The major U.S. index futures are pointing to a higher opening on Thursday, with sentiment holding up after the release of the housing starts and jobless claims data. The housing report was mixed, with housing starts declining more than expected, while building permits rose sharply. Jobless claims came about in line with expectations. On the corporate front, Cisco (CSCO) warmed the Street with positive results and its dividend hike, while Wal-Mart (WMT) reported below-consensus revenue results. Amid the mixed catalysts, the markets seek further clarity on the economic outlook from the results of the manufacturing survey by the Philadelphia Federal Reserve due after the markets open.
U.S. stocks closed a volatile session on Wednesday on a mixed note, as mixed economic data continued to weigh on sentiment.
The major averages opened lower after a regional manufacturing survey showed contraction. Although the averages pared their losses, they continued to move back and forth across the unchanged line before closing mixed.
The Dow Industrials ended down 7.36 points or 0.06 percent at 13,165, while the S&P 500 Index added 1.60 points or 0.11 percent before closing at 1,406 and the Nasdaq Composite closed at 3,031, up 13.95 points or 0.46 percent.
Despite the Dow's decline, the breath among the Dow components was in favor of the advancers, which numbered sixteen of the total 30 stocks. Bank of America (BAC), Cisco Systems (CSCO), American Express (AXP) and United Technologies (UTX) were among the biggest gainers of the session.
Biotechnology and transportation stocks were among the best performers of the session.
On the economic front, U.S. consumer prices remained unchanged in July compared to the previous month. Food prices were up merely 0.1 percent and energy prices declined 0.3 percent, dropping for the fourth straight month. Excluding food and energy, prices were up a milder than expected 0.1 percent.
The New York Federal Reserve's manufacturing report showed that manufacturing activity in the region contracted in August. The headline business conditions index fell to -5.9 in August from 7.4 in July. The new orders index fell 3 points to -5.5, while the order backlogs index rose 3 points. The employment index declined 2 points to 16.5. The 6-month outlook index also declined, dropping 5 points to 15.2, the weakest level since October 2011.
At the same time, industrial output rose 0.6 percent month-over-month in July, marking, the fourth straight month of gains. That said, June's growth was downwardly revised to 0.1 percent from the 0.4 percent growth initially estimated. Manufacturing output climbed 0.5 percent, the same pace as in June, mining output was up 1.2 percent and utilities output was 1.3 percent higher. Reflecting the shorter summer shut downs, motor vehicle and parts output rose 3.3 percent. Capacity utilization edged up 0.4 percentage points to 79.3 percent, the highest in four years.
A report released by the National Association of Home Builders showed that builder sentiment improved further in August. The headline index rose 2 points to 37 in August, the highest level since February 2007. The current sales conditions index rose 3 points to 39 and the index measuring prospective buyer traffic also increased 3 points to 31, while the sales expectations index edged up 1 point to 44.
Currency, Commodity Markets
Crude oil futures are up $0.38 to $94.71 a barrel after gaining $0.90 to $94.33 a barrel on Wednesday.
The previous session's advance came amid the release of the inventory report, which showed that crude oil stockpiles fell by 3.7 million barrels to 366.2 million barrels in the week ended August 10th. Inventories remained above the upper limit of the average range.
Gasoline stockpiles fell by 2.4 million barrels and were in the lower half of the average range. Meanwhile, distillate inventories rose by 0.7 million barrels yet remained below the lower limit of the average range. Refinery capacity utilization averaged 92.6 percent over the four weeks ended August 10th compared to 92.4 percent over the previous four weeks.
Gold futures, which rose $4.20 to $1,606.60 an ounce in the previous session, are currently adding $3.30 to $1,609.90 an ounce.
Among currencies, the U.S. dollar is trading at 79.32 yen compared to the 78.99 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2283 compared to yesterday's $1.2290.
Asian stocks ended mixed yet again, as the listless trading on Wall Street overnight left traders unsettled even as stimulus hopes remained alive. Chinese premier Wen Jiabao's not-so-positive comments on the domestic economy added to the optimism about further stimulus.
Japan's Nikkei 225 average opened higher and advanced steadily throughout the session, closing up 167.72 points or 1.88 percent at 9,093, closing above the 9,000 level for the first time since July 6th. The domestic market benefited from the yen's weakness.
A majority of stocks advanced, with insurance stocks Da-ichi Life and T&D Holdings leading the gains with advances of over 6 percent each. Most export stocks also gained ground. Capitalizing on the yen's weakness.
Australia's All Ordinaries settled up 46.50 points or 1.08 percent at 4,354. The market witnessed across the board buying, with consumer staple and energy stocks leading the gains.
Meanwhile, Hong Kong's Hang Seng Index closed at 19,963, down 89.34 points or 0.45 percent.
European stocks are trading mixed after yesterday's retreat. The CAC 40 and the DAX Indexes are currently in positive territory, while the FTSE 100 Indexes is declining.
In corporate news, Zurich Insurance reported a 19 percent drop in its second quarter profit, although the decline was not as steep as analysts had expected.
