The PremiereTrade Market Wrap for 10/26/07

Consumer confidence fell to the level of 80.9 points in October, from the 83.4 points registered in September. The market consensus was a smaller decline to the level of 82.0 points. The decline in confidence was mostly due to the decreasing home prices.

Merrill Lynch and Wachovia are contemplating a merger. The merger approach, which came before Merrill's disclosure this week of a $7.9 billion third-quarter write-down for collateralized debt obligation investments, was viewed as "a major breach of corporate protocol. There is some speculation that Merrill's CEO could lose his job over the proposal since he didn't check with board members before the meeting.

Bank of America Corp. ( BAC) is leaving the wholesale mortgage business. Bank of America officials said that the company will stop offering home mortgages through brokers, eliminating 700 jobs.

Crude oil prices spiked above $92 a barrel on tensions in the Middle East and renewed concerns about supply. The United States announced new sanctions against Iran this week and a confrontation between the world's largest oil consumer and its fourth largest oil producer could upend markets.

In Forex News Today

The dollar fell to another new low against the euro in midmorning trading on speculation that U.S. interest rates might be cut again when the FOMC meets next week. The euro was lifted higher by a wave of negative economic reports this week from the United States, including a report that showed U.S. orders for durable goods dropped 1.7 percent in September.

The Aussie was helped by expectations that the Reserve Bank of Australia will raise rates next month. In contrast, weak U.S. durables goods data reinforced bets for a growth-boosting Fed cut on Oct. 31 from 4.75 percent. The rise in high-yielding commodity currencies, coupled with gains in Asian equity markets, helped boost risk appetite and encourage investors to put on carry trade bets funded by cheap borrowing in the Japanese yen. The latest Japanese inflation data showed ongoing deflation with the core annual rate remaining negative in September for the eighth consecutive month.

Higher-yielding currencies advanced against the yen as stock markets in Asia gained, boosting risk appetite. Analysts said this encouraged investors back into carry trades, in which the low-yielding yen is sold to fund the purchase of riskier, higher-yielding assets elsewhere.

Scheduled Economic Reports (Next Week)

Consumer Sentiment, Gross Domestic Product, Chicago PMI, Construction Spending, ISM Manufacturing Index, Vehicle Sales, Non-Farm Payrolls, and the Federal Open Market Committee meeting

In Earnings News

Countrywide Financial Corp. (CFC) posted a third-quarter loss of $1.2 billion, or $2.85 per share. Analysts forecast a loss of $1.28 per share. Countrywide also said they expect to be profitable in the fourth quarter.

Microsoft (MSFT) reported a profit up 23 percent to $4.29 billion, or 45 cents per share, as brisk sales of the new "Halo 3" video game, Windows and Office helped it breeze past Wall Street's expectations. Analysts expected a profit of 39 cents per share.

Waste Management Inc. (WMT) reported its third-quarter earnings fell 7 percent, missing Wall Street's expectations, on the impact of a labor stoppage and rising crude oil prices. Waste Management earned $278 million, or share, in the year-ago quarter.

Fortune Brands Inc. (FO), which makes consumer products ranging from Jim Beam bourbon to Moen faucets, said its third-quarter profit rose 38 percent with wine and spirits sales helping to offset a decline in sales of home products as the housing market slowed.

Scheduled Earnings Reports (Next Week)

Hertz, Kellogg, Loews, Winn Dixie, AirTran, DreamWorks Animation, Qwest Communications, Procter & Gamble, Sirius Satellite Radio, Brinks, MasterCard, Blockbuster, Credit Suisse, Eastman Kodak, Electronic Arts, World Wrestling Entertainment

Stocks in the News

Emulex Corp?s (ELX) fiscal first-quarter net income fell 32% to $10.2 million, or 12 cents a share, from a year earlier.

Wendy?s International (WEN) third-quarter profit was cut by better than half, weighed down by charges and the spin-off of Tim Horton's.

And Allegheny Energy (AYE) reported its third-quarter net income rose to $115 million, or 67 cents a share, from $110.2 million, or 65 cents.