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Wall Street Eyeing Catalysts After Last Week's Heady Gains

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With the euphoria over last week's budget deal slowly ebbing, Wall Street is apparently on the look out for sound catalysts that could help sustain the momentum. Nevertheless, the precarious fiscal situation despite the budget deal, the impending corporate reporting season and global economic risks could make traders edgy, as reflected by the U.S. index futures, which point to a slightly lower opening. The perch of the major averages at multi-year highs makes them ideal candidates for profit taking, given the lingering macroeconomic and fiscal uncertainties.

As of 6:30 pm ET, the Dow futures are slipping 15 points and the S&P 500 futures are moving down 1.50 points, while the Nasdaq 100 futures are retreating 1.25 points.

U.S. stocks advanced notably in the week ended January 4th, as the budget deal optimism encouraged traders to stay invested. For the week ended January 4th, the Dow Industrials added 3.84 percent, while the S&P 500 Index and the Nasdaq Composite Index rose 4.57 percent and 4.78 percent, respectively.

After the fiscal cliff and mostly positive economic data lifted markets solidly last week, traders are likely to have very little economic catalysts to react to in the unfolding week. Several Fed speeches scheduled for the week could give some direction to the markets. The Commerce Department's trade balance report for November and the weekly jobless claims data may also create some ripples in the markets.

A Labor Department report on import and export price index for December, the Commerce Department's wholesale inventories report for November, the Treasury Budget report for December, the Federal Reserve's consumer credit report for November and Treasury auctions of 3-year and 10-year notes and 30-year bonds round up the economic events of the week.

In corporate news, Illumina (ILMN) announced an agreement to buy Verinata Health, a provider for non-invasive test to detect fetal chromosomal abnormalities, for $350 million plus up to $100 million in milestone payments through 2015.

Sequenom (SQNM) announced preliminary 2012 revenues of $89 million, up 59 percent year-over-year.

US Airways (LCC) said it has completed discussions with the Allied Pilots Association and U.S. Airline Pilots Association for developing framework for the terms of employment for pilots and a process for pilot integration in the event of a merger between the airline and American Airlines, owned by AMR (AAMRQ), during restructuring.

Regeneron (REGN) said it does not endorse a mini-tender offer by TRC Capital for buying up to 1 million or about 1.06 percent of its outstanding shares at $161.25 per share. The company recommended its shareholders to reject the offer, citing the offer price, which was below the current market price.

Pericom Semiconductor (PSEM) lowered its second quarter sales guidance, citing weak demand environment. The company now expects sales of $29 million to $30 million, down from its previous guidance of $30.5 million to $34.5 million.

The Asian markets closed mostly lower, as profit taking took away some sheen off the recent U.S. budget deal-induced rally. Meanwhile, the Chinese, Malaysian and New Zealand markets bucked the downtrend.

Japan's Nikkei 225 average was hurt by the yen's small rebound, which weighed on export stocks. After opening higher, the index turned lower and fell below the unchanged line in early trading. Thereafter the index moved sideways until late trading, when it legged down further. The index closed down 89.10 points or 0.83 percent at 10,599.

Financial stocks led the slide, with Aozora Bank slumping 10.07 percent and Shinsei Bank losing close to 6 percent. Kansai Electric, Fujitsu, Nomura Holdings and Nisshin Steel also fell notably. On the other hand, Seven & I Holdings, Tokyo Dome and Pioneer stocks found notable buying interest.

Australia's All Ordinaries also surrendered its early gains and fell steadily in the morning before moving on a lackluster note in the afternoon. The index closed down 4.80 points or 0.10 percent at 4,738. Material and energy stocks saw modest weakness, while consumer stocks firmer up.

Hong Kong's Hang Seng Index closed at 23,330, down 1.34 points or 0.01 percent.

European stocks have also started on a down note and have seen further weakness since then. While profit taking is contributing to the weakness, traders may take hear from a decision by regulators to allow more flexibility in bank liquidity rules, with banks now given four more years to comply with the rules.

In corporate news, Air Berlin announced the appointment of its strategy head Wolfgang Prock-Schauer as its CEO, succeeding Hartmut Mehdorn, who was serving as the CEO on an interim basis. Irish low cost carrier easyJet reported a 2.3 percentage point year-over-year increase in its load factor for December to 87.9 percent, as traffic rose 4.9 percent.

British supermarket chain Wm Morrison reported that its like-for-like sales for the 6-week period ended December 30th fell 2.5 percent year-over-year. The company also said it expects difficult market conditions to persist through 2013.

by RTT Staff Writer

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