The major U.S. index futures are pointing to a higher opening on Tuesday, with the optimism muted despite a more spontaneous and cheery reaction of the rest of the global equity markets and the currency markets to stimulus hopes. Corporate tidings were mostly positive, but Best Buy's (BBY) earnings came in as a disappointment. Although risk appetite could give a lift, trading could show a lack of direction for want of any compelling catalysts.
U.S. stocks held mostly below the unchanged line on Monday, although closing off the lows of the session amid a lack of any major catalysts. The overbought levels prompted traders to ignore some deal news and encouraging reports of the European Central Bank preparing itself for buying sovereign bonds.
The major averages opened lower and declined through the first hour of trading. After paring their losses by the mid-session, the averages broadly moved sideways before closing slightly lower. The Dow Industrials ended down 3.56 points or 0.03 percent at 13,272 and the S&P 500 Index closed 0.03 points lower at 1,418, while the Nasdaq Composite closed at 3,076, down 0.38 points or 0.01 percent.
Nineteen of the thirty Dow components closed lower, with American Express (AXP) and Verizon (VZ) leading the declines. On the other hand, Hewlett-Packard (HPQ) rallied 2.92 percent and Bank of America (BAC) added 1.87 percent, while JP Morgan Chase (JPM), McDonald's (MCD) and Merck (MRK) also showed notable buying interest.
Housing and retail stocks came under selling pressure, while airline stocks advanced.
Apple Sprints to Another Record
Investor faith in the iPhone and iPad maker Apple (AAPL) is still intact, as the company's stock is on a tear even as the leadership baton has changed hands. Although the June quarter's lukewarm results stirred concerns about the company's ability to thrive and flourish without the backing of its iconic co-founder Steve Jobs, who succumbed to pancreatic cancer in October 2011, traders have stayed invested in the stock.
The stock closed Monday's trading at an all time high of $665.15 and toppled Microsoft (MSFT) as the most valuable publicly traded company of all time. At $665.15, the company's 937.4 million outstanding shares are valued at $623.51 billion compared to Microsoft's $619 million at the peak of the dotcom bubble in 1999. Despite the run up, the company's valuation is still attractive, as its stock trades at 15.08 times the estimated earnings for the fiscal year ending September 2012. Given the company's resounding product momentum, can investors be faulted for their exuberance?
Currency, Commodity Markets
Crude oil futures are up $0.79 to $96.76 a barrel after declining $0.04 to $95.97 a barrel on Monday. Gold futures are currently gaining $14.20 to $1,637.20 an ounce. In the previous session, the precious metal added $3.60 to $1,623 an ounce.
Among currencies, the U.S. dollar is trading at 79.46yen compared to the 79.43 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2455 compared to yesterday's $1.2346.
With the exception of the Japanese and Hong Kong markets, the major Asian markets closed higher, as traders firmly believed that policy actions will be announced in the near term to tackle the economic setback stemming from the eurozone debt crisis, the growth slowdown in China and the impending fiscal cliff in the U.S.
Japan's Nikkei 225 average saw a considerable degree of volatility before closing down 14.24 points or 0.16 percent at 9,157. Electric utility and most export stocks declined, while real estate, telecom, pharma, bank and auto stocks gained ground.
Meanwhile, Australia's All Ordinaries ignored a nervous start and advanced steadily till late trading before giving back some of its gains yet closing moderately higher. At the close of trading, the index was up 18.90 points or 0.43 percent at 4,411. Energy stocks gave solid support to the index, while most other stocks, with the exception of REIT, IT and consumer staple stocks, also gained.
Hong Kong's Hang Seng Index languished in negative territory for much of the session, weighed down by lackluster results from CNOOC, before ending down 4.18 points or 0.02 percent at 20,100.
The minutes of Reserve Bank of Australia's August 7th policy meeting showed the central bank was content with its policy, suggesting that a near term policy move is improbable.
Meanwhile, China injected 220 billion yuan in the money market through reverse repurchase operations, according to reports. The news has reduced expectations of monetary policy easing by the central bank.
European stocks are also advancing, as stimulus hopes abound. A successful debt auction by Spain also helped sentiment. Spain sold 4.51 billion euros in 12 and 18-month bills compared to its 3.5 billion to 4.5 billion euro-target. Borrowing costs eased from a previous auction on July 17th.
In corporate news, commodity trader Glencore International reported a 24 percent decline in its first half adjusted EBIT despite 17 percent revenue growth. The company announced an 8 percent increase in its interim dividend.
U.S. Economic Reports
Atlanta Federal Reserve Bank President Dennis Lockhart is due to speak to the Latin American Chamber of Commerce and World Affairs Council in Atlanta at 8:45 am ET.
Stocks in Focus
Church & Dwight (CHD) announced an agreement to buy Avid Health, a producer of gummy form vitamins and supplements, for $650 million in cash. The company expects to close the deal early in the fourth quarter. The target company generated sales of about $230 million for the trailing twelve months ended June 30th. Church & Dwight said it continues to expect full year adjusted earnings of $2.41-$2.43 per share, while including the dilutive impact of the deal, earnings are expected to be $2.39-$2.41 per share.
Nordson (NDSN) reported third quarter non-GAAP earnings of $1.06 per cent on sales of $380 million, up 22 percent year-over-year. For the fourth quarter, the company expects earnings of 96 cents to $1.04 per share, including items, which on a net basis reduced earnings by 2 cents per share. Sales are expected at $408 million to $422 million. The results exceeded estimates and the guidance was also positive.
DreamWorks Animation (DWA) announced that it has entered into a new 5-year agreement with News Corp.'s (NWS) Twentieth Century Fox for marketing and distributing all of DreamWorks animated feature films due for release in 2013 through 2017.
Tuesday Morning (TUES) reported a fourth quarter-adjusted loss of 2 cents per share on net sales of $196.4 million, up 0.8 percent year-over-year. For 2013, the company expects earnings of 18 to 23 cents per share on net sales of $820 million to $830 million.
Urban Outfitters' (URBN) second quarter earnings rose to 42 cents per share from 35 cents per share last year. Net sales also improved to $676 million from the year-ago quarter's $609 million. The results exceeded estimates.
Analog Devices (ADI), Dell (DELL), Intuit (INTU), La-Z-Boy (LZB), Wet Seal (WTSLA) and Williams-Sonoma (WSM) are among the companies due to release their quarterly results after the markets close.
Best Buy's second quarter profit plunged from the year-ago period. Revenue also declined from the prior year period. In addition, the company said it does not intend to further provide or update its earnings guidance for fiscal 2013.
Medtronic (MDT) reported first quarter earnings that increased from the year-ago quarter and its non-GAAP earnings per share matched Wall Street view. Medtronic also reiterated its fiscal 2013 earnings per share guidance.
by RTT Staff Writer
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