Nervousness is writ all over the face of the markets on Monday, as is evident from the trading in the U.S. index futures, which point to a modestly lower opening. After Chinese premier Wen Jiabao's comments of difficulties persisting for some more time hurt sentiment in Asia and Europe, there is further anxiety in the air, as the markets prepare to receive earnings from U.S. financial services giant Citigroup (C) and some key first tier economic reports, including the retail sales report and a report on manufacturing conditions in the New York region.
As of 6:15 am ET, the Dow futures are up down 30 points and the S&P 500 futures are slipping 3.10 points, while the Nasdaq 100 futures are declining 6 points.
U.S. stocks closed the week ended July 13th on a mixed note, as the European debt turmoil, lukewarm economic data and lackluster earnings reports kept market mood largely downbeat.
The unfolding week provides ample data points to verify the resilience of the economy to withstand both domestic and overseas shocks. The Commerce Department's retail sales report for June, the July manufacturing surveys of the New York Federal Reserve and the Philadelphia Federal Reserve, the weekly jobless claims report and the Federal Reserve's industrial production report for June are among the closely watched reports of the week.
Some key housing reports, including the Commerce Department's housing starts report for June, the National Association of Realtors' existing home sales report for June and the National Association of Realtors' housing market index for July are also due for the week. The spotlight is also likely to be on Federal Reserve Chairman Ben Bernanke's Congressional testimony and the Federal Reserve's Beige Book.
The business inventories report for May, the Labor Department's consumer price report for June, the Conference Board's leading economic indicators index for June and announcements concerning the Treasury auction of 2-year, 5-year and 7-year notes round up the economic events of the week.
The Commerce Department is set to release its retail sales report at 8:30 am ET. For June, economists estimate a 0.2 percent increase in retail sales and a 0.1 percent increase in retail sales that exclude autos. In May, retail sales fell 0.2 percent and retail sales, excluding autos, were down 0.4 percent.
The results of the New York Federal Reserve's empire state manufacturing survey is slated to be released at 8:30 am ET. The headline general business conditions index for July is expected to come in at 4.50 after declining to 2.3 in June.
The Commerce Department is also scheduled to release its business inventories report for April at 10 am ET. The report is expected to show a 0.3 percent increase in business inventories for the month following a 0.4 percent increase in the previous month.
In corporate news, MasterCard (MA) said it has agreed to a memorandum of understanding to settle the current U.S. merchant class litigation. The company noted that its share of the cash portion of the settlements would total $790 million on a pre-tax basis. With the company having already recorded a $770 million charge in the fourth quarter of 2011, it would now incur an additional $20 million pre-tax charge in its second quarter.
United Parcel Service (UPS) said it expects its previously announced TNT Express acquisition to be completed in the fourth quarter of 2012. UPS expects the European Commission's review to move to a Phase II review, as there are certain areas that require more time to analyze.
Cintas (CTAS), JB Hunt Transportation (JBHT), Lincare (LNCR) and Packaging Corp. (PKG) are among the companies due to release their quarterly results after the market closes.
The major Asian markets failed to capitalize on the positive lead from Wall Street last Friday and closed on a mixed note. The Japanese market remained closed on account of a public holiday. Jiabao has reportedly stated that the momentum for a recovery in economic growth isn't yet in place and that difficulties may persist for a while. The comments created some indecision among traders, particularly against the backdrop of a bleak debt situation in Europe and slippery recovery in the U.S.
Australia's All Ordinaries ended up 24.90 points or 0.60 percent at 4,143. Energy and material stocks led the gains. Hong Kong's Hang Seng Index showed volatility throughout the session before closing up 28.71 points or 0.15 percent at 19,121. On the other hand, China's Shanghai Composite Index closed down 37.94 points or 1.74 percent at 2,148, its lowest level since March 2009.
The major European markets are trading lower ahead of a few key U.S. earnings and economic reports. The French CAC 40 Index and the German DAX Index are slipping 0.20 percent and 0.08 percent, respectively, while the U.K.'s FTSE 100 Index is down 0.10 percent.
In corporate news, shares of U.K. securities firm G4S came under selling pressure after it admitted that it will not be able to keep up its contractual obligation of supplying security personnel for the 2012 London Olympics. The company expects to incur a loss of up to 50 million pounds to deliver the necessary staffing.
On the economic front, final estimates released by Eurostat showed that the eurozone's annual inflation rate held steady at 2.4 percent in June. The rate was also unchanged from the preliminary estimate.
by RTT Staff Writer
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