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Wall Street On Back Foot Amid Risk Aversion


Risk-off mood is likely to prevail on Wall Street on Wednesday, as fiscal fears abound, especially as the deadline for the fiscal cliff looms. Traders could remain nervous over whether Congress clinches a deal in time to ward off the fiscal cliff. Global cues are negative, with most Asian stocks declining, while the European markets are also seeing weakness. Although the new home sales data and the Beige Book due for the session are market movers, even a positive outcome on these could barely nullify the negative sentiment generated by the fiscal crisis.

As of 6:15 pm ET, the Dow futures are down 18 points and the S&P 500 futures are slipping 3.10 points, while the Nasdaq 100 futures are declining 6.25 points.

U.S. stocks moved about in a listless manner on Tuesday as traders reacted to some positive economic data and forecast for bleaker times ahead by the Organization of Economic Co-operation and Development amid fears concerning the U.S. fiscal cliff.

On the economic front, the Commerce Department is set to release its new home sales report for October at 10 am ET. Economists expect new home sales to come in at a seasonally adjusted annual rate of 387,000 for October compared to 389,000 in the previous month.

Federal Reserve Governor Daniel Tarullo is due to deliver the Yale School of Management Leaders Forum Lecture on the "Regulation of Foreign Banking Organizations," in New Haven, Connecticut at 12:15 am ET.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended November 23rd at 10:30 AM ET.

The Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts, at 2 pm ET. The report is normally released about two weeks before the monetary policy meeting is held.

In corporate news, PVH (PVH) reported third quarter earnings that beat estimates, while it revenues were in line. The company raised its full year non-GAAP earnings guidance to $6.37-$6.38 per share, while it expects 2 percent revenue growth for the year. The guidance was positive.

Analog Devices (ADI) reported fourth quarter earnings that beat estimates, while its revenues were shy of estimates. For the first quarter, the company expects revenues ton decline by 6-12 percent and earnings of 40-48 cents per share. The guidance was weak.

Copart (CPRT) reported first quarter earnings of 36 cents per share on revenues of $238.9 million. The earnings were in line, while the revenues were ahead of estimates. Kirby (KEX) announced a deal to buy coastal transportation operator Penn Maritime and Maritime Investments for $295 million in cash and stock.

McCormick (MKC) said its board approved an increase in its dividend to 34 cents from 31 cents per share. Costco (COST) reported a 6 percent increase in its comparable store sales for November. The company also announced a special dividend of $7 per share.

Aeropostale (ARO), Coldwater Creek (CWTR), Guess (GES), La-Z-Boy (LZB), New York & Co. (NWY), Pall (PLL), Semtech (SMTC) and TiVo (TIVO) are among the companies due to release their financial results after the close of trading.
Most Asian markets closed lower, although the Indian, New Zealand, Taiwanese and Malaysian markets ended in negative territory. The overnight negative close on Wall Street weighed on the averages, stirring up risk aversion in the markets.

Japan's Nikkei 225 average snapped a 4-session rally and ended near the lows of the session. The index closed down 114.95 points or 1.22 percent at 9,308. Resource stocks led the retreat, while export, finance and marine transportation also witnessed selling pressure.

Australia's All Ordinaries opened lower and declined sharply in early trading. After declining steadily till the mid-session, the index pared some of its losses over the course of the session before ending down 10.80 points or 0.24 percent at 4,463. Energy and material stocks were the worst hit.

Hong Kong's Hang Seng closed at 21,709, down 135.05 points or 0.62 percent. Meanwhile, China's Shanghai Composite languished below the unchanged line throughout the session before closing down 17.64 points or 0.89 percent at 1,974.

European stocks opened lower and are continuing to see weakness amid fears about the regional economy and the looming U.S. fiscal cliff.

In corporate news, Swiss Life said it expects net profit in the double-digit millions for the year, as it writes down the value of its German brokerage unit AWD Holding by 576 million francs. The company expects adjusted profit of over 850 million francs for the year.

U.K. travel company Thomas Cook reported a pre-tax loss for the year ended September as revenues slipped slightly. Meanwhile, United Utilities reported that its first half pre-tax profits rose to 135.6 million pounds from 124.4 million pounds last year.

by RTTNews Staff Writer

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