The major U.S. index futures are pointing to a sharply lower opening on Thursday, with stocks likely to extend the pullback seen in the previous session. The downward momentum for the markets is partly due to lingering concerns about the outlook for the Federal Reserve's asset purchase program. Negative sentiment has also been generated by a report from Markit Economics and HSBC showing that Chinese manufacturing activity contracted in May.
After spending much of Wednesday's session above the unchanged line, U.S. stocks retreated in afternoon trading. The major averages opened little changed but rose in early trading. Despite the release of a report showing a smaller than expected increase in existing home sales, the major averages held above the unchanged line until late afternoon trading. As traders digested the FOMC minutes that suggested that some members discussed the possibility of scaling back stimulus as early as June, selling emerged, pushing the averages sharply lower.
The Dow Industrials ended down 80.41 points or 0.52 percent at 15,307, the S&P 500 Index slid 13.81 points or 0.83 percent before closing at 1,655, and the Nasdaq Composite closed at 3,463, down 38.82 points or 1.12 percent.
Twenty-three of the thirty Dow components declined, while the remaining seven stocks advanced. Cisco Systems (CSCO), DuPont (DD), Merck (MRK), United Technologies (UTX) and Verizon (VZ) were among the biggest decliners of the session. On the other hand, Home Depot (HD), JP Morgan Chase (JPM) and Pfizer (PFE) rose notably.
Transportation, utility, biotechnology, basic material, energy, retail, housing, semiconductor and financial stocks were among the worst performers of the session.
On the economic front, the National Association of Realtors reported that existing home sales rose 0.6 percent month-over-month to 4.97 million units in April. The March reading was upwardly revised to show 4.94 million units. The increase in April was in single family home sales, which rose 1.2 percent, while condominium sales dropped 3.3 percent.
Inventories measured in absolute terms rose to 2.160 million units in April from 1.930 million in March, and the months of supply also rose to 5.2 months from 4.7 months. The median price of an existing home rose 4.8 percent month-over-month to $192,800.
Currency, Commodity Markets
Crude oil futures are falling $1.27 to $93.01 a barrel after declining $1.90 to $94.28 a barrel on Wednesday. The previous session's retreat came amid dollar strength on expectations that the Fed stimulus may be prematurely withdrawn and the release of the oil inventory report.
The report showed that crude oil inventories edged down 0.3 million barrels to 394.6 million barrels in the week ended May 17th. Inventories remained above the upper limit of the average range. Distillate stockpiles fell by 1.1 million barrels and remained in the lower half of the average range.
Meanwhile, gasoline inventories rose by 3 million barrels and were near the upper limit of the average range. Refinery capacity utilization averaged 86.7 percent over the four weeks ended May 17th compared to 85.7 percent over the four weeks ended May 10th.
Gold futures, which fell $ 10.20 to $1,367.40 an ounce in the previous session, are climbing $22 to $1,389.40 an ounce.
Among currencies, the U.S. dollar is trading at 101.55 yen compared to the 103.16 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2897 compared to yesterday's $1.2857.
Asia
The major Asian markets fell across the board, as the markets in the region took cues from Wall Street's reaction to the Fed's thinking on the itinerary for stimulus withdrawal. The mood was also dampened by a report showing that the Chinese manufacturing sector experienced a contraction for the first time in seven months.
Japanese stocks fell sharply, as the yen strengthened and after the yield on the Japanese 10-year bond rose to a 1-year high of 1 percent.
Japan's Nikkei 225 average held above the unchanged line until the mid-session before pulling back sharply in the afternoon. The index closed down 1,143.28 points or 7.32 percent at 14,484.
All but 2 of the index components retreated, with Shinsei Bank, Mitsubishi Motors, Tokyu Land, Sumitomo Electric Industries, Tokyo Power and Sharp leading the slide.
Australia's All Ordinaries Index opened lower and declined steadily till the afternoon. Thereafter, the index moved sideways before closing down 101.30 points or 1.97 percent.
The market witnessed an across the board sell-off, with consumer staple, energy, financial, material and utility stocks seeing notable weakness.
Hong Kong's Hang Seng Index closed at 22,670, down 591.40 points or 2.54 percent.
A report released by Markit Economics and HSBC showed that Chinese manufacturing activity contracted in May, with the purchasing managers' index based on the survey coming in at 49.6 compared to 50.4 in April. Economists had expected the index to remain unchanged.
Europe
European stocks are also retreating sharply, as fears of a withdrawal of stimulus in the U.S. and the weak Chinese manufacturing data have led to profit taking.
In corporate news, brewer SABMiller reported fairly in line EBITDA for its fiscal year ended March 31st and also said its markets should remain broadly unchanged in the coming months.
Swiss Life said its first quarter premium income rose 14 percent to 6.970 billion francs, higher than forecasts by most analysts. U.K.'s United Utilities reported higher profits and revenues for its full year.
