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Stocks May Give Back Ground In Early Trading - U.S. Commentary

After moving modestly higher last week, stocks are likely to give back some ground in early trading on Monday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 49 points.

The downward momentum for the markets is partly due to renewed concerns about the financial situation in Europe due to a statement from the G20.

Following a weekend meeting, the G20 finance ministers and central bank governors called for a further enhancement of the Eurozone's bailout fund before the rest of the G20 nations can consider increasing their contribution to the International Monetary Fund's resources. "Euro area countries will reassess the strength of their support facilities in March," the G20 said. "This will provide an essential input in our ongoing consideration to mobilize resources to the IMF."

Not long after the open, trading could be impacted by the release of a report from the National Association of Realtors on pending home sales in the month of January. Pending home sales, an indicator of future housing activity, are expected to increase by 1.5 percent.

A pending sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

In corporate news, home improvement retailer Lowe's (LOW) reported fourth quarter earnings of $0.26 per share on revenues of $11.6 billion. The results exceeded estimates. The company also updated its 2012 earnings guidance, forecasting earnings of $1.75 to $1.85 per share on 1 to 2 percent sales growth.

Transocean (RIG) reported a fourth quarter loss of $18.62 per share, including items that impacted results by $18.80 per share. Operating revenues rose to $2.42 billion from the year-ago's $2.13 billion.

El Paso (EP) could also be in focus after announcing an agreement to sell its exploration and production business to a consortium led by Apollo Global Management for about $7.15 billion. El Paso also reported notable fourth quarter earnings growth.

With traders reluctant to make any significant moves, stocks showed a lack of direction throughout much of the trading day on Friday. The major averages lingered near the unchanged line for most of the session, eventually ending the day mixed.

After reaching a high above the key 13,000 level, the Dow gave back some ground, closing down 1.74 points or less than a tenth of a percent at 12,982.95. Meanwhile, the Nasdaq rose 6.77 points or 0.2 percent to 2,963.75 and the S&P 500 climbed 2.25 points or 0.2 percent to 1,365.74.

Despite the mixed performance on the day, the major averages all posted modest gains for the week. The Nasdaq advanced by 0.4 percent, while the Dow and the S&P 500 both rose by 0.3 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index edged down by 0.1 percent, while Hong Kong's Hang Seng Index ended the day down by 0.9 percent.

The major European markets have also shown notable moves to the downside on the day. While the U.K.'s FTSE 100 Index is down by 0.9 percent, the French CAC 40 Index and the German DAX Index have fallen by 1.2 percent and 1.3 percent, respectively.

In commodities trading, crude oil futures are sliding $0.85 to $018.92 a barrel after surging up $6.17 or 6 percent to a nine-month high of $109.77 a barrel last week. Gold futures, which rose $50.50 or 2.9 percent to $1,776.40 an ounce last week, are retreating $4 to $1,772.40 an ounce.

On the currency front, the U.S. dollar saw some weakness last week, falling 1.6 percent against the euro before ending at $1.3449. Meanwhile, the greenback rose 2 percent against the Japanese yen to 81.19 yen. The dollar is currently trading at 80.51 yen and is valued at $1.3379 versus the euro.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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