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Wall Street Stares At Bleak Global Growth Outlook

Wall Street Stares At Bleak Global Growth Outlook
4/23/2012 6:33 AM ET

Sentiment seems to have taken a turn for the worse, as reflected by the U.S. index futures, which point to a sharply lower opening on Wall Street on Monday. Contraction in the manufacturing sectors of China and the eurozone has sapped investor risk appetite, sending them scurrying for cover under the relative safety of safe havens. The results of the presidential election in France have also heightened European debt concerns.

As of 6:30 am ET, the Dow futures are receding 117 points, the S&P 500 futures are slipping 13.40 points and the Nasdaq 100 futures are declining 23 points.

The FOMC meeting is likely to headline the economic events of the unfolding week, as traders anxiously await the Fed's view on the recent turn of economic events and the central bank's economic outlook.

The Commerce Department's new home sales report for March, the National Association of Realtors' pending home sales index for March, April consumer conference readings based on separate surveys by the Conference Board and Reuters and the University of Michigan, the durable goods orders report and advance first quarter GDP estimates are among the other economic reports that could draw attention.

The S&P Case-Shiller house price index, the Federal Housing Finance Agency's house price index, the Labor Department's employment cost index for the first quarter and the Treasury auctions of 2-year, 5-year and 7-year notes round up the economic events of the week.

In corporate news, Pfizer (PFE) announced an agreement to sell its nutrition business to Nestle for $11.85 billion in cash. French dairy company Danone was also interested in the division.

VimpelCom (VIP) said it has signed an agreement to sell its entire indirect 49 percent stake in GTEL Mobile Joint Stock company in Vietnam for $45 million and give up operational control of GTEL Mobile.

B/E Aerospace (BEAV) reported first quarter net earnings pf 67 cents per share on revenues of $747.3 million, up 24.5 percent. The results were better than expected. For 2012, the company expects earnings of $2.75 per share on revenues of $2.95 billion. Analysts estimate earnings of $2.79 per share on revenues of $2.98 billion.

Tellabs (TLAB) released a letter from its CEO Rob Pullen, where he disclosed that he has been diagnosed with colon cancer.

Ameriprise Financial (AMP), Crane (CR), Ethan Allen (ETH), Health Management (HMA), Illumina (ILMN), Netflix (NFLX), Owens & Minor (OWI), Rent-A-Center (RCII), Sanmina-SCI (SANM), STMicroelectronics (STM), Texas Industries (TXN), Tuesday Morning (TUES), Volterra Semiconductor (VLTR) and Zions Bancorp. (ZION) are among the companies due to report their quarterly results after the markets close.

The major Asian markets retreated, with the Hong Kong, Indian and Singaporean markets retreating the most. Developments in the eurozone and the Chinese manufacturing data triggered a sell-off across the region.

After seeing some strength in the morning, Japan's Nikkei 225 average retreated in the afternoon before ending down 19.19 points or 0.20 percent at 9,542. The strengthening of the yen exerted downward pressure on export stocks.

Australia's All Ordinaries ended down 14.10 points or 0.32 percent at 4,430, as traders looked ahead to central bank decisions by the U.S. Federal Reserve. Hong Kong's Hang Seng Index lost 386.25 points or 1.84 percent before closing at 20,624.

Flash estimates based on Markit's manufacturing survey for April showed that the manufacturing purchasing managers' index for China rose to 49.1 in April from 48.3 in March. The reading suggested that China's manufacturing sector contracted, albeit at a slower pace, in April.

The major European averages are retreating sharply, with soft domestic private sector activity data and the results of the first round of French presidential election impacting sentiment.

Markit's survey showed that the private sector activity in the eurozone contracted at the sharpest pace in 5 months in April. The manufacturing purchasing managers' index fell 1.7 points to 46, while the service sector purchasing managers' index declined 1.3 points to 47.9.

Meanwhile, French president Nicholas Sarkozy lost to his socialist rival Francois Hollande in the first round of the presidential election, rendering the second round scheduled for May 6th an uphill battle for the incumbent. The election results have increased fears that the firefighting aimed at diffusing the debt crisis in Europe may see a setback.

In corporate news, Vodfone (VOD) announced a recommended cash offer to buy Cable & Wireless for 1.04 billion euros. AstraZeneca (AZN) announced a deal to buy Ardea Pharma (RDEA), which focuses on the development of small molecule therapies for the treatment of serious diseases, for $1.26 billion or $32 per share in cash.

Consumer electronics company Philips (PHG) reported that its first quarter EBITDA rose to 552 million euros from 438 million euros last year. Sales also rose modestly to 5.6 billion euros.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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