On the economic front, Markit Economics reported that private sector activity in the euro area continued to contract. The composite purchasing managers' index measuring performance of the manufacturing and service sectors rose 0.8 points to 47.7 in May. The manufacturing index rose 1.1 points to 47.8 and the service sector activity index moved up 0.5 points to 47.5.
A revised GDP report released by the U.K. Office for National Statistics showed that U.K. GDP rose at an unrevised rate of 0.3 percent in the first quarter, reversing the 0.3 percent drop in the previous quarter.
U.S. Economic Reports
First-time claims for U.S. unemployment benefits fell by more than expected in the week ended May 18th, according to a report released by the Labor Department on Thursday.
The report showed that initial jobless claims fell to 340,000, a decrease of 23,000 from the previous week's revised figure of 363,000.
Economists had expected jobless claims to drop to about 345,000 from the 360,000 originally reported for the previous week.
At 9 am ET, the Federal House Finance Agency is scheduled to release the results of its house price survey for March. The house price index based on the survey is expected to increase 0.9 percent month-over-month compared to a 0.7 percent increase in February.
The Commerce Department will release its new home sales report for April at 10 am ET. The consensus expectations call for new home sales to come in at a seasonally adjusted annual rate of 425,000 compared to 417,000 in March.
New home sales rose 1.5 percent month-over-month to a seasonally adjusted annual rate of 417,000 units in March. The previous month's decline was revised to show a 7.6 percent drop compared to the 4.6 percent decrease estimated initially. Inventories of new home rose slightly in the month.
The Kansas City Federal Reserve is scheduled to release the results of its regional manufacturing survey at 11 am ET. Economists expect the manufacturing index based on the survey to come in at -2 in May compared to -5 in April.
Stocks in Focus
Hewlett-Packard (HPQ) reported second quarter non-GAAP earnings of 87 cents per share, down 11 percent year-over-year, while net revenues fell 10 percent to $27.6 billion. The earnings exceeded estimates, while the revenues missed expectations. For 2013, the company expects full year non-GAAP earnings of $3.50-$3.60 per share, and for the third quarter, the company expects non-GAAP earnings of 84-87 cents per share. The guidance was positive.
Limited Brands (LTD) reported first quarter earnings of 48 cents per share, higher than 41 cents per share last year. Net sales rose 5 percent to $2.268 billion. For the second quarter, the company expects earnings of 50-55 cents per share, and for 2013, the company expects earnings of $2.95-$3.15 per share. The results were better than expected, while the guidance was in line.
Shanda Games (SNDA) reported first quarter non- GAAP earnings of 16 cents per ADS on net revenues of $173 million.
Semtech (SMTC) reported first quarter non-GAAP earnings of 46 cents per share on revenues of $162.4 million. The earnings were in line, while the revenues exceeded expectations. For the second quarter, the company expects non-GAAP earnings of 50-56 cents per share on net sales of $164 million to $172 million. The guidance was positive.
Synposys (SNPS) reported second quarter non-GAAP earnings of 66 cents per share on revenues of $499.3 million. The company expects 2013 non-GAAP earnings of $2.37-$2.42 per share. The results were better than expected and the guidance was positive.
PetSmart (PETM) reported first quarter earnings of 98 cents per share on revenues of $1.7 billion. The earnings exceeded estimates, while the revenues were shy of estimates. The company raised its 2013 earnings guidance to $3.82-$3.94 per share, while it forecast total sales growth of 3-4 percent. The guidance surrounded the consensus estimate.
Pacific Sunwear (PSUN) reported a first quarter loss from continuing operations of 14 cents per share on a non-GAAP basis, narrower than the loss of 20 cents per share last year. Net sales from continuing operations rose modestly to $169.8 million. For the second quarter, the company expects an adjusted loss of 2-5 cents per share on revenues of $209 million to $219 million. The results were better than expected and the guidance was positive.
Logitech (LOGI) said it plans to reiterate its 2014 outlook at its financial analysts and investors meeting. The company also said it would discuss its long range 2016 financial performance guidance of $2.25 billion in sales, $150 million in operating income and gross margin of about 35 percent. For 2015, the company expects sales of $2.1 billion, operating income of $90 million and gross margin of 34.5 percent.
Donaldson (DCI) announced a 30 percent increase in its dividend to 13 cents per share.
Aeropostale (ARO), Gap (GPS), Marvell (MRVL), Mentor Graphics (MENT), New York & Co. (NWY), Nordson (NDSN), Pandora Media (P), Ross Stores (ROST), Salesforce.com (CRM), Sears Holding (SHLD), Shoe Carnival (SCVL), Williams-Sonoma (WSM) and Zumiez (ZUMZ) are among the companies due to release their quarterly earnings after the close of trading.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.