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Wall Street Stays Optimistic Ahead Of Data, Citi Earnings


Wall Street looks set to preserve its recent momentum, as reflected by the U.S. index futures, which point to a higher opening on Monday. Asian stocks closed mostly higher amid some nervousness, while the European markets are seeing a firmer trend. The sentiment in the domestic market is likely to be heavily reliant on a couple of economic reports on manufacturing and retail sales. Additionally, earnings from financial conglomerate Citi (C) could also impact trading. Although the overbought levels of the markets could introduce some caution, these catalysts could give a decisive direction to the markets.

As of 6:15 pm ET, the Dow futures are rising 18 points, the Nasdaq 100 futures are adding 5.25 points and the S&P 500 Index futures are moving up 1.50 points.

U.S. stocks rose for the third straight week in the week ended July 12th, as alleviation of concerns about monetary policy normalization and positive earnings kept the momentum going despite the Dow Industrials and the S&P 500 Index closing at fresh record highs.

On the economic front, several key economic reports/events that can give additional clarity to the economic and monetary policy outlook are due in the unfolding week. The spotlight is likely to be on the Commerce Department's retail sales report for June, the results of the manufacturing surveys for July by the New York and Philadelphia Federal Reserves, the Federal Reserve's industrial production report for June, the National Association of Home Builders' housing market index for July, the Commerce Department's housing starts report for June and the weekly jobless claims report.

Traders may also closely track Federal Reserve Chairman Ben Bernanke's Congressional testimony on Wednesday and Thursday and the Federal Reserve's Beige Book due to be released on Wednesday. The Commerce Department's business inventories report for May, the Labor Department's consumer price inflation report for June, the Conference Board's leading economic indicators index for June and announcement concerning auctions of 2-year, 5-year and 7-year notes round up the economic events of the week.

The Commerce Department is scheduled to release its retail sales report for June at 8:30 am ET. Economists expect retail sales growth of 0.8 percent month-over-month for June, while retail sales, excluding autos, may have risen by 0.5 percent.

Around the same time, the New York Federal Reserve is due to release the results of its manufacturing survey for July. The consensus estimates call for a small decline in the general business conditions index to 5 in July from 7.84 in June. At 10 am ET, the Commerce Department will also release its business inventories report for May. Economists expect business inventories to have remained unchanged in May following a 0.3 percent increase in April.

In corporate news, AT&T (T) said it has entered into a definitive agreement to buy Leap Wireless (LEAP) for $15 per share in cash. AT&T noted that owners of about 29.8 percent of Leap's outstanding shares have agreed to vote in favor of the deal. Tellabs (TLB) announced the appointment of Lawrence Rieger as its acting CFO, effective immediately, following the resignation of Tom Minichiello as its CFO. Minichiello has joined Westell as its CFO.

Dell (DELL) said the special committee of its board stated in response to a letter to shareholders by Carl Icahn that Icahn's proposal requires abandoning an all cash transaction at a substantial premium with a high degree of closing certainty in exchange for a highly speculative recapitalization concept. Ryder System (R) said its board approved a $0.03 per share increase in its dividend to 31 cents per share. Brown & Brown (BRO), Cintas (CTAS) and Stanley Furniture (STLY) are among the companies due to release their quarterly results after the close of trading.

Most Asian markets closed higher, with China leading the way higher with the release of its second quarter GDP growth estimate that slowed in line with expectations. However, the gains weren't convincing enough as the markets in the region awaited some key economic and earnings news from the U.S. later in the day. The Japanese market remained closed for a public holiday.

Australia's All Ordinaries ended up 8.10 points or 0.16 percent at 4,966. Energy and financial stocks gained ground in the session, helping to offset the weakness in the material and consumer staple spaces. Hong Kong's Hang Seng Index closed a volatile session up merely 5.92 points or 0.03 percent at 21,283. China's Shanghai Composite Index traded mostly above the unchanged line, closing up 19.90 points or 0.98 percent at 2,059.

On the economic front, China released a slew of economic data that confirmed the loss of momentum of the domestic economy. Second quarter GDP growth slowed to a year-over-year pace of 7.5 percent, slower than the 7.7 percent growth recorded for the first quarter. However, the slowdown was in line with expectations. Separate data showed that industrial production and fixed asset investment growth slowed but retail sales grew at a faster rate.

European stocks opened moderately higher and have seen further upside since then, as traders digested the Chinese growth data and a U.K. house price reading.

In corporate news, AstraZeneca (AZN) said its CFO Simon Lowth will quit as its CFO at the end of October, as he takes up the CFO position at BG Group. The company said it has initiated a search for a replacement. Reports suggest that the German government has approached UBS regarding selling the government's 17 percent stake in Commerzbank.

On the economic front, property tracking website Rightmove reported that the price of newly marketed property increased 0.3 percent month-over-month to a record 253,658 pounds in July.

by RTTNews Staff Writer

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