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Wall Street Momentum Moderating After Run Up

Wall Street Momentum Moderating After Run Up
2/4/2013 6:31 AM ET

After economic optimism took the major averages to multi-year highs, Wall Street may opt to pause for a breather. The U.S. index futures point to a subdued start on Wall Street on Monday. Corporate earnings continue to trickle in, although most of the earnings scheduled for the day aren't likely to be market movers. Main Street activity for the week is also light, with markets likely to show some theoretical interest in the factory orders report scheduled for the day. After Asian stocks meandered to a mixed close, the European markets are in the red amid the release of some disappointing domestic data.

As of 6:30 pm ET, the Dow futures are declining 17 points and the S&P 500 futures are down 2.60 points, while the Nasdaq 100 futures are losing 2 points.

U.S. stocks extended their gains in the week ended February 1st, thanks to some benign economic data and positive corporate earnings. These twin catalysts kept the momentum going despite the overbought levels of the markets.

The unfolding week's economic calendar is light, with only a handful of key economic data important enough to lend direction to the markets. The focus of the week is likely to be on the results of the Institute for Supply Management's non-manufacturing survey for January, the jobless claims report and the Commerce Department's trade balance report for December.

The Commerce Department's factory orders report for December, the preliminary fourth quarter productivity & costs report, the Federal Reserve's consumer credit report for December, the wholesales inventories report for December 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.

The Commerce Department is scheduled to release its factory goods orders report for December at 10 am ET. Economists estimate factory goods orders to have increased by 2.4 percent month-over-month.

In corporate news, CarMax (KMX) said its board has approved a $500 million extension of its existing share repurchase program for its outstanding stock. Sohu.com (SOHU) reported fourth quarter results that exceeded estimates, while its first quarter earnings guidance was weak. Changyou's (CYOU) fourth quarter results were also better than expected and its first quarter guidance was also positive.

DuPont (DD) said it has completed the sale of DuPont Performance Coatings for $4.9 billion in cash to the Carlyle Group. The company said it expects to use the proceeds to buy back $1 billion of its common stocks during the first half of the year.

Anadarko Petroleum (APC), Baidu.com (BIDU), Edwards Lifesciences (EW), General Growth Properties (GGP), Gilead Sciences (GILD), Hartford Financial (HIG), Hologic (HOLX), Leggett & Platt (LEG), MDU Resources (MDU), Post Properties (PPS) and Yum Brands (YUM) are among the notable companies due to release their quarterly results after the close of trading.

The major Asian markets closed mixed, with the positive U.S. economic data giving enough reasons for traders to stay invested in stocks even as caution prevailed due to the recent run up. While the Chinese, Indonesian, Malaysian, Japanese, New Zealand, Singaporean and Taiwanese markets firmed up, the Australian, Hong Kong, Indian and the South Korean markets settled modestly lower.

Japan's Nikkei 225 average closed up 69.01 points or 0.62 percent at 11,260. The index ended higher for the fifth straight session and was amply supported by the yen's depressed levels. Exports stocks continued to strengthen, while defensive telecom, utility, bank and pharma stocks were among the worst performers of the session.

Australia's All Ordinaries ended down 12.80 points or 0.26 percent at 4,929. Healthcare and financial stocks came under selling pressure, while energy stocks also showed weakness, while material stocks saw modest buying interest. Hong Kong's Hang Seng Index closed at 23,685, down 36.83 points or 0.16 percent. China's Shanghai Composite Index settled at a nearly 9-month high of 2,428 after rising 9.39 points or 0.39 percent in the session.

On the economic front, the results of a survey by the China Federation of Logistics and Purchasing and the National Bureau of Statistics showed that its non-manufacturing index edged up 0.1 points to 56.2 in January. The reading suggested that the service sector activity expanded for the fourth straight month.

The major European averages opened higher but have since then pared back their gains.

In corporate news, re-insurer Hannover Re said it expects 2013 profits to come in around 800 million euros, almost flat with the profit it is expected to post for 2012. Swiss watchmaker Swatch reported a 26 percent profit growth for 2012, which was better than what most analysts expected. Randgold Resources (GOLD) reported an 18 percent increase in its fourth quarter profits to $141.03 million.

Barclays (BCS) announced the retirement of its Group finance director Chris Lucas and Group General Counsel Mark Harding. Lucas is one of the executives who have been under investigation by the Financial Services Authority related to fund raising from Middle East investors.

On the economic front, an index measuring investor sentiment in the eurozone remained depressed in February, according to the results of a survey by Sentix. The sentix investor confidence index came in at -3.9 in February compared to -3.3 expected by economists. Meanwhile, Markit's survey showed that construction sector activity in the U.K. contracted at a faster than expected rate in January. The CIPS/Markit construction purchasing managers' index remained unchanged at 48.7, while economists expected a reading of 49.6.

by RTT Staff Writer

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