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Sentiment Wavers As Key Data, FOMC Meeting Loom

The major U.S. index futures are pointing to a mixed opening on Tuesday, with sentiment still wavering as a consumer confidence and housing data loom. Although some bargain hunting could be expected, a strong rebound is unlikely, as the eurozone debt crisis still lingers on. Debt offerings by peripheral nations Netherlands and Spain and Italy passed off smoothly, with the troubled nations successful in raising debt closer to the high end of their target despite an increase in borrowing costs.

Traders now turn their attention to Main Street domestically to gauge if the setback suggested by recent data is transient or has further leg to play out. The FOMC begins a 2-day meeting today and the focus is on the post-meeting policy statement, the Fed's economic forecast and the press briefing by Chairman Ben Bernanke, all due for tomorrow.

U.S. stocks declined sharply on Monday, as global growth fears haunted investors. The major U.S. averages opened sharply lower after separate surveys by Markit showed that the Chinese and the eurozone manufacturing sectors contracted in April. Additionally, political developments in France and the Netherlands also unnerved the markets. The averages moved sideways before paring back some of their losses in late trading.

The Dow Industrials ended down 102.09 points or 0.78 percent at 12,927 and the S&P 500 Index closed 11.59 points or 0.84 percent lower at 1,367. Meanwhile, the Nasdaq Composite Index receded 30 points or 1 percent, ending at 2,971.

Twenty-seven of the thirty Dow components closed lower, with Wal-Mart Stores (WMT) (down 4.66 percent) pacing the declines. Bank of America (BAC) (down 2.15 percent), DuPont (DD) (down 1.52 percent), General Electric (GE) (down 1.50 percent) and United Technologies (UTX) (down 1.54 percent) also retreated sharply.

Transport, basic material, gold, housing, retail, financial and semiconductor were among the worst decliners in the session.

Currency, Commodity Markets

Crude oil futures are trading up $0.31 to $103.42 a barrel after declining $0.77 to $103.11 a barrel on Monday. Gold futures are currently rising $9.80 to $1,642.40 an ounce. In the previous session, the precious metal fell $10.20 to $1,632.60 an ounce.

Among currencies, the U.S. dollar is trading at 81.02 yen compared to the 81.18 yen it fetched at the close of trading on Monday. Against the euro, the dollar is trading at $1.3155 compared to yesterday's $1.3156.

Asia

The major Asian markets closed on a mixed mote, with the Japanese, Malaysian and South Korean markets closing lower, while the Australian, Hong Kong, Chinese, Indian, Indonesian, New Zealand, Singaporean and Taiwanese markets ended in positive territory. Expectations that the U.S. Federal Reserve will drop a hint on further stimulus in the wake of recent soft data gained ground, allaying concerns generated by the political uncertainties in Europe.

The Japanese market retreated for the fourth straight day, with the key Nikkei 225 average declining 74.13 points or 0.78 percent before closing at 9,468. The European debt fears and apprehensions ahead of the reporting season in Japan kept sentiment subdued.

Australia's All Ordinaries rose 3.60 points or 0.08 percent before closing at 4,434 amid rate cut expectations. A report released by the Australian Bureau of Statistics showed that consumer prices rose 1.6 percent year-over-year in the first quarter, well below the 2.2 percent increase expected by economists.

Hong Kong's Hang Seng Index closed at 20,677, up 52.77 points or 0.26 percent.

Europe

The major European averages are rebounding following yesterday's sharp declines, helped by fairly successful debt auctions by Spain, Italy and the Netherlands.

In corporate news, Shell (RDS) announced a recommended cash offer to buy all outstanding shares of Cove for 220 pence per share.

Swiss drug maker Novartis (NVS) reported a decline in its first quarter profit, as its blood pressure drug went off patent in Europe in 2011. The company, however, maintained its outlook for 2012.

A report released by French statistical office INSEE showed that its reading on French consumer confidence rose to 88 in April from 87 in March. Economists had expected an unchanged reading for the month. A separate report released by the U.K. Office for National Statistics showed that public sector borrowing in the U.K. rose sharply to 18.2 billion pounds in March after excluding temporary effects of financial interventions.

U.S. Economic Reports

The 2-day FOMC meeting is scheduled to begin on Tuesday.

The S&P/Case-Shiller home price index, which tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S., is scheduled to be released at 9 am. Economists expect a seasonally adjusted 0.1 percent month-over-month increase by the 20-city composite house price index for February.

The index fell a seasonally unadjusted 0.8 percent in January. However, after adjustments, house prices were flat. On a year-over-year basis, house prices were down 3.8 percent.

The Commerce Department is due to release its new home sales report for March at 10 am ET. The consensus estimate calls for new homes sales of 318,000.

New home sales unexpectedly fell for the second month in February, declining by 1.6 percent to a seasonally adjusted annual rate of 313,000. This represented the lowest level since October.

