#PreMarket Primer: Thursday, February 27: Markets Anxious To Hear Yellen
Federal Reserve Chair Janet Yellen is set to testify before the Senate Banking Committee later on Thursday to confirm her thoughts on the nation’s economic outlook and monetary policy.
The appearance is widely anticipated as Yellen’s testimony was postponed on February 13 due to a snowstorm. The unusual two week gap between her testimony to the House and today’s testimony to the Senate have put Yellen in an interesting position as weaker than expected economic data has piled up since she first spoke.
Most are expecting her to continue with her predecessor Ben Bernanke’s tapering plan despite the weakening economic indicators. The testimony will also provide some insight into Yellen’s intentions for rate guidance. The bank may start to consider increasing its benchmark rate as the unemployment rate falls closer to its 6.5 percent goal.
In other news around the markets:
- After months of protests, Thai Prime Minister Yingluck Shinawatra may be ejected from office, but not at the hands of the opposition. Instead, Thailand’s anti-corruption agency has stepped in and called Yingluck to appear at a hearing which will charge her with negligence for her part in overseeing a rice purchase program.
- Reuters reported that US Attorney Preet Bharara has subpoenaed the bitcoin exchange Mt. Gox, among others, in an attempt to gain information on how they dealt with recent cyber attacks. Mt. Gox has been shut down since Tuesday, leaving bitcoin traders with no way to recover their funds.
- Analysts are expecting Chinese factory activity to have fallen to an eight month low in February, which would indicate that the nation’s slowdown is continuing. The nation’s manufacturing PMI is forecast to have fallen to 50.1, down from 50.5 in January.
- Problems in Ukraine were magnified on Thursday after dozens of armed men stormed the Crimean parliament. Crimea, located on Ukraine’s Black Sea coast, became the epicenter for conflict shortly following the ousting of Ukraine’s president. Pro-Russian and pro-Western forces are at odds there as the region’s large ethnic Russian population call for succession.
Asian markets were mixed ahead of Yellen’s testimony, with a distinct lack of economic data to trade on. The Japanese NIKKEI lost 0.32 percent and the Shenzhen composite was down 1.42 percent. However the Hang Seng index rose 1.74 percent and the Shanghai composite was up 0.30 percent.
European markets got off to a rocky start on Thursday, the UK’s FTSE was down 0.11 percent and the eurozone’s STOXX 600 lost 0.09 percent. The German DAX fell 0.27 percent and the Spanish IBEX lost 0.38 percent.
Energy futures slipped on weakening demand, Brent futures lost 0.25 percent and WTI futures were down 0.10 percent. Precious metals were also lower with gold down 0.20 percent and silver down 0.37 percent. Industrial metals were mixed; copper fell 0.54 percent but tin was up 1.18 percent.
Emerging market currencies were under pressure as the Ukrainian hryvnia tumbled. The dollar rose to 10.15 hryvnia as well as rising against a basket of other currencies as investors flocked to the greenback for security. The dollar gained 0.26 percent against the euro and 0.22 percent against the pound.
Notable earnings released on Wednesday included:
- J.C. Penney Company, Inc. (NYSE: JCP) reported a fourth quarter loss of $0.68 per share on revenue of $3.78 billion, compared to last year’s loss of $1.95 per share on revenue of $3.88 billion.
- Anheuser-Busch Inbev SA (NYSE: BUD) reported fourth quarter EPS of $1.46 on revenue of $11.60 billion, compared to last year’s EPS of $1.12 on revenue of $10.29 billion.
- Cablevision Systems Corporation (NYSE: CVC) reported fourth quarter EPS of $0.18 on revenue of $1.58 billion, compared to last year’s loss of $0.32 per share on revenue of $1.66 billion.
- Barnes & Noble, Inc. (NYSE: BKS) reported third quarter EPS of $0.86 on revenue of $2.00 billion, compared to last year’s loss of $0.18 per share on revenue of $2.22 billion.
- Dollar Tree, Inc. (NASDAQ: DLTR) reported fourth quarter EPS of $1.02 on revenue of $2.23 billion, compared to last year’s EPS of $1.01 on revenue of $2.25 billion.
Stocks moving in the Premarket included:
- Transocean Ltd (NYSE: RIG) rose 3.09 percent in premarket trade after losing 0.94 percent on Wednesday.
- PulteGroup Inc. (NYSE: PHM) gained 1.18 percent in premarket trade after rising 8.09 percent over the past five days.
- Amazon.com Inc (NASDAQ: AMZN) rose 0.19 percent in premarket trade after gaining 3.58 percent over the past five days.
- Verizon Communications (NYSE: VZ) lost 0.45 percent in premarket trade after falling 0.39 percent over the past five days.
Notable earnings releases expected on Thursday include:
- Best Buy Co., Inc. (NYSE: BBY) is expected to report fourth quarter EPS of $1.01 on revenue of $14.66 billion, compared to last year’s EPS of $1.55 on revenue of $16.71 billion.
- Salesforce.com Inc (NYSE: CRM) is expected to report fourth quarter EPS of $0.06 on revenue of $1.13 billion, compared to last year’s EPS of $0.13 on revenue of $834.68 million.
- Hilton Worldwide (NYSE: HLT) is expected to report fourth quarter EPS of $0.16 on revenue of $2.47 billion.
- Southeby’s (NYSE: BID) is expected to report fourth quarter EPS of $1.40 on revenue of $351.58 million, compared to last year’s EPS of $0.96 on revenue of $291.12 million.
Thursday’s economic calendar will be overshadowed by Janet Yellen’s testimony to the Senate Banking Committee at 10:00 am EST. Investors will also be watching for British consumer confidence data, US durable goods orders, and eurozone business climate and consumer confidence data.
For a recap of Wednesday’s market action, click here.
Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin here.
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