Domestic equity markets are closed today (fixed-income markets close at noon ET), as Hurricane Sandy – the largest Atlantic storm on record to approach the northeast seaboard, prompted a regional evacuation and sand-bagging at the NYSE. Should the 900-mile wide storm make landfall at high-tide, an estimated six to 11.7 foot storm surge may flood Battery Park and downtown New York. Equity futures trading ended at 9:15 am ET, with futures on the S&P 500 closing 0.6% lower. In new economic data, personal household spending rose the most since February, while personal incomes rose the most since March. Treasuries rose on safer haven buying, sending the yield on 10-year Treasury notes down nearly five basis points to 1.710%. At this point, equity and bond trading on Tuesday is in doubt, while the NYSE is formulating emergency plans to have the exchange open on Wednesday for critical month-end trading. Gold is down $2.25 to $1,709.05/oz., while Nymex Crude oil fell $0.42 to $85.86/bbl. Today’s Highlights
- Household Purchases Increase Most in Seven Months. Commerce data showed personal spending rose 0.8% in September, the most since February, topping the consensus forecast for a 0.6% increase. In an accompanying report, personal incomes rose 0.4% last month, the most in six months. The U.S. savings rate fell to 3.3%, the lowest since November 2011, from 3.7% in August.
- Texas Manufacturing Expands at Slower Pace. The Federal Reserve Bank of Dallas said its manufacturing production index fell from 10 to 7.9, indicating slightly slower growth. The Dallas Fed also said its general business activity index rose to 1.8, its first positive reading since June, but missed the consensus forecast for 2.0. A separate manufacturing reading from the Chicago Fed showed that region is also slowing. The Midwest Manufacturing Index declined by 1.2% in August to a seasonally adjusted 94.1 level.
- New Debt Restructuring Plan Proposed for Greece. The European Central Bank (ECB) together with the European Commission and the International Monetary Fund (IMF), have reportedly proposed a new restructuring of Greek debt. According to Der Spiegel, the so-called “troika” plan was presented on October 25th and would require public sector lenders to take heavy losses. Troika officials are awaiting a final report of Greece’s progress toward required fiscal targets on November 12th. It remains unclear whether the report is accurate or an intentional leak to induce Greece to boost fiscal cooperation and compliance.
- Merger Monday Deal Announced. Cloud computing company Riverbed Technology (RVBD) agreed to acquire Opnet Technologies (OPNT) for in a combination cash and stock deal that pays $43 and 0.2774 RVBD for every one OPNT share held.
- Third Quarter Earnings Season Update. Of the 273 companies within the S&P 500 to report their quarterly results, 196 (71.8%) have beaten analysts’ EPS forecasts and 161 (58.9%) have missed analysts’ revenue estimates.
- This Week’s Economic Calendar: Tuesday: S&P Case-Shiller Home Price Index (0.7% forecast, 0.4% prior), Consumer Sentiment (74.0 forecast, 70.3 prior); Wednesday: Employment Cost Index (0.5% forecast and prior), Chicago PMI Mfg (51.0 forecast, 49.7 prior); Thursday: Weekly Jobless Claims (369K forecast and prior), ADP Private Sector Jobs (155K forecast, 162K prior), Worker Productivity and Costs (2% forecast, 2.2% prior; Costs: 1.2% forecast, 1.5% prior), National PMI Mfg., ISM U.S. Mfg. (51.5 forecast and prior), Construction Spending (0.6% forecast, -0.6% prior); Friday: October Non-Farm Payrolls (125K forecast, 114K prior), Factory Orders (4.9% forecast, -5.2% prior).