EmailFriday's session felt more like the summer doldrums than a market in turmoil. U.S. equity markets managed to rally for a second straight session, the first time they have been able to do so since the correction began.
That calmer trade has carried over through the weekend, as futures have a modest bid on Monday morning. A number of markets overseas are closed today for holidays, including markets in Greece, India, Italy and South Korea.
U.S. futures rallied overnight in conjunction with a broad-based rally in Asia, but have come off their highs.
Hong Kong's Hang Seng led the way with a 3.3% gain on short covering and positive earnings from insurance company PICC, though the rally came amid light volume.
Japan's GDP contracted for a third consecutive quarter, which by itself is certainly not good news. The 1.3% decline in the second quarter, however, was actually half the decline expected. The Nikkei rallied 1.4%, though the yen remains near record highs against the dollar.
Helping futures come off their highs was the New York Empire Manufacturing Index, which declined 7.7 points in August. The Briefing.com consensus expected a decline of only 0.4. That is the second economic data point for August, and it disappointed just like Friday's sentiment reading from the University of Michigan.
There is one large M&A deal of note this morning. Following rumors last week of a takeover, Motorola Mobility (MMI) is being acquired by Google (GOOG) for $12.5 billion in cash, a 63.5% premium from Friday's closing price. The large premium is also sending shares of peers higher, including Nokia (NOK) and Research In Motion (RIMM), though the effect on futures has been minimal.
In earnings news, Lowe's (LOW) disappointed investors with weak third quarter and lowered fiscal 2012 guidance, sending shares down 3%.
Looking ahead, even though second quarter earnings season has drawn to a close, a number of notable retailers report this week, including Home Depot (HD), Wal-Mart (WMT), Dell (DELL), Target (TGT) and HP (HPQ).
With fears of a slowing U.S. economy rising, this week's economic calendar also takes on added importance. It includes housing starts and industrial production on Tuesday, PPI on Wednesday and CPI, jobless claims and existing home sales on Thursday.
Developments out of Europe will also be in focus. European markets have a slight bid at mid-session today, which comes ahead of Tuesday's meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy for a possible solution to the eurozone debt crisis.
--David M. Campione, CFA
Dave is an analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.
