An uneasy optimism prevails on Wall Street on Friday after the solid rally witnessed yesterday brought about by the promise of policy actions. Sentiment has become guarded, with futures pointing to a slightly higher opening, as earnings news continues to stir anxiety. The outlook has been decidedly negative and revenue growth has been lackluster. The notable among the disappointments that traders are likely to fret over in the session are Facebook (FB), Starbucks (SBUX) and Amazon (AMZN).
The morning will also witness the release of the first read of second quarter GDP, and expectations concerning the GDP growth are muted, given the recent slackening consumer spending and manufacturing activity. The dollar is seeing weakness against most currencies, while crude oil futures are holding up.
As of 6:30 am ET, the Dow futures are rising 27 points, the S&P 500 futures are adding 2.70 point and the Nasdaq 100 futures are moving up 7.75 points.
U.S. stocks advanced solidly on Thursday after European Central Bank President Mario Draghi expressed firm commitment that the central bank will support the euro to the hilt. Encouraging domestic economic data also supported sentiment.
On the economic front, the Bureau of Economic Analysis is due to release its advance estimate of second quarter GDP at 8:30 am ET. Economists expect GDP growth of 1.2 percent for the quarter following a 1.9 percent increase in the previous quarter.
Reuters and the University of Michigan are due to release the final report on the consumer sentiment index for July is scheduled at 9:55 am ET. The consumer sentiment index is expected to be left unrevised at 72.
In corporate news, Starbucks' third quarter results missed estimates. The company's earnings guidance for the quarter and the year were below estimates. Amazon reported second quarter profit and sales that missed estimates. The company said it expects an operating loss for its third quarter and issued below-consensus revenue guidance.
Expedia (EXPE) reported better than expected second quarter results. The company raised its 2012 outlook and also lifted its dividend. Facebook reported second quarter adjusted earnings of 12 cents per share on revenues of $1.18 billion. The results were ahead of estimates.
Reinsurance Group of America (RGA) reported second quarter operating income of $1.65 per share compared to $1.60 per share last year. The results missed expectations.
Choice Hotels' (CHH) second quarter results exceeded estimates, while its outlook was bleak. The company also announced a special cash dividend of $10.41 per share.
Netgear (NTGR) reported second quarter results that missed expectations, while the guidance also trailed estimates.
CA Technologies (CA) reported first quarter non-GAAP earnings from continuing operations of 63 cents per share, higher than 55 cents per share last year. Revenues fell 2 percent to $1.15 billion. For 2013, the company expects non-GAAP earnings from continuing operations to be $2.45-$2.50 per share on revenues of $4.74 billion to $4.80 billion. The earnings beat estimates, while the revenues were shy of estimates. The company's guidance was lackluster. Amgen's (AMGN) second quarter results as well as its guidance were upbeat.
The major Asian markets rose along with the increase in risk appetite, set in motion by soothing comments from Draghi. South Korea's Kospi, Taiwan's Weighted Average and Hong Kong's Hang Seng Index all rose over 2 percent.
Japan's Nikkei 225 average closed up 123.54 points or 1.46 percent at 8,567. Most stocks, barring some defensive sectors, ended higher. Australia's All Ordinaries closed 60.60 points or 1.45 percent higher at 4,234. Energy, material and healthcare stocks led the advance. Hong Kong's Hang Seng Index closed at 19,275, up 382.17 points or 2.02 percent.
On the economic front, Japan's retail sales rose 0.2 percent from a year earlier in June, the Ministry of Economy, Trade and Industry said. That was well short of forecasts for a 1.1 percent increase. A separate report showed that the country's deflation accelerated in June, with consumer prices falling 0.2 percent year-over-year compared to a 0.1 percent drop in May.
The major European markets are trading mixed amid the release of mixed earnings and ahead of the release of the advance U.S. second quarter GDP estimate. The French CAC 40 Index is moderately higher, while the German DAX Index and the U.K.'s FTSE 100 Index are retreating.
In corporate news, Airbus maker EADS reported higher first half profits and also raised its full year outlook. French oil giant Total reported a decline in its adjusted earnings for the June quarter, hurt by lower oil prices and a gas leak in the North Sea. British financial giant Barclays (BCS), which has been plagued by the LIBOR scandal, reported better than expected second quarter results.
On the economic front, the results from a survey by statistical office INSEE showed that French consumer sentiment deteriorated for the second straight month in July, as households turned more skeptic about future economic and labor market conditions. The consumer confidence index slid unexpectedly to 87 in July from 89 in June.
A report released by Spanish statistical agency INSEE showed that Spain's jobless rate climbed to a new record in the second quarter. The unemployment rate rose to 24.63 percent in the second quarter from 24.44 percent in the first quarter. This was almost in line with economists' forecast of 24.65 percent.
by RTT Staff Writer
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