MARKET ANALYSIS: Uncertainty And Recent Gains Could Leave Traders Nervous
(Alliance News Via Acquire Media NewsEdge) WASHINGTON (Alliance News) - The major US index futures are pointing to a lower opening on Thursday, with sentiment suggesting that traders are dreading to take positions in equities. The nervousness is accentuated by the still unresolved geopolitical crises and the uncertainty surrounding monetary policy and the economic outlook. With second quarter GDP and jobless claims data coming in better than expected, fears concerning monetary policy normalization may re-emerge. The recent gains could also keep traders wary for any further upside.
Overbought US stocks went about in a lackluster manner on Wednesday amid a lack of any major directional cues. The major averages opened higher but retreated immediately and languished below the unchanged line until early afternoon trading. The Dow Industrials held mostly above the unchanged line before closing up 15.31 points or 0.09% at 17,122. Meanwhile, the S&P 500 Index and the Nasdaq Composite Index continued to move back and forth across the unchanged line, with the former closing up merely 0.10 points at 2,000, while the latter ended down 1.02 points or 0.02% at 4,570.
Seventeen of the thirty Dow components closed higher and one stock ended unchanged, while the remaining twelve stocks retreated. UnitedHealth (UNH) and Pfizer (PFE) advanced strongly in the session.
Among the sector indexes, utility stocks gained ground, while brokerage stocks came under selling pressure.
Commodity, Currency Markets
Crude oil futures are rising USD0.09 to USD93.97 a barrel after edging up USD0.02 to USD93.88 a barrel on Wednesday.
The previous session's gain came amid the release of the weekly petroleum status report, which showed that crude oil stockpiles fell by 2.1 million barrels to 360.50 million barrels in the week ended August 22. With the decline, inventories are in the upper half of the average range for this time of the year.
Gasoline stockpiles fell by 1 million barrels and remained in the middle of the average range. Meanwhile, distillate inventories increased by 1.3 million barrels and were below the lower limit of the average range.
Refinery capacity utilization averaged 92.7% over the four weeks ended August 22 compared to 92.7% over the four weeks ended August 15.
Gold futures, which fell USD1.80 to USD1,283.40 an ounce in the previous session, are currently adding USD9.70 to USD1,293.10 an ounce.
Among currencies, the US dollar is trading at 103.76 yen compared to the 103.88 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at USD1.3177 compared to yesterday's USD1.3193
The Asian markets closed mixed, with the Indian, Malaysian, Indonesian and Taiwanese markets advancing, while the rest of the markets moved to the downside. The lackluster showing by Wall Street stocks overnight served to stifle the risk appetite in the markets.
The Japanese market was hurt by a firmer yen and the Wall Street lead. The Nikkei 225 average opened lower and languished below the unchanged line throughout the session before closing down 74.96 points or 0.48% at 15,460. A majority of stocks declined in the session, with export stocks leading the slide.
Australia's All Ordinaries also traded below the unchanged line throughout the session before ending down 27.60 points or 0.49% at 5,621. The market witnessed broad based weakness, with material and energy stocks leading the declines.
Hong Kong's Hang Seng Index ended at 24,741, down 177.75 points or 0.71%, and China's Shanghai Composite settled down 13.65 points or 0.62% at 2,196.
On the economic front, a report released by the Australian Bureau of Statistics showe4d that new capital expenditure in Australia rose 1.1% sequentially in the second quarter, belying expectations for a 0.9% drop. Annually, capital expenditure was down 0.9%. Meanwhile, the Chinese National Bureau of Statistics reported that industrial profits in China rose 13.5% year-over-year in July, slower than the 17.9% increase in June.
European stocks are retreating amid the release of mixed corporate news and economic data. The general risk aversion in play in the markets in the wake of recent gains have been keeping traders away from equities
In corporate news, Buoygues reported first half operating profits that were below estimates by most analysts and also lowered its sales guidance for the year. Pernod Ricard reported a decline in its full year profits, hurt by weak performance in China, and also announced plans to eliminate 5% of its workforce. The bidding war for Vivendi's GVT unit is heating up, with Telefonica raising its offer to 7.45 billion euros in cash and stock to ward off Telecom Italia's advances. French utility Veolia reported higher first half profits and also maintained its full year forecast.
On the economic front, the results of the European Commission's survey showed that economic confidence in the eurozone fell to 100.6 in August from 102.l in July. Economists had expected a more modest drop to 101.5. Industrial, services and consumer sentiment all weakened.
A report released by the German Federal Statistical Office showed that the unemployment rate for Germany eased to 4.9% in July from 5% in June. The number of unemployed people declined to 2.09 million from 2.12 million in June. A separate report by the Federal Labor Agency showed that the number of unemployed people rose by 2,000 to 2.901 million in August. Economists expected a decline of 5,000. The jobless rate for the nation remained unchanged at 6.7%, in line with expectations.
US Economic Reports
The Labor Department reported that jobless claims fell 1,000 to 298,000 n the week ended August 23 from an upwardly revised reading of 299,000 for the week ended August 16 Economists expected claims to have increased to 300,000 from initially reported claims of 298,000 for the previous week.
The four-week average was at 299,750, down from 300,750 for the previous week. Continuing claims calculated with a week's lag rose to 2.527 million in the week ended August 16 from 2.502 million in the week ended August 9.
The US economy expanded faster during the second quarter than people had previously estimated, according to revised GDP report released by the Commerce Department.
GDP rose by 4.2% in the April-to-June period. Economists had expected GDP growth to hold steady with the estimate of 4.0% released last month. The second-quarter growth followed a contraction of 2.1% in the first quarter.
The National Association of Realtors is due to release its pending home sales index for July at 10 am ET. The consensus estimates call for a 0.5% month-over-month increase in the index.
Pending home sales fell 1.1% month-over-month in June, with the North East and South seeing notable declines. On a year-over-year basis, pending home sales were down 4.5%.
Around the same time, the Kansas City Federal Reserve will release its regional manufacturing index for August. The index is expected to remain unchanged at 9.
The Treasury is scheduled to release the results of its auction of 7-year notes at 1 pm ET.
Stocks in Focus
Abercrombie & Fitch (ANF) reported better than expected second quarter earnings, while its revenues missed estimates. The company's full year earnings guidance was below estimates.
Dollar General's (DG) second quarter earnings were in line but net sales were slightly shy of estimates. The company's 2014 earnings guidance was in line, while it lowered the high end of its same store sales guidance for the full year.
Williams-Sonoma's (WSM) second quarter earnings were in line, while its revenues missed estimates. The company's full year guidance was lackluster.
Guess?, Inc. (GES) reported second quarter results that trailed estimates and the company lowered its full year guidance, which trailed expectations.
Liberty Interactive (LINTA) announced the completion of the spin-off of Liberty TripAdvisor Holdings (LTRPA, LTRPB) at 5 pm on August 27as a result of which the two companies will now be separate publicly traded companies.
S&P announced that S&P SmallCap 600 constituent Centene (CNC) will replace MICROS Systems (MCRS) in the S&P MidCap 400 Index and Aviv REIT (AVIV) will replace Centene in the S&P SmallCap 600 Index after the close of trading on September 3.
Bally Technologies (BYI) reported fourth quarter earnings that were below estimates, while its revenues exceeded estimates.
VCA (WOOF) said its board has authorized the buyback of up to USD400 million worth of its shares and also said it has entered into a new USD1.4 billion revolving credit facility.
Copyright RTT News/dpa-AFX
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