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Wall Street Tentative As Budget Talks Impasse Continues


Sentiment could remain muted on Wall Street on Thursday, as reflected by the U.S. index futures, which point to a narrowly mixed opening. With the Republicans and the Democrats showing no signs of settling their differences and blaming the other for the impasse, a solution has proven elusive. Apart from the fiscal concerns, traders could also react to some first-tier economic data, including jobless claims and the Philadelphia Fed's manufacturing index and existing home sales. A few key earnings announcements are due for the session.

As of 6:30 pm ET, the Dow futures are slipping 4 points and the S&P 500 futures are dipping 0.80 points, while the Nasdaq 100 futures are up 1.75 points.

U.S. stocks declined on Wednesday following two days of solid gains, as the bickering among the lawmakers accentuated worries concerning the fiscal cliff.

On the economic front, the Labor Department is due to release its customary jobless claims report for the week ended December 15th at 8:30 AM ET. Economists expect claims to increase to 359,000 from 343,000 in the previous week.

The Bureau of Economic Analysis is due to release its final estimate of third quarter GDP at 8:30 am ET. Economists expect the GDP growth estimate to be upwardly revised to 2.8 percent.

The National Association of Realtors is scheduled to release its report on existing home sales for November at 10 am ET. Economists estimate existing home sales of 4.900 million for the month compared to 4.79 million units in October.

The results of the Philadelphia Federal Reserve's manufacturing survey are also due out at 10 am ET. Economists expect the diffusion index of current activity to show a reading of -2 for December, an improvement from -10.7 in November.

Around the same time, the Conference Board is scheduled to release a report on the U.S. leading economic indicators index for November at 10 am ET. The consensus estimate calls for a 0.2 percent drop in the index for the month.

The Federal House Finance Agency, or FHFA, is set to release its house price index for October at 10 am ET. Economists expect a 0.3 percent month-over-month increase in the house price index compared to a 0.2 percent increase in September.

In corporate news, Jabil Circuit (JBL) reported first quarter results that exceeded estimates. The company's second quarter earnings guidance trailed estimates, while the revenue guidance surrounded the consensus estimate. Paychex (PAYX) reported second quarter earnings that were in line with estimates, while its revenues missed expectations. For fiscal year ending May 2013, the company expects total service revenue growth of 5-6 percent and net income growth of 5-7 percent.

Accenture's (ACN) first quarter earnings exceeded estimates, while it revenues were shy of estimates. The company's second quarter revenue guidance trailed expectations, while its full year earnings guidance surrounded the consensus estimate.

Bed Bath & Beyond (BBBY) reported third quarter earnings that exceeded estimates, while its revenues were shy of estimates. The company also said its board has authorized a new $2.5 billion share repurchase program. For the fourth quarter, the company expects earnings of $1.60-$1.67 per share and for the full year, the company expects earnings of $4.48-$4.54 per share. The guidance was weak.

ARRIS Group (AARS) announced that it has agreed with Google (GOOG) to buy the home business of its subsidiary Motorola Mobility for $2.35 billion in cash and stock.

Cintas (CTAS), FuelCell Energy (FCEL), Micron (MU), Nike (NKE), Red Hat (RHT), Research In Motion (RIMM), Resources Connect (RECN) and TIBCO Software (TIBX) are among the companies due to release their quarterly results after the close of trading.

The major Asian markets closed on a mixed note, as traders weighed the additional stimulus announcement from he Bank of Japan and the intensifying uncertainty concerning a consensus among U.S. lawmakers to settle fiscal cliff issue. The Japanese, Indonesian, Indian and Taiwanese markets ended in negative territory, while the rest of the major markets advanced.

Japan's Nikkei 225 average snapped a 3-session advance and ended down 121.07 points or 1.19 percent at 10,039. Export and retail stocks came under selling pressure, as the yen strengthened, while financial, utility, marine transportation and real estate gained some ground.

Australia's All Ordinaries ended 13.40 points or 0.29 percent higher at 4,647. Baring material and energy stocks, which saw modest weakness, most other sectors advanced.

Following the conclusion of a 2-day monetary policy board meeting, the Bank of Japan announced an expansion of its asset purchase program. The board voted unanimously to lift the asset purchase to 101 trillion yen from 91 trillion yen previously. This included additional purchases of treasury discount bills and Japanese Government Bonds worth 5 trillion yen each.

European stocks are trading on a mixed note, weighed down by worries concerning the U.S. fiscal cliff, after ending higher in each of the three previous sessions.

On the economic front, a report released by German Federal Statistical Office showed that German annual producer price inflation slowed to 1.4 percent in November from 1.5 percent in October. The reading came in line with expectations. On a month-over-month basis, producer prices edged down 0.1 percent.

by RTTNews Staff Writer

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