NEW YORK (
) -- The health of the consumer will be front and center at the kickoff of Friday's session, which should see low volumes ahead of the long Memorial Day weekend.
Data on personal income and spending for April arrives at 8:30 a.m. ET, and the consensus is for a 0.4% rise in income coupled with a 0.5% increase in spending. The final read on Michigan consumer sentiment will also factor in at 9:55 a.m. ET. There's an expectation that it will tick up from the initial reading of 72.4 as oil prices have declined.
Pending home sales could be the wild card. The consensus estimate is for a decline of 1.4% in March, but
is calling for an increase of 1%. Chief U.S. Economist Ian Shepherdson at High Frequency Economics sees a 1% decrease, saying he seems "little change beyond normal monthly noise" and that the trend is flat.
While the banks held up well enough on Thursday, the latest data on the housing market from
on Thursday was at least mildly concerning as a slowdown in volumes spoke to recent market concerns about the impact of a lingering inventory glut on the balance sheets of names like
Bank of America
The online foreclosure marketplace said third parties bought 158,434 U.S. bank-owned homes and those in some stage of foreclosure in the first quarter. That activity represents a 16% drop from the fourth quarter, and a 36% decrease from last year's first quarter. Foreclosures accounted for 28% of all U.S. residential sales in the first quarter with the average sales prices continuing to decline, coming in at $168,321.
"While foreclosure sales continue to account for an unusually high percentage of all residential home sales, sales volume is well off the peak we saw in the first quarter of 2009, when nearly 350,000 foreclosure properties sold to third parties," said James Saccacio, RealtyTrac's CEO in a
He continued: "While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery. At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks' books, or in foreclosure."
Evercore Partners lifted its earnings estimate for Bank of America's fiscal 2011 to a profit of $1.12 a share from $1.10 a share and reiterated its outperform rating on Thursday night, citing "market share gains in capital markets/underwriting activity" but the firm notes a double-dip in the housing market is one of the biggest risks for the stock, which down 14% year-to-date and 30% in the past year.
The weak dollar helped the
Dow Jones Industrial Average
celebrate its 115th anniversary by
for just the third time this month, trimming the month-to-date decline for the blue-chip index to 3.2%.
There are no earnings of note due on Friday, and that's essentially going to be the case until warning season for the calendar second quarter starts up in mid-June. With QE2 still slated to wind down at the end of next month, the markets will be dealing with an extra dose of skittishness, and the results of the latest
American Association of Individual Investors
on Thursday showed retail investors continue to slide into skepticism that equities will be moving higher in the next six months.
Roughly 41.4% of the non-profit organization's members, which number more than 150,000, identified themselves as bearish for the week ended on Thursday. That's up 0.1% from a week ago, and well above the long-term average of 30%. Those feeling bullish shrunk to 25.6%, a decline from 1.1% from a week ago, while the neutral camp swelled to 33%, rising 0.9%. The long-term averages for bullish and neutral are 39% and 31% respectively.
But hedge fund managers don't appear to quite as bearish as Mom & Pop as the
survey for May found the so-called "smart money" taking a neutral stance.
"About 30% are bullish on the S&P 500, up from 23% in April, while 29% are bearish, down from 34%," according to
Hedge funds are still pulling in plenty of money though with
estimating inflows of $15 billion for April, down slightly from $16 billion in March. The estimate is based on a survey of 896 funds, and
said it believes the fresh cash continues to come from sovereign wealth funds and pension funds.
also found that short sellers took some profits on May's weakness in stocks as New York Stock Exchange short interest decreased 1.1% to 12.9 billion shares, or roughly 3.4% of outstanding stock, in the first half of May. That's a reversal from a build-up of 4.1% in April.
"Short bets and market returns have moved in opposite directions in recent months, which is rather unusual," the research firm said in its Weekly Flow report. "We view recent short covering as bearish because our research shows that short interest is a contrary indicator."
Meantime, Thursday also saw the IPO market lose some steam as fresh offerings,
Lone Pine Resources
didn't do much, and last week's high-flier
fell more than 9% as reports about salivating short sellers surfaced. Options activity in the stock is set to begin on Friday.
"With a small free float of only 9 million shares, or about 10% of the company, we initially see over 60 smallish transactions accounting for around 0.7% of the total shares outstanding on loan or 13% of the free float," said
released late Wednesday. "This represents almost all the shares that are available to be borrowed."
While Data Explorers notes that this lending can also reflect stock being used to manage liquidity early in the life of a public listing, it's mainly indicative of shorts building positions.
was a busy one with
Blue Coat Systems
( BCSI) taking it on the chin because of disappointing top-line growth, and
turning things around with a better than expected outlook on its conference call.
Written by Michael Baron in New York.
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