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Apprehensive Mood Continues Amid Lack Of Trading Cues

The major U.S. index futures are pointing to a mixed opening on Tuesday, as the nation prepares to receive President Obama's State of Union address. Earlier in the global trading day, Asia witnessed subdued nervous trading even as Japan's Nikkei's 225 average rallied strongly on the yen's weakness. European stocks have shed off their early apprehension and are currently trading higher. Meanwhile, G7 nations calmed fears concerning currency wars and reaffirmed their commitment to market determined exchange rates.

Domestically, earnings news has been encouraging, with Coca-Cola (KO) being the latest blue chip to report better than expected earnings. The markets may also focus on Fed speeches to glean some clues on the monetary policy outlook of the central bank.

U.S. stocks languished below the unchanged line for much of Monday's session amid very few catalysts to provide any direction for the markets. The major averages opened flat to slightly lower and moved about in a directionless manner below the unchanged line before closing modestly lower.

The Dow Industrials ended down 21.73 points or 0.16 percent at 13,971, while the S&P 500 Index closed 0.92 points or 0.06 percent lower at 1,517 and the Nasdaq Composite declined 1.87 points or 0.06 percent before closing at 3,192.

Sixteen of the thirty Dow components closed lower and one stock ended unchanged, while the remaining thirteen stocks advanced. UnitedHealth (UNH) fell notably, while Microsoft (MSFT) added over 1 percent.

Oil service and gold stocks were among the worst decliners of the session.

The Dow Industrials remained locked in the 13,862-14,044 range and it would require a solid catalyst to push the index out of this range in either direction. At this juncture even if the 13,862 level is violated to the downside, the index's 21-day MA (currently at 13,803) could give strong support to the index. Further down, the index could stop around a long term support around the 13,680 level.

Currency, Commodity Markets

Crude oil futures are rising $0.61 to $97.59 a barrel after advancing $1.31 to $97.03 a barrel on Monday. Gold futures are currently slipping $4.10 to $1,645 an ounce. In the previous session, gold fell $17.80 to $1,649.10 an ounce.

Among currencies, the U.S. dollar is trading at 93.70 yen compared to the 94.32 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.3422 compared to yesterday's $1.3406

Asia

The Asian markets that were open for trading closed on a mixed note, as subdued activity in the wake of Lunar New Year holidays in the region and a lack of any major catalysts impacted sentiment. Nevertheless, the Japanese market, which opened after Monday's public holiday, benefited from the yen's weakness amid expectations of further monetary policy easing. The Chinese, Hong Kong, Malaysian, Singaporean and Taiwanese markets remained closed for trading.

Japan's Nikkei 225 average opened notably higher and moved sideways for the rest of the session, closing up 215.96 points or 1.94 percent at 11,369. The yen's weakness propped up most export stocks, although some automakers came under selling pressure following disappointing earnings from Mazda Motors.

The yen went into a slide again after a U.S. official allayed fears of a currency war and asserted that the U.S. will support Tokyo's efforts to end deflation. Additionally, Asian Development Bank president Haruhiko Kuroda, a potential candidate to head the Bank of Japan, said he favors additional monetary easing to lift Japan out of deflation. Dentsu, Ebara, Credit Saison, Mitsumi Electric and Mitsui Mining & Smelting were among the biggest gainers of the session.

Australia's All Ordinaries saw a sharp spike in early trading only to give back much of those gains by early afternoon trading. Thereafter, the average moved broadly sideways before closing up merely 1.20 points or 0.02 percent at 4,982. Energy, financial and material stocks came under selling pressure, serving as a drag on the market.

The Indian and Indonesian markets also advanced, while the New Zealand and South Korean markets retreated, with the South Korean market reacting to North Korea's confirmation that it had carried out a nuclear device test.

On the economic front, a report released by the National Australia Bank showed that business conditions in Australia improved in January. The business conditions index based on the survey by the bank came in at -2 compared to -5 in December. The business confidence index rose 1 point to 3 in January.

A survey by Japan's Cabinet Office showed that Japanese consumer confidence improved in January, with the index rising to 43.3 in January from 39.2 in December.

