The FOMC Meets Tomorrow–Here’s What Economists Expect

Stocks rallied–with the Dow up triple digits–on
good economic data and lower oil. It was the first triple digit gain
for the Dow in more than six weeks. An oversold market helped as well.
Consumer Confidence for June was 105.8, higher than expected and a
three-year high. For the first half of 2005, the S&P 500 is off 1.1%. This
compares with +2.6% in 2004 and +10.8% in 2003.

Oil fell below $60 ahead of Wednesday’s DOE inventory report. In a
CNBC interview, Treasury Secretary John Snow said of energy prices:
“Clearly, it’s hurting. I don’t see it derailing the strong recovery we’re
in…but it does take a few tenths of a percentage point off GDP growth, that’s
for sure.”

Airlines were strong on lower oil.

The Senate passed the energy bill. The legislation aims to reduce
dependence on foreign oil and provides incentives for construction of nuclear
power plants. Under the bill, by 2020, 10% of all electricity produced by
utilities would have to be from solar, wind and biomass. The House approved a
separate bill and the two versions must be reconciled before it can be sent to
President Bush.

Advanced Micro Devices
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Intel
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IBM is the target of an informal SEC informal probe into the company’s
plan to expense stock options.

Pfizer
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risk of blindness among patients taking Viagra.

XM Satellite Radio
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guest rooms. Separately, UBS raised its
subscriber estimates and price target on the company.

Trader talk: Will Google split soon?

A jury found Healthsouth founder Richard Scrushy not guilty on all
counts, including fraud, conspiracy and money laundering. Mr. Scrushy
aggressively appeared in churches around Birmingham in a strategy that may have
helped his case.

China is restoring a value added tax on high end steel. US Steel
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rose 3.25%, as did Nucor
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The FOMC meets this week, with a two-day meeting
starting tomorrow. Economists are looking for a quarter-point
rise–to 3.25%–and no major change in the policy statement. Specifically, the
words “accommodative” and “measured pace” are expected to remain intact. It is
also quarter end and half-year end. It will be the ninth increase in the past
year.

Thomson Financial predicts the growth rate for the
S&P 500 for Q2 will be 7.1%. Most companies report mid-July.

Thursday is the end of the quarter.

Goldman Sachs fired 30 traders and transferred
some trading functions to sales traders; 50% of Goldman’s trades are automated.

Strong sectors were:   Airlines  
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+6.20%  Homebuilders  
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+2.26%   Biotech
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Weak sectors were:   Oil Services
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-2.09%       Natural Gas
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Gold
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Cubist Pharma
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primary endpoints; the company said it would file a new drug application with
the FDA before year-end.

Wyeth
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2005.

Apollo
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in revenue.

Paychex
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by 0.03.

Morgan Stanley raised its view on the integrated oil industry, including
ExxonMobil
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Seagate was downgraded at Goldman.