Plus   Neg

Wall Street Sports Debilitated Look As European Concerns Linger


Wall Street faces a muddled outlook on Wednesday, as the veil of political uncertainty surrounding Greece in the wake of parliamentary elections, has not yet been lifted. Added to that, the new socialists regime in France is always a concern for the markets, as an about face in the government's stance towards bailout funding to troubled eurozone nations could upset the applecart.

There are no first tier domestic economic data scheduled for the day that could turn the tide and bring in some sanity in the markets. That said, the markets can take comfort from a data from Germany, showing a bigger than expected trade surplus, which suggests that global trade has not lost its vibrancy.

As of 6:15 am ET, the Dow futures are slipping 61 points, the S&P 500 futures are receding 7.80 points and the Nasdaq 100 futures are moving down 15.25 points.

On the economic front, the Commerce Department is due to release its wholesale inventories report at 10 am ET. Economists expect wholesale inventories at the end of March to show a 0.6 percent increase following a 0.9 percent increase in February.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended May 4th at 10:30 AM ET. . The American Petroleum Institute's inventory report released late Tuesday showed that crude oil stockpiles rose by 7.8 million barrels to 378 million barrels in the week ended May 4th.

In corporate news, Disney (DIS) reported second quarter adjusted earnings of 58 cents per share, exceeding the 25 cents per share consensus estimate. Revenues also exceeded estimates.

Vitesse Semiconductor (VTSS) reported better than expected second quarter earnings, while revenues were in line. The company issued below consensus revenue guidance for the third quarter.

Protective Life (PL) reported first quarter operating earnings of $1.18 per share, ahead of the $1.05 per share consensus estimate. Peer XL Group (XL) reversed to a profit on an operating basis in its first quarter, with the operating earnings coming in above estimates.

STEC (STEC) reported a first quarter loss that was wider than estimates, while its revenues declined by nearly half to $50.4 million, yet exceeded expectations. The company issued a downbeat guidance for its second quarter.

The Yahoo (YHOO) CEO's inaccurate resume controversy snowballed further, as Patt Hart, a board member and who spearheaded the CEO search, informed Yahoo's board that she will not seek re-election to the board.

Convergys (CVG) announced executive changes, including the elevation of president and COO Andrea Ayers as President and CEO. Jeff Fox, the incumbent president and CEO, will become the executive chairman of the board. Separately, the company reported better than expected first quarter earnings and also initiated a regular quarterly dividend of 5 cents per share.

Activision Blizzard (ATVI), BMC Software (BMC), Cisco Systems (CSCO), JDA Software (JDAS), Live Nation (LYV), MEMC Electronics (WFR), News Corp. NWSA), Priceline.com (PCLN) and Scientific Games (SGMS) are among the companies due to release their results after the markets close.

Asian stocks wilted, as European concerns lingered and impacted market sentiment. The intensification of risk aversion also strengthened domestic currencies, which adversely affected export stocks.

Japan's Nikkei 225 average languished notably below the unchanged line throughout the session before closing at a 3-month low of 9,045, down 136.59 points or 1.49 percent. Australia's All Ordinaries closed 43.70 points or 1 percent lower at 4,332, the lowest closing level in a month. Energy and material stocks tumbled in reaction to pullback in the prices of resources. Hong Kong's Hang Seng Index declined 154.11 points or 0.75 percent before closing at 20,331.

The major European markets are trading on a mixed note, as debt concerns are mitigated to some extent by positive earnings news and trade data out of Germany. The French CAC 40 Index and the U.K. FTSE 100 Index are moving down 0.68 percent and 0.22 percent, respectively, while the German DAX Index is rising 0.20 percent.

In corporate news, German financial giant Commerzbank reported lower profits for its first quarter, dragged by lower interest income and an accounting charge. That said, the bank said it made up for the 5.3 billion euros shortfall determined by the European Banking Association. Netherlands' ING reported a sharp drop in first quarter profits.

Insurers Allianz and Prudential reported solid first quarter results. German utility company EON reported higher underlying net income rose to 1.7 billion euros in its first quarter compared to 1.32 billion euros last year. U.K. grocer Sainsbury's underlying pre-tax profit rose on higher sales and the company also increased its full year dividend.

On the economic front, Germany reported a trade surplus of 17.4 billion euros in March compared to a 14.9 billion euros surplus in February. Economists had expected a more modest increase in surplus to 14.3 billion euros. Exports rose 0.9 percent month-over-month, while imports increased by 1.2 percent.

Commodities continue to grind lower along with riskier currencies.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

Market Analysis

Follow RTT