The major U.S. index futures are pointing to a notably higher opening on Friday, with sentiment getting a solid lift from certain measures finalized by EU leaders at a 2-day summit in Brussels that began yesterday. Relief that the eurozone nations will not leave their ailing brethren in the lurch has infused some hopes concerning the global economic outlook. In reaction, risky bets are being chased by traders. Domestically, a report released by the Commerce Department earlier in the day showed personal spending and personal income coming in softer than expectations. Despite the lukewarm data, stocks could still capitalize on the developments in the eurozone.
Following the conclusion of the first day of the EU summit, European Council president Herman Van Rompuy said in a press conference that the leaders have agreed on permitting the EFSF and the ESM to directly recapitalize ailing banks after a single European banking regulator is commissioned. Additionally, the leaders agreed that ESM loans to Spanish banks will not have senior creditor status. The European Central bank is set to act as an agent for the rescue funds in market operations.
U.S. stocks declined on Thursday but closed well off their lows of the session, as hopes of some EU action helped trim some of the losses.
The major averages opened lower following the release of an unimpressive jobless claims report and fell further in early trading. After consolidating around lower levels for much of the remainder of the session, the averages pared their losses in late trading yet closed lower.
The Dow Industrials ended down 24.75 points or 0.20 percent at 12,602 and the S&P 500 Index fell 2.81 points or 0.21 percent before closing at 1,329, while the Nasdaq Composite Index closed at 2,850, down 25.83 points or 0.90 percent.
Sixteen of the thirty Dow components closed lower and one stock ended unchanged, while the remaining thirteen advanced.
Biotechnology and gold stocks declined sharply in the session, while housing stocks extended their gains.
On the economic front, jobless claims for the week ended June 23rd fell to 386,000 from the previous week's upwardly revised reading of 392,000. Claims remained above the 380,000 mark for the fifth straight week. The four-week moving average edged down to 386,750. Meanwhile, continuing claims for the week ended June 16th declined by 15,000 to 3.296 million.
Currency, Commodity Markets
Crude oil futures are rising $3.31 to $81 a barrel after declining $2.52 to $77.69 a barrel on Thursday. Gold futures are currently climbing $43.10 to $1,593.50 an ounce. In the previous session, the precious metal fell $28 to $1,550.40 an ounce.
Among currencies, the U.S. dollar is trading at 79.40 yen compared to the 79.45 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.2676 compared to yesterday's $1.2443.
The major Asian averages closed notably higher, enthused by the announcement by Van Rompuy. Along with the equities, commodity prices also rallied, offering further support to the markets. In the process, the markets largely ignored a batch of economic data released from the region.
Japan's Nikkei 225 average, which opened lower and languished below the unchanged until the afternoon, spiked sharply in the mid-session and moved broadly sideways thereafter. The index closed above the psychological barrier of 9,000 for the first time since May 10th, as it ended up 132.67 points or 1.50 percent at 9,007. A majority of stocks advanced in the session.
Australia's All Ordinaries closed 49.90 points or 1.22 percent higher at 4,136. Most sectors, barring consumer staple and IT stocks, advanced. Energy and material stocks were among the biggest gainers of the session.
Hong Kong's Hang Seng Index ended at 19,417, up 391.66 points or 2.06 percent.
A slew of economic reports were released from Japan today. A Ministry of Internal Affairs and Communications report showed that Japan's jobless rate edged down to 4.6 percent in May from 4.6 percent in April. A separate report released by the ministry showed that household spending rose 4 percent year-over-year in May, faster than the 2.6 percent increase in April.
A Japanese consumer price inflation report showed that core consumer prices fell 0.1 percent year-over-year in May, marking the first drop in four months. Meanwhile, the Ministry of Economy, Trade and Industry reported that industrial production fell 3.1 percent month-over-month in May compared to expectations for a more modest 2.8 percent decline. Based on its survey of manufacturing firms, the ministry said it expects industrial output to rebound by 2.7 percent in June and to grow by 2.4 percent in July.
Housing starts in Japan rose at a slower annual pace of 4.2 percent in May, according to a separate government report. Economists had expected a 6.6 percent increase.
European stocks are also surging following the developments at the EU summit.
On the economic front, the results of a consumer confidence survey by the GfK/NOP showed that the U.K.'s consumer confidence index remained unchanged at -29 in June, in line with expectations.
A report released by the German Federal Statistical Office showed that retail sales fell 0.3 percent month-over-month in May following a 0.2 percent drop in April. The decline belied expectations for a 0.2 percent increase.
