Nervous mood continues to prevail on Wall Street, as reflected by the U.S. index futures, which point to a slightly lower opening. The Asian markets derived some comfort from a report from China, which showed a slowdown in the pace of manufacturing activity in the nation. Meanwhile, private sector activity data from the eurozone was not encouraging, suggesting deepening of recessionary conditions. A move by Moody's to lower its credit rating outlook for Germany reflects fears that even a robust economy such as Germany may not be spared in the eventuality of a eurozone break-up.
Domestic earnings are painting a blurred picture of corporate health. Amid the fluid global macroeconomic condition, the markets may face difficulty in finding a firmer footing.
As of 6:15 am ET, the Dow futures are receding 6 points, while the S&P 500 futures are slipping 1.90 points and the Nasdaq 100 futures are moving down 4.50 points.
U.S. stocks declined sharply on Monday amid intensifying eurozone worries. The major U.S. averages opened notably lower, but gradually pared their losses over the course of the session, yet closed with steep losses.
On the economic front, the Federal House Finance Agency, or FHFA, is set to release its house price index for May at 10 am ET. Economists expect a 0.3 percent increase in the house price index compared to a 0.8 percent increase in April.
The Richmond Federal Reserve's manufacturing index due at 10 am ET is expected to come in at 0 for July compared to -3 in June.
In corporate news, Texas Instruments (TXN) second quarter adjusted earnings beat estimates, while its revenues were just shy of estimates. The company's third quarter guidance was downbeat.
Health Management Associates (HMA) reported second quarter earnings that were in line, while its revenues missed expectations.
VMWare (VMW) reported better than expected second quarter earnings and in line revenues, while it raised its full year revenue guidance. The company also announced a deal to buy Nicira for $1.25 billion.
Baidu.com (BIDU) reported second quarter earnings per ADS of $1.24 per share, ahead of the $1.24 per ADS consensus estimate. Revenues rose 59.8 percent and also exceeded estimates. The company's third quarter revenue guidance was also above estimates.
Owens & Minor (OMI) reported second quarter results that trailed estimates. The company also announced that it has agreed to buy Movianto Group, which will provide the company an entry into the European healthcare market for $158 million. Dupont's (DD) quarterly earnings beat estimates, while the guidance was soft.
The major Asian markets went about in a listless manner amid the economic anxieties before closing on a mixed note. Even as traders remained concerned about the European debt situation, a report showing a slowdown in the contraction of the Chinese manufacturing sector offered some consolation.
Japan's Nikkei 225 average languished below the unchanged line for much of the session before closing down 20.23 points or 0.24 percent at 8,488. Australia's All Ordinaries moved about in a lackluster manner before moving decisively above the unchanged line in late trading. The index closed at 4,161, up merely 2 points or 0.05 percent.
Hong Kong's Hang Seng Index slid 150.27 points or 0.79 percent before closing at 18,903. Trading was cancelled in the morning due to a Typhoon threat.
Flash estimates released by Markit Economics revealed that the purchasing managers' index for China came in at 49.5 in July, up from 48.2 in June, suggesting the slowest contraction in manufacturing activity in five months. The modest improvement came about due to a rebound in output.
The major European markets are seeing some volatility and are currently trading mixed. The French CAC 40 Index and the German DAX Index are slipping modestly, while the U.K.'s FTSE 100 Index is advancing marginally.
Earlier before the European markets opened, Moody's lowered its outlook on its credit rating for Germany to negative from stable. The outlook for Netherlands and Luxembourg were also reduced. The action was premised on the likely financial sector shocks arising from a possible exit of Greece from the eurozone.
Meanwhile, debt offerings by Spain were fairly well received, although the cost of borrowing increased. Spain sold 3.05 billion euros worth of 3-month and 6-month Treasury bills compared to its 2-3 billion euro-target.
Flash estimates released by Markit Economics showed that its manufacturing purchasing managers' index for the eurozone slid 1 point to 44.1 in July. On the other hand, the services index rose 0.5 points to 47.6.
In corporate news, Netherlands' TomTom reported a decline in second quarter adjusted earnings and revenues. STMicroelectronics (STM) reported a loss for its second quarter. SAP (SAP) released encouraging second quarter results. Norwegian telecom company Telenor reported a 32 percent increase in second quarter operating profit and also reaffirmed its full year guidance.
by RTT Staff Writer
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