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Wall Street Striving To Shake Off European Concerns

Wall Street Striving To Shake Off European Concerns
5/10/2012 6:40 AM ET

Wall Street's European debt concerns remain an overhang, as reflected by the U.S. index futures, which point to a modestly lower opening. To add fuel to the fire, a Chinese government data showing a slowdown in the dragon nation's exports and imports also heightened macroeconomic concerns. Additionally, networking giant Cisco's (CSCO) guidance came as a disappointment. Against this backdrop, traders may stay focused on the jobless claims and the domestic trade balance data due for release shortly before the markets open.

The Dow Industrials managed to hold support around its 100-day moving average yesterday, closing at 12,835, just above its 100-MA of 12,819. In the eventuality of the negativity continuing, the index could test the support and pull back to its next support around 12,683. On the upside, resistances lie around 12,911 and 13,040.

As of 6:30 am ET, the Dow futures are slipping 27 points, the S&P 500 futures are receding 0.30 points and the Nasdaq 100 futures are moving down 8 points.

On the economic front, the Labor Department is due to release its customary jobless claims report for the week ended May 5th at 8:30 AM ET. Economists expect claims to edge up to 366,000 from 365,000 in the previous week.

Around the same, the Labor Department is also scheduled to release its report on import and export prices for April. The consensus estimates call for a 0.2 percent month-over-month drop in import prices and a 0.2 percent increase in export prices.

The Commerce Department is set to release its trade gap data for March at 8:30 am ET. Economists estimate that the trade gap widened to $49.5 billion in the month after it narrowed to $46 billion in February.

Federal Reserve Chairman Ben Bernanke is scheduled to speak via satellite at the 48th Annual Conference on Bank Structure and Competition, sponsored by the Chicago Federal Reserve.

Kansas City Federal Reserve Bank President Esther George will speak to the 21st Annual Hyman P. Minsky Conference on Debt, Deficits and Financial Instability at 9:30 am ET.

Minneapolis Federal Reserve Bank President Naryana Kocherlakota will speak to the Business Law Institute in Minneapolis on "Toward a More Transparent FOMC,' at 10 am ET.

The Treasury Budget, a monthly account of the surplus or deficit of the federal government, is due to be released at 2 PM ET. Economists expect a deficit of $30 billion for April compared to a deficit of $198.2 billion for March.

In corporate news, Cisco's third quarter results exceeded estimates, while the company issued a downbeat fourth quarter outlook in its earnings call.

News Corp. (NWSA) reported third quarter adjusted earnings of 37 cents per share, higher than 26 cents per share last year. Revenues were $8.40 billion compared to the year-ago quarter's $8.26 billion. The results exceeded estimates. The company's board also approved a $5 billion stock buyback plan.

Priceline.com (PCLN) said its first quarter non-GAAP net income rose to $4.28 per share from $2.66 per share last year, while revenues rose 28.2 percent to $1 billion. For the second quarter, the company expects 18-23 percent revenue growth and non-GAAP earnings of $7.20-$7.40 per share.

CA Tech (CA), Career Education (CECO), DryShips (DRYS), Express Scripts (ESRX), Liberty Global (LBTYA), Nordstrom (JWN) and Sotheby's (BID) are among the companies due to report their results after the markets close.

The major Asian markets closed on a mixed note in reaction to mixed catalysts. The positive sentiment generated by the decision of the European Financial Stability Facility board release 5.2 billion euros in emergency assistance to Greece was nullified to some extent by the sour Chinese trade data and the continuing political imbroglio in Greece.

Japan's Nikkei 225 average closed down 35.41 points or 0.39 percent at 9,009 and Hong Kong's Hang Seng Index retreated 103.36 points or 0.51 percent before closing at 20,227, while Australia's All Ordinaries added 21.60 points or 0.50 percent to 4,354. Energy and material stocks rebounded following the previous session's slide.

A report released by China's Customs Office showed that China's exports grew 4.9 percent year-over-year in April, about half the pace expected by economists. Imports increased a mere 0.3 percent from last year. However, a report released by the Australian Bureau of Statistics showed that its seasonally adjusted unemployment rate for Australia fell to 4.9 percent in April from 5.2 percent in March.

The major European markets are seeing lackluster sentiment, with all the three major averages in the region declining modestly to moderately ahead of a central bank decision. The Bank of England's policy setting arm is expected to keep interest rates at a record low of 0.50 percent and also maintain the size of its bond buying program unchanged despite the double-dip recession domestically.

Commodities are continuing to see weakness, while the riskier currencies are seeing a rebound.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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