#PreMarket Primer: Thursday, July 31: Obama On The Chopping Block
With a vote to determine who will have control of Congress next year just around the corner, Republicans from the House of Representatives voted to allow lawyers to put together a case against U.S. President Barack Obama.
The President is being sued for allegedly overstepping his boundaries and bypassing the constitutional process in order to move forward with his signature healthcare reform law, called Obamacare.
Republicans in Washington have long accused Obama of using his executive powers to carry out his agenda by cutting Congress out of the decision making process, and effectively going against the constitution. Democrats say the lawsuit is a farce designed to grab attention ahead of elections and is wasting taxpayer dollars and lawmakers’ time.
In other news around the markets:
- In response to new, stricter sanctions from the West, Russia has banned fruit and vegetable imports from Poland and is threatening to extend that ban to the entire EU. The new sanctions target Russia’s defense, banking and energy sectors and have been criticized by the Kremlin as “destructive and short-sighted."
- International outrage continued to grow over the ongoing conflict in Gaza, where more than 1,000 people, mostly civilians, have been killed as Israeli forces press on with a military offensive to destroy cross-border tunnels. Israeli officials say they are “days” away from completing the operation, but since Hamas militants often take shelter near schools and residential areas, it is civilians who are paying the price.
- On Thursday, Johnson & Johnson is expected to warn consumers around the world of the dangers of a surgical tool that has been shown to spread cancer in women. While Johnson & Johnson stopped selling the tool when the FDA advised doctors against using it, the company will now be asking consumers to return the devices.
- The Federal Reserve's policy statement has added fuel to a growing debate among investors about when the bank will raise its interest rate. The statement reflected the nation’s recent spate of strong data and showed confidence in the direction of inflation, but also indicated that the bank planned to be patient and wait to raise interest rates. Now, all eyes are on the upcoming non-farm payrolls report which will provide more details about the labor market.
Asian markets were mostly higher with the exception of the NIKKEI and the KOSPI, which lost 0.16 percent and 0.31 percent respectively. The Shanghai composite rose 0.93 percent, the Shenzhen composite was up 0.98 percent and the Hang Seng Index rose 0.10 percent.
European markets were lower; the FTSE lost 0.11 percent, the STOXX 600 was down 0.67 percent, the DAX lost 0.80 percent and the MIB lost 1.08 percent.
Energy futures were lower as investors saw global supply rising faster than demand. Brent futures lost 0.45 percent and WTI futures were down 0.94 percent. Gold and silver gained 0.04 percent and 0.79 percent respectively and industrial metals were also on the rise. Copper gained 0.03 percent, zinc was up 0.59 percent and aluminum rose 2.02 percent.
After better than expected U.S. GDP data, the dollar was on the rise, gaining 0.08 percent against the yen, 0.18 percent against the pound and 0.38 percent against the Australian dollar. The euro also gained against the pound and the yen, up 0.25 percent and 0.03 percent respectively, but lost 0.02 percent against the dollar.
Notable earnings released on Wednesday included:
- Pilgrim’s Pride Corporation (NYSE: PPC) reported EPS of $0.73 on revenue of $2.19 billion, compared to last year’s EPS of $0.74 on revenue of $2.18 billion.
- Kraft Foods (NASDAQ: KRFT) reported EPS of $0.80 on revenue of $4.75 billion, compared to last year’s EPS of $0.76 on revenue of $4.74 billion.
- WellPoint (NYSE: WLP) reported EPS of $2.44 on revenue of $18.47 billion, compared to last year’s EPS of $2.60 on revenue of $17.60 billion.
- Phillips 66 (NYSE: PSX) reported EPS of $1.51, compared to last year’s EPS of $1.50 on revenue of $43.24 billion.
Stocks moving in the Premarket included:
- Expedia (NASDAQ: EXPE) was up 3.09 percent in premarket trade after rising 1.24 percent on Wednesday.
- Akamai Technologies (NASDAQ: AKAM) was down 7.62 percent in premarket trade after gaining 2.93 percent on Wednesday.
- Transocean Ltd (NYSE: RIG) fell 0.87 percent in premarket trade after losing 4.64 percent over the past five days.
- Yahoo! (NASDAQ: YHOO) was down 1.45 percent in premarket trade after gaining 2.58 percent on Wednesday.
Notable earnings releases expected on Thursday include:
- Exxon Mobil (NYSE: XOM) is expected to report EPS of $1.84 on revenue of $107.13 billion, compared to last year’s EPS of $1.55 on revenue of $106.47 billion.
- McKesson (NYSE: MCK) is expected to report EPS of $2.34 on revenue of $40.79 billion, compared to last year’s EPS of $2.07 on revenue of $32.21 billion.
- ConocoPhillips (NYSE: COP) is expected to report EPS of $1.61 on revenue of $15.40 billion, compared to last year’s EPS of $1.41 on revenue of $14.14 billion.
- Anheuser-Busch Inbev (NYSE: BUD) is expected to report EPS of $1.31 on revenue of $11.93 billion, compared to last year’s EPS of $0.93 on revenue of $10.59 billion.
Notable economic releases expected on Thursday include Italian CPI, Italian PPI, U.S. initial and continuing jobless claims, German retail sales, French PPI, and the German unemployment rate.
For a recap of Wednesday’s market action, click here.
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