It's shaping up to be a relatively quiet day on Wall Street. Stocks are seeing a little profit taking after Friday's gains. There doesn't appear to be any new catalyst to drive stocks higher so investors may be content to wait for the end of the two-day FOMC meeting on Wednesday. There is a growing consensus that the markets are overbought and need to digest their impressive gains over the last four weeks. The U.S. dollar is still bouncing and that's putting pressure on the commodities like oil, gold and copper.
Asian stocks were mixed. The better than expected U.S. jobs data on Friday helped fuel a rally in Hong Kong and Japan. There was also some improvement in Japan's machinery orders, which suggest capex spending is bouncing. The Japanese NIKKEI index gained just over 1% to close at new ten-month highs. China is due to release some monthly economic data tomorrow. Goldman Sachs upped their forecast for growth in China's 2009 GDP from 8.3% to 9.4%. The Chinese Shanghai index still struggled and posted a 0.3% loss. This is the fourth decline in a row for Shanghai. Meanwhile the Hong Kong Hang Seng soared more than 2.7% to completely erase Friday's sharp decline.
European markets were also mixed. The financial sector was an under performer as investors worried that Lloyds Banking Group might come out with another secondary offering to raise capital and dilute shareholders. The automakers were also displaying weakness thanks to a couple of analyst downgrades. HSBC downgraded Volkswagen to an "underweight" and shares lost more than 7%. Meanwhile Morgan Stanley downgraded Daimler to an "underweight" and the stock lost almost 4%. Morgan Stanley did have some positive comments for the American automakers stating their opinion that the U.S. market had bottomed and should see a sharp bounce. The French CAC-40 index lost 0.4%. The German DAX gave up 0.75%. The English FTSE managed a 0.6% gain.
Back home in the U.S. it's been a slow news day but there were a couple of corporate headlines. Dow-component McDonald's (MCD) said that worldwide same-store sales rose 4.3% in July. U.S. same-store sales gained 2.6% while European same-store sales soared 7.2%. The company benefited from penny-pinching consumers and the introduction of MCD's new line of coffee drinks. Shares of MCD are up 2% and have erased several days worth of losses with a bounce above $56.00.
Online travel giant Priceline.com (PCLN) is soaring to new 9-year highs with a 13% gain to $148.00. The company reported earnings this morning of $2.02 per share, which were 27 cents better than expected. PCLN beat the top line revenue numbers as well. Furthermore management raised their third quarter earnings and revenue guidance significantly above analysts' estimates. Volume is three times the norm with shares testing the $150.00 mark several times today. Rival Expedia (EXPE) is only up 0.1% and appears to be running out of steam in its five-week rally.
Tomorrow we'll start to get more economic data with the weekly chain store sales numbers, wholesale trade report and the consumer comfort index. Tuesday will start the two-day FOMC meeting and the treasury department will auction off $37 billion in three-year notes.
Currently the S&P 500 index is off about 6.5 points at 1,004. The NASDAQ is down about 14 points at 1986. The Dow Industrials are down just over 50 points at 9318. The small cap Russell 2000 index is down less than 3 points at 570. A quick glance at the sector indices and you'll notice that the miners, retailers, cyclicals, transports, and homebuilders are the worst performers today. Disk drives, drugs, natural gas, defense and healthcare are the only sector indices still in positive territory and not by much.
Let's take a quick look at charts for the major averages:
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
Scanning the OptionInvestor.com play list I see that the FXE euro ETF is nearing potential short-term support near the $141.00 mark and its 50-dma. JCP is trading lower with the retail sector. The stock is off 3.7% near $33.00. GENZ is a put play and the stock has seen a big bounce in the last two hours as the company updates investors on its Cerezyme product. The rally in GENZ hit $50.89 and shares are starting to trim their gains. Shares of VPRT have rallied sharply on no news and broken through the $44.00 level hitting our stop loss. Meanwhile shares of WYNN have produced another failed rally under $60.00 and the move looks like a new entry point to buy puts. Please see our weekend play update for details.