASON Our Scott Cohn reports from Florida today on the official start of the 2007 hurricane season which could be more active than normal. Mary Thompson reports on how the energy industry is dealing with the threat.
ECONORAMA In addition to May's employment report, personal income data for April, and May's ISM manufacturing data, pending home sales are reported today as well as University of Michigan consumer sentiment. Auto sales for May are also reported throughout the day.
"What's going to surprise people the most in my opinion is going to be a rise in average hourly earnings," says Rick Santelli.
Fed Governor Randall Kroszner spoke in Athens, Greece today. He said the economy should rebound in the course of 2007 after hitting a soft patch in the first quarter and the main threat to the economy remains inflation.
SOMETHING NEW AND COOL We welcome the "Heat," a new feature on CNBC.com which will focus on, as if you couldn't guess, "hot" topics. The Heat launches this weekend and will look at whether unions should leave Wal-Mart alone as its first agenda item. The Heat, as its creator Alex Crippen says, is our unique "briefing book" on controversial debates in the world of business and finance. Check it out this weekend.