Cautious optimism prevails on Wall Street on Tuesday even as stimulus doubts linger. Economists have voiced doubts about Fed stimulus and even in the eventuality of the Fed doling out QE III, economists are skeptical about its efficacy to kickstart the economy. Meanwhile, expectations concerning a ECB stimulus gained ground following leaking of comments reportedly made by the bank's president before the region's parliamentarians. The markets may also take cues from monthly auto sales and the results of the national manufacturing survey done by the Institute for Supply Management.
As of 6:30 am ET, the Dow futures are moving up 22 points, the S&P 500 futures are adding 1.60 points and the Nasdaq 100 futures are moving up 6.50 points.
U.S. stocks retreated yet again in the week ended August 31st, as vacillating stimulus hopes kept sentiment subdued for much of the week. For the week, the Dow Industrials fell 0.51 percent and the S&P 500 Index declined 0.32 percent, while the Nasdaq Composite Index eased 0.09 percent.
Labor worries come to the forefront in the unfolding week, as a trio of key labor market statistics is due in the unfolding week. Traders may keenly watch the Labor Department's non-farm payrolls report due on Friday, the ADP's private sector employment report and the weekly jobless claims report. The results of the Institute for Supply Management's manufacturing and non-manufacturing surveys for August are also on the investors' radar.
Auto sales for August, the revised second quarter productivity & costs report, the Commerce Department's construction spending report for July and announcements concerning the Treasury auctions of 3-year and 10-year notes and 30-year bonds round up the economic events of the week.
Individual automakers are scheduled to release their monthly U.S. sales results for August. Economists expect domestic vehicle sales of 14.3 million for August, up from 14.1 million last month.
The results of the manufacturing survey of the Institute for Supply Management, which are based on data compiled from purchasing and supply executives nationwide, are due out at 10 am ET. Economists expect the index to show a reading of 50 for August.
Additionally, the Commerce Department's construction spending report to be released at 10 am ET is expected to show a 0.4 percent increase in July, the same pace as in June.
In corporate news, Novartis (NVS) announced that the FDA has approved a higher dose of its Exelon patch for patients with mild to moderate Alzheimer's disease.
Valeant Pharma (VRX) announced a deal to buy all outstanding shares of Medicis Pharma (MRX) for $44 per share in cash. The transaction is valued at $2.6 billion in total. The deal is expected to close in the first half of 2013.
Bottomline Technologies (EPAY) announced that it has got regulatory clearance to buy U.K.'s Albany Software. The deal is expected to be accretive within the first year.
United Steel (X) said its U.S. Steel Tubular Products subsidiary reached a tentative agreement withy the United Steelworkers on a successor three-year collective bargaining agreement covering about 1,000 representative employees.
Collective Brands (PSS) reported second quarter earnings that beat estimates, while its revenues trailed expectations. The company said it still anticipates its previously announced sale to a consortium of private equity buyers and Wolverine World Wide (WWW) to close late in the third quarter or early in the fourth quarter.
Finisar (FNSR) and Pep Boys (PBY) are due to report their quarterly results after the markets close.
The major Asian markets went about a lackluster session amid concerns about growth in the region. Stimulus hopes have also not firmed up, giving a strong reason to stay invested in stocks.
Japan's Nikkei 225 average closed down 8.38 points or 0.10 percent at 8,776. Australia's All Ordinaries opened on a nervous note and fell steadily throughout the session, closing down 26 points or 0.60 percent at 4,326. Most stocks, barring real estate and IT stocks, came under selling pressure. Hong Kong's Hang Seng Index closed at 19,430, down 129.30 points or 0.66 percent.
In economic news, the Reserve Bank of Australia decided to leave its key rate unchanged at 3.50 percent, as expected by economists. The central bank said that as a result of the sequence of earlier decisions, interest rates for borrowers are a little below their medium-term averages.
Monetary base in Japan rose 6.5 percent year-over-year in August, according to a report released by the Bank of Japan. In July, the growth was 8.6 percent.
The major European averages have also begun the week on a weak note despite a leaked report, suggesting that European Central Bank President Mario Draghi had said the central bank is not averse to buying government bonds of up to 3-year maturities on the secondary market. In a statement reportedly made before a closed-door meeting of European lawmakers, Draghi seemed to have defended number of measures introduced by the ECB, including the controversial bond-purchase plan.
by RTT Staff Writer
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