The major U.S. index futures are pointing to a slightly higher opening on Thursday, with most of the early gains squandered following the release of the U.S. jobless claims report, which showed a smaller than expected decline in jobless claims. Earnings news has been mostly positive, with bank earnings eliciting positive response from traders. That said, there are disappointments as well, such as the guidance from Qualcomm (QCOM).
The lackadaisical jobs may stir economic worries and force traders to focus on the results of a regional manufacturing survey and a housing report, both due for release after the markets open.
U.S. stocks languished below the unchanged for the bulk of Wednesday's session, as lackluster tech earnings and European debt fears weighed on the markets.
The major averages opened lower after the Bank of Spain said bank bad debts rose and IBM (IBM) and Intel (INTC) reported slowing revenue growth. Although some buying interest emerged in early trading, it was not adequate enough to push the averages decisively above the unchanged line. The averages moved about without any clear direction before closing moderately lower.
The Dow Industrials traded below the unchanged line throughout the session before closing down 82.79 points or 0.63 percent at 13,033, while the S&P 500 Index ended down 5.64 points or 0.41 percent at 1,385 and the Nasdaq Composite Index closed at 3,032, down 11.37 points or 0.37 percent.
Twenty-two of the thirty Dow components closed lower, with IBM (down 3.53 percent) and Intel (down 1.83 percent) leading the declines. JP Morgan (JPM), Johnson & Johnson (JNJ) and General Electric (GE) also declined sharply. One stock ended unchanged, while the remaining seven stocks ended in positive territory.
Biotech, airline, gold, housing and networking stocks were among the worst decliners of the session.
Currency, Commodity Markets
Crude oil futures are receding $0.19 to $102.48 a barrel after declining $1.53 to $102.67 a barrel on Wednesday. The previous session's retreat came amid the release of the oil inventory report, which showed that crude oil stockpiles rose by 3.9 million barrels to 369 million barrels in the week ended April 13th and remained in the upper limit of the average range for this time of the year.
Distillate inventories fell by 2.9 million barrels and were in the middle of the average range, while gasoline stockpiles declined by 3.7 million barrels but remained in the upper limit of the average range. Refinery capacity utilization averaged 84.7 percent over the four weeks ended April 13th compared to 84 percent over the previous four weeks.
Gold futures, which fell $11.50 to $1,639.60 an ounce in the previous session, are currently slipping $3.10 to $1,636.50 an ounce.
Among currencies, the U.S. dollar is trading at 81.54 yen compared to the 81. 26 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.3098 versus the euro compared to yesterday's $1.3123.
The major Asian stocks closed mixed, with the Japanese, Malaysian, Indonesian, South Korean and Chinese markets declining, while the Australian, Hong Kong, Indian, New Zealand, Singaporean and Taiwanese markets closing in the green. The Spanish debt auction scheduled for the day kept sentiment subdued despite the weakening of domestic currencies, which offered support to export stocks.
Japan's Nikkei 225 average languished below the unchanged line throughout the session before closing down 78.88 points or 0.82 percent at 9,588. Meanwhile, Australia's All Ordinaries ended up 14.10 points or 0.32 percent at 4,441 and Hong Kong's Hang Seng Index closed 214.28 points or 1.03 percent higher at 20.995.
Meanwhile, Japan's Ministry of Finance reported that Japan's trade deficit came in at 82.55 billion yen in March compared to expectations for a deficit of 223.2 billion yen. Exports rose 5.9 percent year-over-year compared to a 10.5 percent increase in imports.
After seeing some early strength in early trading, the European have turned mixed. The early strength came on the back of some solid earnings and fairly positive Spanish and French debt auctions offered encouragement. Spain successfully auctioned 2.54 billion euros worth of 2-year and 10-year bonds, slightly above the maximum target of 2.50 billion euros. However, following the release of the U.S. jobless claims report, sentiment soured.
In corporate news, Nokia (NOK) reported a first quarter loss of 8 euro cents per share on an IFRS basis compared to a loss of 13 euro cents per share last year despite a decline in net sales to 7.35 billion euros.
Paint maker AkzoNobel reported a drop in its first quarter profits despite 6 percent sales growth, with the company attributing the weakness to weak end markets and cost inflation.
U.S. Economic Reports
New unemployment claims fell somewhat for the second week in April, but revised data for the previous week put the level of initial jobless claims significantly higher than most economists had predicted.
According to the Department of Labor, new unemployment claims for the week ending April 14, came in at a seasonally adjusted level of 386,000.That marks a 2,000 decline from the previous week's revised level of 388,000 new unemployment claims. Most economists had expected the level of new claims to fall from even the initially reported figure to a level of 365,000 for the week ending April 14.