French statistical agency INSEE confirmed the stagnation the nation experienced in the first quarter, according to revised estimates. A separate INSEE report showed that French consumer spending rose 0.6 percent month-over-month in May, faster than the 0.1 percent growth expected by economists.
An inflation report released by Eurostat showed that the eurozone's annual inflation remained unchanged at 2.4 percent in June, in line with estimates. The inflation rate represents the lowest level since February 2011.
In corporate news, Anheuseur-Busch InvBev (BUD) announced an agreement to buy the remaining stake it does not already own in Mexico's Grupo Modelo for $9.15 per share in cash or a total transaction value of $20.1 billion.
Actelion Pharma said the FDA has approved its supplemental NDA for second generation VELETRI for the treatment of pulmonary arterial hypertension to improve exercise capacity.
Vivendi announced the exit of its Chairman and CEO Jean-Bernard Levy following strategy differences with the supervisory board. The company also announced the appointment of General Counsel Jean-Francois Dubos to replace Levy.
U.S. Economic Reports
U.S. personal incomes grew by slightly less than expected in May but the slower than expected growth did not bring down consumer spending levels. According to figures released by the Commerce Department, U.S. personal income increased by $25.4 billion or 0.2 percent for May, with disposable incomes increasing by the same 0.2 percent margin.
Consumer spending, known more formally as personal consumption expenditures, decreased by $4.7 billion for the month, though, because that represents a decrease of less than 0.1 percent, Commerce Department figures record it as a 0.0 percent change.
Most economists had expected to see personal incomes rise slightly faster, forecasting a 0.3 percent increase, though the figures released for May matched the 0.2 percent growth in incomes recorded for April. And while consumer spending held relatively level from April to May, new revisions to April consumer spending figures showed a drop to a 0.1 percent increase from the 0.3 percent increase initially reported.
The results of the Institute for Supply Management - Chicago's business survey for June are scheduled to be released at 9:45 am ET. Economists expect the business barometer index based on the survey to improve to 53.1.
The May survey showed that the ISM-Chicago's business barometer index declined 3.5 points to 52.7, marking the third straight month of declines and the lowest reading since September 2009. The production index fell by 7.1 points to 50, the new orders index slipped 4.5 points to 52.9 and the order backlogs index moved down about 10 points to 46.3. Additionally, the employment index slid 1.7 points to 57.
Thomson Reuters and the University of Michigan's final report on their consumer sentiment index for June is scheduled to be released at 9:55 am ET. The consumer sentiment index is expected to be left unrevised at 74.1.
Stocks in Focus
Accenture's (ACN) said its third quarter earnings rose to $1.03 per share from 93 cents per share last year. Revenues before reimbursements improved to $7.2 billion from the year-ago quarter's $6.7 billion. The earnings were ahead of estimates, while revenues were about in line. For the fourth quarter, the company expects revenues of $6.60 billion to $6.85 billion. The company narrowed its 2012 earnings guidance to $3.80 to $3.84 per share, while it continues to expect revenue growth of 10-12 percent. While the fourth quarter revenue guidance was below estimates, the full year revenue growth forecast was above estimates.
Nike (NKE) reported fourth quarter earnings of $1.17 percent, up 6 percent year-over-year, and revenues of $6.5 billion, up 12 percent year-over-year. The results trailed expectations.
TIBCO Software (TIBX) said its second quarter non-GAAP earnings rose to 26 cents per share from 21 cents per share last year, while revenues climbed to $247.4 million from year-ago revenues of $216.4 million. The results exceeded estimates.
Research In Motion (RIMM) reported a first quarter adjusted net loss of 37 cents per share on revenues of $2.8 billion. In the year-ago quarter, the company reported earnings of $1.33 per share on revenues of $4.2 billion. The results trailed expectations. For the second quarter, the company expects an operating loss, as it grapples with an increasing competitive environment, lower handset volumes, potential financial and other impacts from the delay of BlackBerry 10 and its aggressive plans to aggressively push its Blackberry 7 hand held device. The company also announced plans to eliminate 5,000 jobs.
ValueClick (VCLK) pre-announced second quarter results, now expecting revenues at the high end of its earlier guidance range of $155 million to $160 million. The company also expects adjusted EBITDA to come in at the high end of its previous guidance of $46 million to $48 million. Additionally, the company said it has increased the amount available under its credit facility by $50 million.
AES (AES) announced the closing of the sale of 100 percent of its interests in wind generation assets in France to Boralex Europe for about $42 million.
by RTT Staff Writer
For comments and feedback: email@example.com