On the economic front, a report released by the U.K. Office for National Statistics reported that U.K. retail sales rose 0.3 percent month-over-month in July compared to the 0.1 percent drop expected by economists. The annual increase was also ahead of expectations.
Eurostat reported that the euro area's annual consumer price inflation came in at 2.4 percent in July, the same pace as in June and also in line with flash estimates. On a month-over-month basis, consumer prices were down 0.5 percent.
U.S. Economic Reports
New housing construction in the U.S. dipped more than expected in July, but an equally unexpected strong jump in construction permitting offers hopes for the future of the beleaguered housing market.
New privately-owned housing starts came in at a seasonally adjusted annual rate of 746,000, a 1.1 percent drop from June levels. Most economists had predicted a drop in housing starts from the rebound in June, but most had expected it to remain at a somewhat higher 750,000 annual .
The June rebound also proved to be somewhat less strong than initially reported. Preliminary figures had put the June rate of housing starts at 760,000.However, new building permits, often viewed as an indicator of future housing starts, jumped significantly in July, rising 6.8 percent to a seasonally adjusted annual rate of 812,000 - the highest level since August 2008.
Initial claims for U.S. unemployment insurance came in slightly higher than anticipated in the week ended August 11th, according to a report released by the Labor Department, although claims appear to have stabilized following recent volatility.
The report showed that initial jobless claims crept up to 366,000 from the previous week's revised figure of 364,000. Economists had expected jobless claims to climb to 365,000 from the 361,000 originally reported for the previous week. At the same time, the less volatile four-week moving average edged down to 363,750 from the previous week's revised average of 369,250.
The results of the Philadelphia Federal Reserve's manufacturing survey are due out at 10 am ET. Economists expect the diffusion index of current activity to show a reading of -5 for August.
Manufacturing activity contracted at a faster than anticipated pace in July, although improving from month-ago levels. The diffusion index of manufacturing activity rose 3.7 points to -12.9. The new orders index improved to -6.9 from -18.8, the unfilled orders index increased to -9.5 from -16.3 and the shipments index rose to -8.6 from -16.6. However, the number of employees index fell to -8.4 from 1.8.
Minneapolis Federal Reserve Bank President Narayana Kocherlakota will speak in Williston, North Dakota, repeating his speech from the previous day, at 8 pm ET.
Stocks in Focus
Cisco Systems (CSCO) reported fourth quarter non-GAAP earnings of 47 cents per share, up 18 percent year-over-year, on net sales of $11.7 billion, up 4 percent. Separately, the company announced a 75 percent increase in its quarterly dividend to 14 cents per share.
Wal-Mart Stores' (WMT) second quarter profit and net sales increased from the same period last year. Walmart U.S. comparable store sales rose 2.2 percent. The company also raised its full-year earnings per share guidance.
Best Buy's (BBY) founder Richard Schulze has sent a letter to the company's board requesting permission to form a group and conduct basic due diligence so that he can present a fully financed offer for the company.
Agilent (A) reported third quarter non-GAAP earnings of 79 cents per share on revenues of $1.72 billion. The company also said it expects 2012 non-GAAP earnings of 80-82 cents per share on revenues of $1.76 billion to $1.78 billion. The results as well as the guidance were weaker than expected.
Hot Topic's (HOTT) second quarter loss narrowed to 2 cents per share from 8 cents per share in the year-ago period. Net sales rose to $157.83 million from $150.95 million last year. The loss was in line with estimates, while the revenues were shy of expectations.
NetEase.com (NTES) reported second quarter earnings of $1.05 per share compared to 93 cents per share in the year-ago period. Revenues came in at $308.91 million. The results trailed expectations.
PetSmart (PETM) reported better than expected second quarter results, while it also raised its 2012 earnings guidance.
NetApp (NTAP) reported first quarter adjusted earnings that were ahead of estimates. Revenues were about in line with estimates. The company also issued healthy second quarter guidance.
SINA reported (SINA) second quarter non-GAAP net income of 5 cents per share on revenues of $131.6 million, up 11 percent year-over-year. The earnings exceeded estimates. For the third quarter, the company expects non-GAAP net revenues of $145 million to $148 million, surrounding the consensus estimate.
Ross Stores (ROST) said its board has approved an updated long-term management succession plan, which includes a new employment agreement with CEO Michael Balmuth. The agreement with Balmuth extends through May 2016 and transitions him to the role of Executive Chairman after June 1, 2014.
Lockheed Martin (LMT) said it has been awarded a $150 million contract from the Missile Defense Agency to produce Terminal High Altitude Area Defense Weapon System launchers and fire control and communications equipment for the U.S. Army.
Pall (PLL) announced the award of a multi-phase project to develop an advanced shipboard desalination system by the U.S. Navy.
Aeropostale (ARO), Brocade (BRCD), DryShips (DRY), Gap (GPS), Marvell (MRVL), New York & Co. (NWY) and ScanSource (SCSC) are among the companies due to release their quarterly results after the markets close.
by RTT Staff Writer
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