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Consolidation Likely As Bargain Hunting Expected To Stem Slide

The major U.S. index futures are pointing to a higher opening on Friday, with sentiment likely to see a lift from bargain hunting following the losses in the previous two sessions. Supporting the upside is likely to a German business sentiment reading, which rose more than expected. Commodities are seeing a small lift, while the dollar is mostly higher, with the euro suffering due to data released by the European Central Bank that the region's banks are set to repay lesser than estimated amount at the early prepayment schedule. Against this backdrop and in the absence of any major catalysts, the markets could mostly consolidate in recent trading ranges.

U.S. stocks extended their declines on Thursday, as doubts concerning growth in Europe and the U.S. were re-ignited by some disconcerting economic data. The major U.S. averages opened lower and languished below the unchanged line throughout the session before closing firmly in the red. The Dow Industrials ended down 46.92 points or 0.34 percent at 13,881 and the S&P 500 Index lost 9.53 points or 0.63 percent before closing at 1,502, while the Nasdaq Composite closed at 3,132, down 32.92 points or 1.04 percent.

Twenty of the thirty Dow components closed lower and one stock ended unchanged, while the remaining nine stocks advanced. Bank of America (BAC) fell over 3 percent for the second straight session and Home Depot (HD) declined 3.10 percent. Intel (INTC), Caterpillar (CAT) and Cisco Systems (CSCO) also fell notably. On the other hand, Wal-Mart (WMT) and Hewlett-Packard (HPQ) rose sharply.

Financial, semiconductor, biotechnology, basic material and oil service stocks lost ground in the session, while gold stocks rallied.

On the economic front, the Labor Department reported that initial claims for unemployment benefits rose by 20,000 to 362,000 in the week ended February 16th. The four-week moving average rose to a 6-week high of 360,750. Continuing claims calculated with a week's lag rose to 3.148 million in the week ended February 9th from 3.14 million in the previous week.

Meanwhile, a separate report released by the Labor Department showed that U.S. consumer prices remained unchanged for a second straight month in January. The annual rate of the headline number was at 1.6 percent. Food prices were unchanged, while energy prices declined 1.7 percent. Excluding food and energy, consumer prices rose a steeper than expected 0.3 percent.

The results of the Philadelphia Federal Reserve's manufacturing survey showed that its manufacturing index fell to -12.5 in February -5.8 in January. The new orders index fell to -7.8 from -4.3, while the shipments index rose to 2.4 from 0.4. The employment indexes improved, with the number of employees index rising 6.1 points to 0.9, while the average workweek index climbed 6.7 points to -1.6.

The Conference Board's leading economic indicators index rose 0.2 percent month-over-month in January, the second straight month of growth. The lagging economic indictors index and the coincident economic indicators index rose 0.4 percent each.

A report released by the National Association of Realtors showed that existing home sales rose 0.4 percent month-over-month to a seasonally adjusted annual rate of 4.92 million units in January. Single-family as well as condominium sales rose in the month and sales were up in all geographical regions, except the West. The number of existing homes available for sale fell to 1.74 million units from 1.83 million units, while inventories measured in terms of the months of supply eased to 4.2 months in January from 4.5 months in December. The median price of an existing home fell 3.7 percent month-over-month to $173,600.

Currency, Commodity Markets

Crude oil futures are rising up $0.09 to $92.93 a barrel after declining $2.38 to $92.84 a barrel on Thursday. The previous session's drop came amid the release of weak economic data from the eurozone and the U.S. and the release of the weekly oil inventory report, which showed that crude oil stockpiles rose by 4.1 million barrels to 376.4 million barrels in the week ended February 15th. Inventories of crude oil were above the upper limit of the average range for this time of the year.

Meanwhile, gasoline inventories fell by 2.9 million barrels and remained in the middle of the average range. Distillate inventories declined by 2.3 million barrels, remaining near the lower limit of the average range. Refinery capacity utilization averaged 84 percent over the four weeks ended February 15th compared to 84.1 percent over the four weeks ended February 8th.

Gold futures, which rose $0.60 to $1,578.60 an ounce in the previous session, are currently trading down $2.40 at $1,575.50 an ounce.

Among currencies, the U.S. dollar is trading at 93.34 yen compared to the 93.11 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3176 compared to yesterday's $1.3190.

