The major U.S. index futures are pointing to a lower opening on Wednesday, with sentiment subdued, as traders await trading cues. The technology space, especially hardware stocks, may be in for some weakness following Dell's (DELL) disappointing quarterly results. Meanwhile, Toll Brothers' (TOL) quarterly results vouched for the renewed housing market recovery. The market would now turn their attention to the U.S. existing home sales data for the reaffirmation of the housing market recovery momentum. The FOMC minutes could also improve visibility into the central bank's stimulus plans. Across the Atlantic, a meeting due between Greece and the European Union is expected to take the center stage.
Nervousness finally caught up with Wall Street on Tuesday, sending stocks moderately lower, despite most financial markets pricing in a definitive ECB action.
After failing to sustain an early upward move, the major U.S. averages turned lower over the course of the trading day, ending the session moderately lower. The Dow Industrials ended down 68.06 points or 0.51 percent at 13,204 and the S&P 500 Index closed at 1,413, down 4.96 points or 0.35 percent, while the Nasdaq Composite Index lost 8.95 points or 0.29 percent before closing at 3,067.
Twenty-one of the thirty Dow components closed lower, with Verizon (VZ), Merck (MRK), Disney (DIS), Wal-Mart (WMT) and United Technologies (UTX) declining sharply in the session. On the other hand, JP Morgan Chase (JPM) and Cisco Systems (CSCO) advanced notably.
Currency, Commodity Markets
On the first day of trading as the front-month contract, crude oil futures for October delivery are declining $0.31 to $96.53 a barrel. On Tuesday, the September contract expired at $96.68 a barrel, up $0.71, as the euro rallied strongly.
An ounce of gold is currently trading down $0.80 to $1,642.10 an ounce from the previous session's close of $1,642.90 an ounce. The precious metal added $19.90 on Tuesday.
Among currencies, the U.S. dollar is valued at 79.25 yen compared to the 79.29 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.2434 compared to yesterday's $1.2473.
The major Asian markets retreated, in line with the negative sentiment that prevailed on Wall Street overnight. Sentiment also took a hit from a report released by Japan's Ministry of Finance showing that Japan swung to a trade deficit of 517.38 billion yen in July compared to a surplus of 60.3 billion yen surplus in June. Exports fell 8.1 percent year-over-year, while imports rose 2.1 percent.
Japan's Nikkei 225 average opened little changed but fell steadily until the mid-session. From its intra-day lows, the average pared back its losses over the course of the remainder of the session. The index closed down 25.18 points or 0.27 percent at 9,132. Most sectors moved to the downside, with the exception of defensive utility, bank and pharma stocks.
Australia's All Ordinaries languished below the unchanged line throughout the session amid some volatility before closing down 7.50 points or 0.17 percent at 4,403. Energy stocks declined sharply, serving as a drag.
Hong Kong's Hang Seng Index closed 212.31 points or 1.06 percent lower at 19,888.
The major European markets are trading lower after advancing in the previous session. The mood remains cautious as the Greek Prime Minister is due to meet Jean Claude Juncker, the head of the Eurogroup finance ministers to seek an extension in the timeframe for implementing austerity measures.
In corporate news, BHP Billiton (BHP) reported a 35 percent drop in its second half profits, hurt by a drop in commodity prices. The company also said it would delay its $20 billion Olympic Dam copper expansion project.
Danish wind turbine maker Vestas Wind Systems announced additional job cuts to the tune of 1,400 jobs as it reported a loss for its second quarter.
U.S. Economic Reports
The National Association of Realtors is scheduled to release its report on existing home sales for July at 10 am ET. Economists estimate existing home sales of 4.50 million for the month.
Existing home sales fell 5.4 percent month-over-month in June to a seasonally adjusted annual rate of 4.37 million units. Single-family sales declined 5.1 percent and condominium sales were down 7.8 percent, while sales were down in all the four geographical regions.
Inventories measured in absolute terms declined, while the months of supply at the current sales rate rose slightly to 6.6 months from 6.4 months in May. Meanwhile, the median price of an existing home rose 5 percent month-over-month to $189,400.
The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended August 17th at 10:30 AM ET.
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.
The Federal Reserve is due to release the minutes of its July 31st-August 1st meeting at 2 pm ET.
Stocks in Focus
Dell's quarter non-GAAP earnings fell to 50 cents per share from 54 cents per share last year. Revenues fell 8 percent $14.48 billion. The earnings were ahead of estimates, while the revenues trailed expectations. The company lowered its full year earnings outlook to at least $1.70 per share on a non-GAAP basis, while it expects a 2-5 percent sequential drop in third quarter revenues. The guidance was disappointing.
Toll Brothers reported third quarter net income of 36 cents per share compared to 25 cents per share last year. Revenues rose to $554.32 million from $394.31 million last year. The results exceeded estimates.
Career Education (CECO) announced the appointment of Colleen M. O'Sullivan as its senior VP, CFO and Treasurer, replacing Michael Graham, who has tendered his resignation to take up a position at another company.
Analog Devices (ADI) reported third quarter earnings of 56 cents per share on revenues of $683.03 million. The earnings were in line, while the revenues were below expectations. For the fourth quarter, the company expects earnings of 54 to 60 cents per share on revenues of $685 million to $715 million. The guidance was bordering on the negative.
Intuit (INTU) reported below-consensus results for its fourth quarter. The full year guidance for 2013 was also soft.
La-Z-Boy (LZB) reported first quarter earnings of 8 cents per share compared to earnings of 85 cents per share last year, which benefited from a reduction to certain valuationreserves. Sales rose 7.6 percent to $301.5 million. The earnings were in line, while the revenues beat estimates.
Fifth Third Bancorp (FITB) announced that the Federal Reserve did not object to the proposed capital actions through March 31st, 2013, which includes the potential increase of its quarterly stock dividend to 10 cents per share and the potential repurchase of common shares.
Williams-Sonoma's (WSM) second quarter earnings rose 16 percent to 43 cents per share on net revenues of $874 million, up 7.3 percent. For the full year, the company expects non-GAAP earnings of $2.44-$2.47 per share on net revenues of $3.98 billion to $4.03 billion. The results exceeded estimates, while the guidance surrounded the consensus estimates.
Principal Financial Group (PFG) announced a 17 percent increase in its quarterly dividend to 21 cents per share.
Focus Media (FMCN), Guess? (GES), Hain Celestial (HAIN), Hewlett-Packard (HPQ), International Rectifier (IRF) Krispy Kreme (KKD), Pacific Sunwear (PSUN), Semtech (SMTC) and Synopsys (SNPS) are among the companies due to release their quarterly results after the markets close.
by RTT Staff Writer
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