Inventories measured in terms of months of supply rose to 5.8 months in February from 5.7 months in January. That said, the median sales price of a new home rose 8.3 percent month-over-month to $233,700.

The Conference Board is also scheduled to release its consumer confidence report for April at 10 am ET. The report, which is based on a survey of 5,000 U.S. households, is expected to show that the consumer confidence index dipped to 69.7 in April.

The consumer confidence index declined 1.4 points to 70.2 in March from an upwardly revised reading for February. The expectations index slipped 4.6 points to 83, while the present situation index rose 4.6 points to 51.

The Federal House Finance Agency, or FHFA, is set to release its house price index for February at 10 am ET. The index is a weighted, repeat-sales index that measures average price changes of single-family houses in repeat sales or refinancings on the same properties. Economists expect a 0.1 percent month-over-month increase by the house price index after prices remained unchanged in the previous month.

The Richmond Federal Reserve's manufacturing index due to be released at 10 am ET is expected to see a 1-point increase to 8 in April.

Stocks in Focus

Texas Instruments (TXN) reported first quarter earnings of 22 cents per share, including 10 cents per share in charges, compared to 55 cents per share last year. Revenues fell 8 percent to $3.12 billion. For the second quarter, the company expects earnings of 30-38 cents per share, including 6 cents per share in charges, on revenues of $3.22 billion to $3.48 billion. While the first quarter results exceeded estimates, the earnings guidance surrounded the consensus estimate.

AT&T (T) reported first quarter profit that improved from the year-ago quarter and was above Wall Street view. Consolidated revenues rose 1.8 percent.

Baker Hughes (BHI) reported better than expected first quarter results. 3M Co. (MMM) also reported better than expected first quarter results and also raised the lower end of its 2012 earnings per share guidance.

Netflix (NFLX) reported a loss of 8 cents per share for its first quarter compared to the loss of 27 cents per share forecast by analysts. Revenues also were better than estimates. For the second quarter, the company estimates bottom line results between a loss of 10 cents and earnings of 14 cents per share, while analysts expect a loss of 17 cents per share.

Sanmina-SCI's (SANM) second quarter adjusted loss was in line with estimates, while its revenues trailed expectations. The company issued below-consensus revenue and earnings guidance for the third quarter.

PVH (PVH) said it expects first quarter non-GAAP earnings per share to be at least at the high end of its guidance range. The company also forecast non-GAAP earnings per share guidance for the full year towards the high end of its previous guidance.

Big Lots (BIG) lowered its first quarter comparable store sales guidance to slightly negative compared to its previous guidance for 2-4 percent growth.

Rent-A-Center (RCII) reported better than expected first quarter results, while its 2012 earnings guidance surrounded the consensus estimate.

Weatherford (WFT) reported first quarter adjusted earnings of 25 cents per share compared to 7 cents per share last year, as revenues rose 26 percent at $3.60 billion. The results were below estimates. The company's second quarter earnings guidance was also below estimates.

STMicroelectronics (STM) reversed to a loss of $176 million in its first quarter from a profit of $170 million, as sales fell to $2.02 billion from $2.54 billion. ST-Ericsson, a joint venture between STMicroelectronics and Ericsson (ERIC) reported a first quarter loss of 312 million on revenues of $290 million.

Owens & Minor (OMI) said its first quarter earnings rose 1 penny to 46 cents per share on 4.4 percent revenue growth to $2.22 billion. The results were below expectations. The company reaffirmed its 2012 revenue growth guidance of 3-5 percent and net income growth guidance of 5-10 percent.

Crane (CR) reported first quarter earnings of 88 cents per share on sales of $658 million. In comparison, the company's year-ago earnings and revenues were 81 cents per share and $611.02 million, respectively. The results trailed expectations. For 2012, the company expects 3-5 percent sales growth and earnings of $3.75-$3.95 per share, surrounding the consensus estimate of $3.89 per share.

Standard & Poor's announced that Phillips 66 (PSXwi) will replace SUPERVALUE (SVU) in the S&P 500 Index. SUPERVALUE will replace American Greetings (AM) in the S&P MidCap 400 Index, while American Greetings will replace Standard Register (SR) in the S&P SmallCap 600 Index after the close of trading on April 30th.

ACE Limited (ACE), Amgen (AMGN), AmSurg (AMSG), Apple (AAPL), Baidu (BIDU), CB Richard Ellis (CBG), Century Aluminum (CENX), CTS Corp. (CTS). DeVry (DV), Edwards Lifesciences (EW), Healthways (HWAY), International Game Technology (IGT), Juniper Networks (JNPR), Norfolk Southern (NSC), Panera Bread (PNRA), Questar (STR), RF Micro Devices (RFMD), Unisys (UIS) and Websense (WBSN) are among the companies due to release their quarterly results after the markets close.

by RTT Staff Writer

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