Sentiment remains fragile on Wall Street on Monday, as reflected by the U.S. index futures, which point to a marginally lower opening. Tidings from across the Atlantic are not very encouraging, with Spain re-entering recession territory in its first quarter, while S&P downgraded 16 Spanish banks. Traders may also remain apprehensive about a key domestic consumer spending data and the results of a regional manufacturing survey both due later in the global trading day.
Corporate earnings seem to be the silver lining in the cloud, giving a reason for traders to stay invested in stocks. Deal news, which is characteristic of Mondays, may also give some impetus to the markets even as economic uncertainties linger.
As of 6:30 am ET, the Dow futures are slipping 10 points, the S&P 500 futures are down 2 points and the Nasdaq 100 futures are declining 3 points.
Despite underlying economic concerns, U.S. stocks advanced solidly in the week ended April 27th, capitalizing on strong corporate earnings news, fairly successful European debt auctions and a positive U.S. pending home sales data.
Jobs and manufacturing reports are likely to be on the forefront in the unfolding week, as traders seek more clarity on the economic outlook. The markets are expected to closely track the monthly non-farm payrolls report for April, the ADP private sector employment report, the weekly jobless claims report and the results of the Institute for Supply Management's manufacturing and non-manufacturing surveys for April.
The ISM-Chicago's manufacturing survey, the Commerce Department's personal income and spending data for March, chain store sales and auto sales for April may also be on the radar. Several Fed speeches, the Commerce Department's construction spending report for March, the factory orders report for March, the Labor Department's preliminary read on first quarter productivity and costs report and announcements concerning the treasury auctions of 3-year and 10-year notes and 30-year bonds round up the economic events of the week.
The Bureau of Economic Analysis is due to release its personal income & outlays report for March at 8:30 am ET. Economists expect personal income growth to quicken to 0.4 percent, while personal spending growth is expected to slow to 0.4 percent. In April, personal income rose a smaller than expected 0.2 percent and personal spending increased by a robust 0.9 percent.
The results of the Institute of Supply Management-Chicago's business survey for April are scheduled to be released at 9:45 am ET. Economists expect the business barometer index based on the survey to slip to 60.8 from 62.2 in March.
Dallas Federal Reserve Bank President Richard Fisher is scheduled to participate in a Panel discussion at the 2012 Milken Institute Global Conference at 5:30 pm ET.
In corporate news, NYSE Euronext (NYX) reported first quarter earnings of 47 cents per share compared to 68 cents per share last year. Total revenues less transaction based expenses, fell 11 percent to $601 million. The results missed expectations.
Merck (MRK) said a U.S. District court has ruled in its favor in two jointly related patent infringement suits against Mylan Pharma (MYL) with respect to Merck's ZETIA and VYTORIN.
Apogee (APOG) announced a 10 percent increase in its quarterly dividend to 9 cents per share. Humana (HUM) reported better than expected first quarter results, while its full year and second quarter earnings guidance trailed expectations.
Energy Transfer Partners (ETP) announced a deal to buy Sunoco (SUN) for $5.3 billion.
Anadarko Petroleum (APC), Cognex (CGNX), Forest Oil (FST), Hologic (HOLX), Herbalife (HLF), Jacobs (JEC), Kilroy Realty (KRC), McKesson (MCK), MDU Resources (MDU), PAREXEL (PRXL), PartnerRe (PRE), PMC-Sierra (PMCS), Quaker Chemical (KWR) and WMS Industries (WMS) are among the companies due to release their quarterly results after the markets close.
The major Asian markets that were open for trading closed mostly higher amid hopes of stimulatory props. The Japanese and the Chinese markets remained closed for public holidays.
Australia's All Ordinaries rose sharply in early trading and climbed steadily thereafter, closing at its best level since August 2nd 2011. Materials stocks advanced strongly, spearheading the market's climb. Sentiment also received a shot in the arm from rate cut expectations. The Reserve Bank of Australia's policy setting arm is scheduled to announce its monetary policy decision tomorrow. Recent inflation data and the global economic fragilities have increased calls for an interest rate reduction.
Hong Kong's Hang Seng Index closed 352.76 points or 1.70 percent higher at 21,094, with the market witnessing broad based buying interest.
The major European markets are seeing lackluster sentiment ahead of the U.S. consumer spending data.
In corporate news, AB Inbev reported a higher profit for its first quarter, although the increase was not as much as what economists had expected. German athletic footwear and accessories maker Adidas reported preliminary first quarter sales of 3.8 billion euros and net income of 289 million euros. The company also raised its guidance for the full year, while also revealing charges related to commercial irregularities at its Indian unit.
On the economic front, Spain experienced a double-dip recession, with the nation's statistical agency stating that GDP fell by 0.3 percent sequentially in the first quarter compared to the 0.4 percent drop expected. Earlier Standard & Poor's downgraded its rating on 16 Spanish banks by two notches close on the heels of its downgrade of Spain's sovereign rating.
Flash estimates released by Eurostat showed that the euro area's annual inflation slowed to 2.6 percent in April, while economists expected a steeper decline to 2.5 percent.
by RTT Staff Writer
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