The major U.S. index futures are pointing to a narrowly mixed opening on Monday, with the overbought levels introducing caution after five weeks of advances. Japan's second quarter GDP data set the mood for the global markets, with Asian stocks slammed by weaker than expected growth reported by the world's third largest economy. European stocks have shown some resilience in the wake of positive debt auctions by German and Italy. Risky assets are seeing some strength, reflecting hopes that all is not lost. That said, the absence of any major economic catalysts could lead to indecision among Wall Street traders, especially as the markets await a slew of first-tier economic over the course of the week.
U.S. stocks extended their gains in the week ended August 10th, although the gains could best be characterized as uneasy. Traders held firm to stimulus hopes and stayed invested in stocks. Commodities and semiconductor stocks were among the best performers of the week.
Last Monday, the major averages posted uneasy gains, helped by some positive corporate news and hopes that the eurozone crisis will be kept in check. Traders warmed to the idea of central bank support on Tuesday in the wake of weak economic data, sending stocks higher.
After trading on a lackluster note on both Wednesday and Thursday, the major averages closed mixed, as the overbought levels of the markets pushed traders to the defensive. Stimulus expectations strengthened on Friday following the release of weak Chinese data, sending stocks higher.
For the week, the Dow Industrials rose 0.85 percent and the S&P 500 Index added 1.07 percent, while the Nasdaq Composite Index rallied 1.78 percent.
Among the sector indexes, the NYSE Arca Gold Bugs Index rallied 5.55 percent for the week and the Philadelphia Semiconductor Index rose 4.07 percent, while the Philadelphia Oil Service Index and the Philadelphia Housing Sector Index gained about 3 percent each.
Currency, Commodity Markets
Crude oil futures are rising $0.82 to $93.69 a barrel after advancing $1.47 or 1.61 percent to $92.87 a barrel in the week ended August 10th.
Last week, the commodity got a shot in the arm from stimulus expectations. Oil extended its gains last Monday, advancing moderately in the session. The commodity rose further on Tuesday and added close to $1.50-a-barrel. Despite the weekly inventory report showing a draw in crude oil stockpiles, oil fell modestly on Wednesday. The commodity closed little changed on Thursday before pulling back moderately on Friday.
Gold futures, which climbed $13.50 or 0.84 percent to $1,622.80 an ounce in the previous week, are currently adding $2.10 to $1,624.90 an ounce.
Among currencies, the U.S. dollar strengthened against the euro in the week ended August 10th, rising 0.78 percent before ending the week at $1.2290 versus the common currency. The euro was hurt by the European Central Bank's downgraded assessment of the domestic economy. Meanwhile, the dollar edged down 0.24 percent against the yen over the week to 78.27 yen.
The U.S. dollar is currently trading at 78.35 yen and is valued at $1.2356 versus the euro.
The major Asian markets ended on a mixed note amid intensification of economic fears after Japan reported weak GDP data. The unfolding week's 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 had 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.
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.
U.S. Economic Reports
The economic clamor intensifies in the unfolding week, as several first-tier economic reports 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 surveys for August and the Federal Reserve's industrial production report for July are among the key reports that could shed further light 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.
Retail sales may have seen a rebound following three consecutive months of declines, as U.S. equities rallied and gasoline prices thawed. Chain store sales have posted a modest gain in the month, while auto sales were soft.
Industrial production growth may have remained healthy, given the gains in the number of hours worked in the manufacturing sector in the past two months. Economists also expect a strong performance by utilities and the auto sector, boosted by shorter summer shut downs.
Homebuilder confidence is expected to have remained flat near its 5-year high, given the decline in new mortgage applications and the recent setback witnessed by the job market.
Stocks in Focus
Google (GOOG) is announced plan to cut about 4,000 jobs and close certain facilities at its recently acquired Motorola Mobility Holdings Inc. unit. The company expects to incur a severance-related charge of no greater than $275 million.
TARO Pharma (TARO) announced that it has entered into a merger agreement with certain affiliates of India-based Sun Pharma that 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.
Verint Systems (VRNT) and Comverse Technology (CMVT) announced that Verint has signed a definitive merger agreement with Comverse. Comverse Technology shareholders will become direct stockholders of Verint through an exchange, eliminating majority ownership and control structure.
O'Reilly Automotive (ORLY) said its board has approved an additional $500 million 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.
by RTT Staff Writer
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