Sentiment on Wall Street remains guarded on Monday, as the economic outlook remains hazy and the eurozone debt crisis continues to remain an overhang. Earlier in the day, Asian stocks came under pressure after Japan reported weak second quarter growth, signaling that the rebuilding boost post the quake may soon be a thing of the past. At the same time, European stocks are seeing some volatility, although sentiment has improved following a successful debt auction by Italy. The lack of any major economic catalysts in the New York session, stocks may tread the same lackluster path they have taken for much of last week.
As of 6:15 am ET, the Dow futures are slipping 14 points, the S&P 500 futures are receding 1.80 points and the Nasdaq 100 futures are moving down 1.25 points.
U.S. stocks extended their gains in the week ended August 10th, although the gains could best be characterized as uneasy. Markets held firm to stimulus hopes and stayed invested in stocks. Commodities and semiconductor stocks were among the best performers of the week.
Economic clamor intensifies in the unfolding week, as several first-tier economic data are due to be released in the week. The Commerce Department's retail sales report for July, the results of the New York and Philadelphia Federal Reserves' manufacturing survey for August and the Federal Reserve's industrial production report for July are among the key reports that could shed further clarity on the economic outlook.
Traders may also focus on the National Association of Home Builders' housing market index for August, the Commerce Department's housing starts report for July, the weekly jobless claims report and the preliminary consumer sentiment index compiled by Reuters and the University of Michigan. The Labor Department's producer and consumer price inflation reports for July, the Conference Board's leading economic indicators index for June and the business inventories report for June round up the economic events of the week.
In corporate news, TARO Pharma (TARO) announced that it has entered into a merger agreement with certain affiliates of India-based Sun Pharma, which allows all TARO shareholders other than Sun Pharma and its affiliates to receive a cash payment of $39.50 per share upon closing of the merger. Taro will become a privately held company upon completion of the merger.
O'Reilly Automotive (ORLY) said its board has approved an additional $500 million worth of stock buyback plan. Meanwhile, C.H. Robinson Worldwide (CHRW) said its board increased its share repurchase authorization by up to an additional 10 million shares of common stock.
GroupOn (GRPN) and IAMGOLD (IAG) are among the companies due to release their quarterly results after the markets close.
The major Asian markets ended on a mixed note amid intensification of economic fears after Japan reported weak GDP data. The unfolding weeks key global data releases also tempered mood.
Japan's Nikkei 225 average remained mostly below the unchanged line before closing down 6.29 points or 0.07 percent at 8,885. Taiheiyo Cement, Sharp, Daiwa House Industry and Mitsui OSK Lines were among the worst decliners of the session, while Nippon Sheet Glass rallied over 10 percent.
After seeing a sharp spike in early trading, Australia's All Ordinaries declined steadily throughout the session before closing up 6.70 points or 0.16 percent at 4,310. Material stocks advanced strongly, while energy stocks also lent some support.
Hong Kong's Hang Seng Index fell 54.76 points or 0.27 percent before closing at 20,081.
On the economic front, a report released by Japan's Cabinet Office showed that Japanese GDP rose by 0.3 percent sequentially in the second quarter. The increase was tame compared to the 0.6 percent growth expected by economists. Annually GDP rose 1.4 percent, while economists expected a steeper 2.5 percent increase.
European stocks are seeing lackluster sentiment and are currently seeing mixed sentiment. Italy raised 8 billion euros through a 12-month bill auction, although the cost of borrowing was higher than at an earlier auction. Additionally, the Greek economy contracted less than expected in the second quarter.
Swiss money manager Julius Baer announced an agreement to buy Bank of America's (BAC) Merrill Lynch wealth management business outside of the U.S. for 860 million francs. German utility E.ON reported revenues of 65.4 billion euros for the first half of the year, ahead of estimates by most analysts.
by RTT Staff Writer
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