The major U.S. index futures are pointing to a lower opening on Monday, although they have come off their early lows. The political developments in Europe may leave traders wary over the global economic outlook, while they may also react to the Federal Reserve's consumer credit report and a Fed speech scheduled for the day. That said, recent losses could bring some bargain hunters into the markets.
U.S. stocks moved lower in the week ended May 4th, as insipid economic data sapped risk appetite and generated selling pressure in the markets. The commodity, financial and technology spaces were the worst hit.
Last Monday, the major averages ended moderately lower after domestic consumer spending and manufacturing data disappointed investors. The markets got a reprieve on Tuesday after the Institute for Supply Management's national manufacturing survey showed a better than expected reading. The averages ended moderately higher.
The positive momentum faded on Wednesday after ADP's survey showed that the private sector added less jobs than had been anticipated. The Nasdaq Composite closed higher, while the Dow Industrials and the S&P 500 Index ended lower. Sentiment worsened on Thursday, with stocks closing lower as traders remained apprehensive about Friday's non-farm payrolls report.
The lackluster non-farm payrolls report rendered the mood pessimistic on Friday and the averages closed notably lower.
For the week, the Dow Industrials lost 1.44 percent and the S&P 500 Index closed 2.44 percent lower, while the Nasdaq Composite was down 3.68 percent.
Among the sector indexes, the NYSE Arca Gold Bugs Index fell 6.11 percent and the Philadelphia Oil Service Index lost 5.06 percent. The NYSE Arca Securities Broker/Dealer Index and the Philadelphia Semiconductor Index lost over 4 percent each, while the KBW Bank Index and the Dow Jones U.S. Basic Materials Average ended down over 3 percent each.
Currency, Commodity Markets
Crude oil futures are slipping $0.78 to $97.71 a barrel after declining $6.44 or 6.14 percent to $98.49 a barrel in the week ended May 4th.
Oil slid modestly last Monday amid the release of the weak consumer spending data, but it rose over $1.25-a-barrel on Tuesday, riding on the back of the positive manufacturing reading.
The commodity lost close to a dollar on Wednesday and declined by more than $2.50-a-bareel on Thursday. Oil experienced another sharp pullback on Friday, ending the week notably lower.
Gold futures, which fell $19.60 or 1.18 percent to $1,645.20 an ounce in the previous week, are currently slipping $6.20 to $1,639 an ounce.
Among currencies, the U.S. dollar strengthened against riskier currencies in the week ended May 4th, reflecting the increase in risk aversion that drove traders to safer bets. The greenback rose 1.29 percent against the euro before ending the week at $1.3083, while it fell 0.40 percent against the yen to 79.85 yen.
The U.S. dollar is currently trading at 79.94 yen and is valued at $1.3036 versus the euro.
The major Asian markets plunged sharply after the second round of the French presidential elections confirmed the majority of socialist Francois Hollande. Hollande is opposed to austerity measures and extending bailout financing to troubled eurozone nations.
Additionally, the results of the Greek parliamentary elections pointed to a hung parliament, with no single party getting adequate votes to form a government.
Japan's Nikkei 225 average fell 261.11 points or 2.78 percent before closing at 9,119 and Australia's All Ordinaries ended down 97.80 points or 2.19 percent at 4,361. Hong Kong's Hang Seng Index closed 549.35 points or 2.61 percent lower at 20,537.
The Chinese Shanghai Composite Index ended unchanged, while India's Sensex bucked the downtrend, closing moderately higher.
The European markets are currently trading mixed. The French CAC 40 Index is adding 0.54 percent compared to a 0.95 percent slippage by the German DAX Index.
In economic news, the results of a survey by Sentix showed a deterioration in investor sentiment in May. The sentix investor Sentiment index fell to -24.5 in May from -14.7 in April. Meanwhile, German factory orders rose by more than expected in March, with orders rising 2.2 percent month-over-month compared to expectations for a 0.5 percent increase.
U.S. Economic Reports
Main Street will witness a lull in the unfolding week, as the week's calendar is interspersed by very few economic events that have the potential to move the markets. The weekly jobless claims report, the Commerce Department's trade balance report for March, the preliminary reading of the Reuters and the University of Michigan's consumer sentiment index for May and a slew of Fed speeches are among the important events scheduled for the week.
The Federal Reserve's consumer credit report for March, the Commerce Department's wholesale inventories report for March, the import and export price indexes for April, the Labor Department's producer price inflation report for April and the Treasury auctions of 3-year, 10-year and 30-year bonds round up the economic events of the week.
The trade deficit is set to widen from a month ago, as higher oil prices may have lifted imports. That said, exports are also expected to increase, thanks to strong sales to the emerging markets. Nevertheless, export growth could be capped by the recessionary impact of the debt turmoil in the euro area.
The consumer sentiment reading based on the survey by Reuters and the University of Michigan could remain flat, as macroeconomic concerns and worries over the developments in the eurozone may be offset by the positive impact of the retreat in gasoline prices and the fairly buoyant equity market performance.
The U.S. Federal Reserve is expected to release its monthly consumer credit report at 3 pm ET. Consumer credit for March is expected to show an increase of $9.8 billion.
In February, outstanding consumer credit rose by $8.7 billion to $2.52 trillion, with an $11 billion increase in non-revolving credit offsetting a $2.2 billion decline in revolving credit tied to credit card loans.
Richmond Federal Reserve Bank President Jeffrey Lacker is due to speak to business and government executives and community leaders on "Technology, Unemployment and Workforce Development in a Rapidly Changing World," in Greensboro, North Carolina at 6 pm ET.
Stocks in Focus
Phillip Morris (PM) announced the appointment of Jacek Olczak, currently president, European Union, as CFO effective August 1st, 2012. The move follows the decision by incumbent CFO Hermann Waldemer to take early retirement.
ADTRAN (ADTN) announced that it has completed the acquisition of the Nokia Siemens fixed line broadband access business.
AIG (AIG) said the Treasury has priced an offering of 163.93 million shares of its common stock at $30.50 per share.
General Dynamics (GD) recommended that its shareholders reject a mini-tender offer by TRC Capital to purchase up to 2 million of its shares for $66.95 per share.
Westlake (WLK) announced that it has withdrawn its proposal to buy all outstanding shares of Georgia Gulf (GGC) and also announced its intention to liquidate its holding in Georgia Gulf as market conditions permit.
Cognizant Technology's (CTSH) first quarter earnings and revenue improved from the year-ago quarter. However, the company stated that it is adopting a more conservative stance for the remainder of the year, due to a slower than anticipated acceleration in demand as it enters the second quarter.
Tyson Foods (TSN) reported second quarter profit that increased from the previous year period and was above Wall Street view. Sales rose 3.4 percent, but missed the consensus estimate.
Avis Budget Group, Inc. (CAR) slipped to a loss in its first quarter. However, the company's revenues increased from the year-ago quarter and were above consensus.
Electronic Arts (ERTS), Fuel-Tech (FTEK), Pitney Bowes (PBI), Rackspace (RAX) and Vornado Realty Trust (VNO) are some of the companies due to release their results after the markets close.
by RTT Staff Writer
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