(CVS) Greek Turmoil Dominates Headlines

We have a slew of economic and earnings reports on the docket today, but the Greek turmoil will likely continue to dominate the headlines. On the economic front, we got better-than-expected weekly Jobless Claims numbers, raising hopes for a favorable showing from Friday’s non-farm payroll report.

We also have a surprise interest rate cut from the European Central Bank, likely indicating a new monetary policy course for the central bank under Mario Draghi, who replaced Jean-Claude Trichet only three days ago. A little later, we get the September Factory Orders and the October ISM Service Sector Index reading.

The big wait on the U.S. economic front now is for the Friday labor market report. But irrespective of the quality of that report, the overall economic picture has improved markedly over the last few weeks. Had it not been for the re-emergence of the Euro-zone fears following the Greek referendum gambit, all the major macro worries have started easing in recent days. The solid October rally reflected this improved macro backdrop, but the renewed Euro-zone uncertainty threatens to derail it.

European leaders meeting in the French city of Cannes have tightened the screws on Greece’s Prime Minister Papandreou. They have suspended payment of the next tranche of bailout money till the completion of the referendum and given him an ultimatum to decide whether his country wanted to stay within the common currency or not.

As a result, the referendum will likely take place on or around December 4, almost a month ahead of what the Greeks had originally indicated. But the referendum plan needs to get approved by the Greek parliament before it could take place. And the government may not have the votes in parliament to get its approval. The question at this stage is whether the Greek government will survive if its referendum plan fails to get parliamentary approval. The government’s fall would mean fresh general elections, hardly a solution to the current problem.

On the domestic labor market front, we got a better-than-expected read on weekly Jobless Claims. Initial claims dropped a bigger than expected 9K to 397K, while the prior week’s level was revised upwards to 406K from the original 402K. The four-week average dropped 2K to 404.5K. The overall trend on the initial Jobless Claims front has been favorable, as they have fallen in four of the last six weeks. However, the extent of the decline has been quite anemic, with the initial claims number stubbornly refusing to fall below the 400K level. This week’s drop below the 400K notwithstanding, initial claims have remained above the 400K level consistently since March, except for two weeks.

On the earnings front, we got a modest EPS beat from CVS Caremark (CVS) on in-line revenue. We got a similar performance from exchange operator NYSE Euronext (NYX), a modest EPS beat on in-line revenue. Starbucks (SBUX) reports after the close.

In other corporate news, we got weaker-than-expected October same-store sales numbers from a number of major retailers this morning, including J.C. Penney (JCP), Target (TGT), Nordstrom (JWN) and Macy’s (M).

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