India's statistical office reported that the nation's industrial output fell 0.6 percent year-over-year in December compared to expectations for a 1.1 percent increase.

Europe

After seeing some volatility and trading mixed in early trading, European stocks have moved uniformly higher.

In corporate news, Norsk Hydro reported higher fourth quarter underlying earnings before financial items and taxes, and its revenues improved 6 percent. Meanwhile, auto navigation equipment maker TomTom reported that its fourth quarter revenues fell 19 percent and adjusted earnings per share declined to 13 euro cents from 16 euro cents in the year-ago period.

On the economic front, a survey by the Royal Institution of Chartered Surveyors showed that the U.K. house price balance fell to -4 in January from -1 in December. Meanwhile, the Office for National Statistics reported that U.K. annual output price inflation eased to 2 percent in January from 2.2 percent in December. The inflation rate was in line with expectations. Input prices rose 1.8 percent year-over-year, faster than the 1 percent increase expected by economists.

A separate report showed that U.K. annual consumer price inflation remained at 2.7 percent in January. On a monthly basis, prices fell 0.5 percent, completely reversing the 0.5 percent increase in December.

U.S. Economic Reports

Kansas City Federal Reserve Bank President Esther George is scheduled to speak on the economy to the University of Nebraska-Omaha at 11:30 am ET. Atlanta Federal Reserve Bank President Dennis Lockhart will speak to the Instituto de Empresas in Madrid at 1:30 pm ET.

Additionally, Philadelphia Federal Reserve Bank President Charles Plosser is scheduled to speak on the economic outlook and monetary policy to the Stanford Institute for Economic Policy Research's Associates Meeting at 7:30 pm ET.

The Treasury is set to release its monthly budgetary report at 2 pm ET. Economists expect the budgetary balance to show a deficit of $2 billion in January compared to a deficit of $0.3 billion in December.

Stocks in Focus

Tw telecom (TWTC) reported fourth quarter earnings of 11 cents per share, missing the consensus estimate of 15 cents per share. Revenues rose 7.6 percent to $377.89 million, above the consensus estimate of $376.8 million.

Forward Air (FWRD) reported fourth quarter net income of 54 cents per share on operating revenues of $155.5 million, up 4.9 percent year-over-year. The earnings exceeded estimates, while the revenues were below estimates. The company's first quarter earnings guidance surrounded the consensus.

Lions Gate Entertainment (LGF) reversed to a profit in its third quarter and revenues more than doubled to $743.6 million. The company's adjuated earnings of 37 cents per share were above estimates.

Cognex (CGNX) reported fourth quarter adjusted earnings of 40 cents per share on revenues of $82.17 million. This represents a decline from the year-ago earnings of 44 cent per share on revenues of $84.04 million. The results exceeded estimates. The company also issued above-consensus revenue guidance for the first quarter.

D&B (DNB) reported fourth quarter adjusted earnings of $2.38 per share on revenues of $463.1 million. The results came in below expectations. For 2013, the company expects adjusted earnings per share growth of 8-11 percent and core revenue growth of 0-3 percent.

Choice Hotels (CHH) reported fourth quarter adjusted earnings of 45 cents per share compared to 46 cents per share in the year-ago quarter. Revenues rose 7 percent to $178.31 million. The company expects RevPAR growth of 4.5-5.5 percent and earnings of $1.96-$1.98 per share for 2013. The results exceeded estimates and the guidance was positive.

GenCorp. (GY) reported fourth quarter net income of 5 cents per share compared to 1 cents per share in the year-ago period, while its loss on a continuing basis was 1 cent per share, flat with last year. Net sales climbed to $298.2 million from $252.2 million last year.

Trimble (TRMB) announced that its board approved a 2-for-1 split of all outstanding shares of the company.

Owens & Minor (OMI) announced a 9 percent increase in its quarterly dividend to 24 cents per share.

Blue Nile (NILE), Clearwire (CLWR), DDR (DDR), NETGEAR (NTGR), Rackspace (RAX), Valmont (VMI) and Western Union (WU) are among the companies due to release their quarterly results after the close of trading.

by RTT Staff Writer

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