The National Association of Realtors is scheduled to release its report on existing home sales for March at 10 am ET. Economists estimate existing home sales of 4.62 million for the month.
U.S. existing home sales fell 0.9 percent month-over-month to 4.59 million units in February. Meanwhile, the previous month's reading was upwardly revised by 1.3 percent. Single-family home sales fell 1 percent, while condominium sales remained unchanged. The median price of an existing home rose 0.3 percent year-over-year to $156,600.
The results of the Philadelphia Federal Reserve's manufacturing survey are due out at 10 am ET. Economists expect the diffusion index of current activity to show a reading of 12 for April.
The Philadelphia Fed's manufacturing index rose to 12.5 in March from 10.2 in February. The new orders index slipped 3.3 points to 11.7 and the order backlogs index slipped to -11 from 2.2. The shipments index was down 11.5 points. While the number of employees index rose 5.7 points to 6.8, the average workweek index slid 7.4 points to 2.7. The 6-month outlook index edged down 0.4 points to 32.9.
The Conference Board is scheduled to release a report on its U.S. leading economic indicators index for March at 10 am ET. The consensus estimate calls for a 0.2 percent increase by the leading indicators index for the month.
In February, the leading economic indicators index rose 0.7 percent month-over-month following a 0.2 percent increase in January and a 0.5 percent increase in December. The coincident and the lagging economic indicators indexes were up 0.2 percent each.
Stocks in Focus
eBay (EBAY) reported first quarter non-GAAP net income of 55 cents per share, 8 cents ahead of the consensus estimate, while revenues rose 29 percent to $3.3 billion, also exceeding estimates. The company raised its guidance for the full year.
Marriott International (MAR) reported first quarter earnings of 30 cents per share, up from 26 cents per share reported for the year-ago period. Revenues fell to $2.5 billion from the $2.8 billion reported for last year. The earnings beat estimates by a penny, while revenues were shy of estimates. For 2012, the company expects earnings of $1.58-$1.69 per share, surrounding the consensus estimate of $1.60 per share.
Yum Brands (YUM) reported better than expected first quarter results and also raised its earnings growth forecast for the full year.
Novellus' (NVLS) first quarter earnings met expectations, while its revenues exceeded estimates despite declining from the year-ago period.
Qualcomm (QCOM) reported second quarter non-GAAP earnings of $1.01 per share compared to the consensus estimate of 95 cents per share, while its revenues also beat expectations. The company raised its full year earnings guidance, although it is still below the consensus estimate. The company's third quarter adjusted earnings guidance also trailed expectations.
F5 Networks (FFIV) reported better than expected second quarter results, while its third quarter revenue guidance surrounded the consensus estimate.
VMWare (VWM) also released first quarter earnings and revenues that exceeded expectations.
Student loan company SLM (SLM) reported first quarter core earnings that came in ahead of estimates. The company also reaffirmed its 2012 core earnings outlook, which is below the consensus estimate.
Stanley Black & Decker (SWK) reported first quarter adjusted earnings that missed expectations, while revenues were above estimates. The company reaffirmed its full year adjusted earnings estimate.
Kinder Morgan (KMP) announced a 5 percent increase in its quarterly cash distribution per common unit to $1.20.
El Paso Pipeline (EPB) said it has received a proposal from El Paso (EP), whereby El Paso Pipeline will purchase from El Paso the remaining 14 percent of Colorado Interstate Gas company and all of Cheyenne Plains Investment Company.
Noble Corp. (NE) reported first quarter earnings that rose sharply from last year, while its revenues exceeded estimates.
Human Genome Sciences (HGSI) said it is exploring strategic alternatives after finding an unsolicited $13 per share offer from GlaxoSmithKline (GSK) inadequate.
Bank of America (BAC) reported a decline in its first quarter profits, but stated that it has made a significant progress in the first quarter in line with its operating principles. Peer Morgan Stanley (MS) reported a loss for its first quarter, while net revenues, excluding debt valuation adjustment, rose year-over-year.
Travelers Companies (TRV) reported better than expected first quarter operating earnings. Verizon (VZ) reported first quarter results that exceeded expectations. DuPont's (DD) first quarter earnings also beat expectations.
Rockwell Collins (COL) announced that its board approved a 25 percent increase in its quarterly dividend to 30 cents per share.
Advanced Micro Devices (AMD), Altera (ALTR), BJ Restaurants (BJRI), Capital One (COF), Chipotle Mexican Grill (CMG), E*TRADE (ETFC), Freescale Semiconductor (FSL), Lattice Semiconductor (LSCC), Interactive Brokers (IBKR), Microsoft (MSFT), Rambus (RMBS), Riverbed Technology (RVBD), SanDisk (SNDK) and Wynn Resorts (WYNN) are among the companies due to report their results after the markets close.
by RTT Staff Writer
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