Asia

Most Asian markets advanced after a shaky start amid the weakness in domestic currencies and some bargain hunting following the previous session's sell-off.

After trading below the unchanged line until the afternoon, Japan's Nikkei 225 average recovered and remained mostly afloat thereafter. The index closed up 76.81 points or 0.68 percent at 11,386.

Australia's All Ordinaries hovered in positive territory throughout the session before closing up 38.10 points or 0.76 percent at 5,037. Stocks derived encouragement from upbeat remarks by Reserve Bank of Australia governor Glenn Stevens on global economic conditions. A majority of stocks advanced, with healthcare stocks leading the gains.

Meanwhile, Hong Kong's Hang Seng ended down 124.23 points or 0.54 percent at 22,782. The Chinese and Taiwanese markets also retreated.

Europe

European stocks are rebounding amid the release of a positive German business sentiment reading.

In corporate news, Air France-KLM reported a wider loss for the full year, hurt by higher fuel costs and a restructuring charge. Denmark-based marine freight company A.P. Moller-Maersk reported an increase in its fourth quarter profit, which also exceeded estimates by analysts.

On the economic front, Ifo released the results of its German business sentiment survey for February, which showed an improvement in confidence among businesses. The business climate index rose for a fourth straight month to 107.4, up from 104.3 in January and above the estimate of 104.9.

This was the highest reading for the index since April of last year and represented the biggest improvement since July 2010. The current conditions index came in at 110.2 in February, higher than January's 108.1 and the expected reading of 108.5. The index measuring business expectations rose to 104.6 from 100.6 in the previous month.

Revised estimates released by the German Federal Statistical Office showed that the German economy contracted 0.6 percent in the fourth quarter, in line with the preliminary estimate.

U.S. Economic Reports

Federal Reserve Governor Jerome Powell and Boston Fed President Eric Rosengren are among the speakers at the University of Chicago Booth School's Monetary Policy Forum in New York.

Stocks in Focus

Hewlett-Packard reported first quarter non-GAAP earnings of 82 cents per share on net revenues of $28.4 billion. For the full year, the company expects non-GAAP earnings of $3.40-$3.60 per share. The results exceeded estimates and the guidance was also positive.

Intuit (INTU) reported second quarter non-GAAP earnings of 33 cents per share on revenues of $968 billion. The company expects full year non-GAAP earnings of $3.40-$3.46 per share on revenues of $4.55 billion to $24.65 billion. The results and the guidance were both positive. Separately, the company said sales of TurboTax Online units rose 32 percent from January 30th to February 16th.

Marvell Technology (MRVL) reported fourth quarter non-GAAP earnings of 19 cents per share on revenues of $775 million. For the first quarter, the company expects non-GAAP earnings of 14 cents per share, plus or minus 2 cents per share, on revenues of $700 million to $740 million. The results exceeded estimates and the guidance was upbeat.

AIG (AIG) reported a fourth quarter operating profit of 20 cents per share, contrasting the 8 cents per share loss estimated by analysts.

Nordstrom (JWN) reported fourth quarter earnings of $1.40 per share on net sales of $3.6 billion. The earnings exceeded estimates, while the revenues missed forecasts. For 2013, the company estimates adjusted earnings of $3.65 to $3.80 per share on sales growth of 4.5 to 6.5 percent. The guidance was weak.

Public Storage (PSA) reported fourth quarter funds from operations of $1.86 per share compared to $1.50 per share last year. Revenues rose 4.9 percent to $405.05 million.

Heinz (HNZ) reported third quarter adjusted earnings adjusted earnings from continuing operations of 99 cents per share on revenues of $2.93 billion. The earnings exceeded estimates, while the revenues were below estimates. The company has agreed to be taken private in a transaction.

Texas Instruments (TXN) announced a 33 percent increase in its dividend to 28 cents per share. The company's board also authorized an additional $10 billion stock buyback program. Parkway Properties (PKY) also announced a 33 percent increase in its quarterly dividend

Newmont Mining (NEM) reported fourth quarter adjusted net income of $1.11 per share, ahead of the 97 cents per share consensus estimate. Cabot Oil & Gas (COG) reported fourth quarter adjusted earnings of 27 cents per share on operating revenues of $369.88 million. The results exceeded estimates.

by RTT Staff Writer

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