The major U.S. index futures are pointing to a mixed opening on Monday, with sentiment weighed down by the cautious undertone of traders, as the major averages trade in overbought territory. Lowe's (LOW) disappointing earnings could weigh on the retail space. Additionally, the lack of any major catalysts could fail to give direction to the markets. Although reports of sovereign bond buying by the European Central Bank have been doing the rounds, the lack of visibility into the resolution of the eurozone debt crisis may act as a deterrent.
U.S. stocks advanced yet again in the week ended August 17th, with the Dow Industrials and the S&P 500 Index moving higher for the sixth straight week, as late-week optimism generated over the euro zone debt crisis, some positive earnings and mixed economic data kept traders invested in stocks.
Last Monday, the major averages went about in a lackluster manner amid the release of some weak global data points before closing on a modestly negative note. Despite the release of robust domestic retail sales data on Tuesday, the major averages closed on a narrowly mixed note.
Amid the release of mixed domestic economic data on Wednesday, stocks saw some volatility before closing mixed. German Chancellor Angela Merkel's comments backing the European Central Bank's stance on the debt crisis and Cisco's (CSCO) results fueled a strong rally on Thursday. The markets showed a lack of direction on Friday before closing modestly higher.
For the week ended August 17th, the Dow Industrials added 0.51 percent and the S&P 500 Index gained 0.87 percent, while the Nasdaq Composite closed 1.84 percent higher.
Among the sector indexes, the Philadelphia Housing Sector Index climbed 4.76 percent for the week, while the S&P Retail Index gained 3.31 percent. The Dow Jones Transportation Average ended up 2.58 percent compared to advances of over 1 percent by both the Dow Jones Utility Average and the KBW Bank Index.
Currency, Commodity Markets
Crude oil futures are receding $0.07 to $95.94 a barrel after advancing $3.14 or 3.38 percent to $96.01 a barrel in the week ended August 17th. Oil fell modestly last Monday, reversing some of the previous week's gains. However, the commodity rebounded on Tuesday, encouraged by the strong U.S. retail sales for July. Oil rose further on Wednesday, adding close to $1-a-barrel amid the release of mixed U.S. economic data and a bullish inventory report.
Risk aversion pepped up sentiment further on Thursday, with oil rising over $1.25-a-barrel on Thursday. The commodity advanced yet again on Friday, closing the week with a solid advance and ending at its highest level since May 11th.
Gold futures, which fell $3.40 or 0.21 percent to $1,619.40 an ounce in the previous week, are currently declining $5.80 to $1,613.60 an ounce.
Among currencies, the U.S. dollar weakened against risk currencies in the week ended August 17th, although it advanced strongly against the yen. The stifling of Fed stimulus hopes in the wake of some strong domestic data and higher commodity prices pushed the greenback lower against most currencies.
The dollar fell 0.37 percent against the euro, ending the week at $1.2335. At the same time, it added 1.65 percent against the yen before ending the week at 79.56 yen.
The U.S. dollar is currently trading at 79.50 yen and is valued at $1.2309 versus the euro.
The major Asian markets closed on a mixed note, with the Australian, Chinese, Hong Kong, South Korean and Taiwanese markets closing lower, while the New Zealand, Japanese, Indonesian and Indian market firmed up. The Malaysian and Singaporean markets were closed for a holiday. The lackluster sentiment reflected continued uncertainty surrounding the economic outlook.
Australia's All Ordinaries languished below the unchanged line for the better part of the session before closing down 1.90 points or 0.04 percent at 4,392. Financial, material, telecom and consumer discretionary stocks were among the worst decliners.
Hong Kong's Hang Seng Index closed at 20,104, down 11.80 points or 0.06 percent.
Meanwhile, Japan's Nikkei 225 average opened higher and moved sideways until late afternoon. After squandering all of its gains, the index rose yet again but closed off its highs at 9,171, up 8.66 points or 0.09 percent.
Most export stocks advanced, while financial, real estate, auto and utility stocks moved to the downside. Yokogawa Electric and Toho Zinc led the gainers, with advances of over 3 percent each. Pioneer, Ube Industries, Unitika and Hokuetsu Paper all gained over 2 percent.
European stocks are currently mixed. The mood is cautious as reports suggested that Greek Prime Minister Antonis Samaras will meet Luxembourg Prime Minister Jean Claude Juncker, who also heads the Eurogroup, German Chancellor Angela Merkel and French President Francois Hollande this week to seek an extension for the nation's reforms.
Meanwhile, Germany's Spiegel magazine reported Sunday that the European Central Bank is considering setting limits on yields of Eurozone sovereign bonds. The central bank will intervene and buy the bonds if their interest rates exceed a pre-determined threshold above German bonds. The report also suggested that the European Central Bank will make a decision on the proposal at its governing council meeting in September.
A Eurostat report showed that the euro area's construction output fell 0.5 percent month-over-month in June compared to a 0.2 percent drop in May. Annually, output was down 2.8 percent.
U.K. house prices fell at the fastest pace ever seen for the month of August, as the number of properties coming to the market continued to outstrip demand, property website Rightmove reported. The asking prices for a property fell 2.4 percent month-over-month in August.
U.S. Economic Reports
After a week that saw mostly positive economic data, traders head into another week that has a few key economic data that could provide further evidence regarding the domestic economic recovery. The unfolding week's economic calendar has a trio of housing reports on new home sales, existing home sales and house prices that have the potential to move the markets.
Traders may also focus on the weekly jobless claims report, the Commerce Department's durable goods orders report for July and the minutes of the latest FOMC minutes. Some Fed speeches and announcements concerning the Treasury auction of 2-year, 5-year and 7-year notes round up the economic events of the week.
New home sales may have seen an increase in July, given the optimistic reading of the July present sales conditions index of the NAHB housing market survey. Additionally, economists also see a rebound from June's 8.4 percent drop.
Durable goods order growth may have quickened in July, with transportation equipment orders likely to get a shot in the arm from Boeing's (BA) commercial airplane orders, which jumped to 260 in July from 24 in June. However, most other segments should see weakness due to the global economic uncertainty stemming from the eurozone debt crisis and China's slowdown.
Stocks in Focus
Lowe's (LOW) reported second quarter earnings of 64 cents per share, flat with last year. Net sales fell to $14.25 billion from the year-ago quarter's $14.54 billion. For the year, the company expects sales and comparable store sales to remain flat and earnings per share of $1.64 per share. The results trailed expectations and the full year earnings guidance was also below estimates.
CME Group (CME) announced that it is in the process of applying to the U.K.'s FSA to create a London-based derivates exchange. The company expects CME Europe to initially begin trading foreign exchange futures products and commence operation by mid-2013, pending regulatory approval.
Best Buy (BBY) announced that its board offered an opportunity to founder Richard Shulze to conduct due diligence and pursue his expressed interest in acquiring outstanding shares in the company. However, the company also stated that Schulze has declined to participate.
Mentor Graphics (MENT) said it has filed another patent infringement suit against EVE in a U.S. district court, alleging that EVE products violated Mentor's patent rights entitled "Regionally Time Multiplexed System."
Aetna (AET) agreed to buy Coventry Health Care (CVH) for $7.3 billion, including the assumption of Coventry debt.
Planar Systems (PLNR) announced the appointment of Ryan Gray, its VP Finance, as its CFO, effective January 1st, 2013 after the incumbent, Scott Hildebrandt steps down by the end of the calendar year.
JDSU (JDSU) announced the completion of the acquisition of South Korean wireless test and measurement solutions provider GenComm, which was announced on August 14, 2012.
by RTT Staff Writer
For comments and feedback: email@example.com