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Stocks May Move Back To The Downside In Early Trading - U.S. Commentary


Stocks are likely to move back to the downside in early trading on Thursday following the strength seen in the previous session. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 32 points.

The downward momentum for the markets comes as traders react to the latest batch of earnings news from several big-name companies.

Shares of J.C. Penney (JCP) are moving sharply lower in pre-market trading after the department store chain reported a narrower than expected first quarter adjusted loss but cut its full-year earnings guidance.

Network equipment maker Cisco Systems (CSCO) may also come under pressure after reporting better than expected fiscal third quarter earnings but providing a disappointing forecast.

On the other hand, shares of Wal-Mart (WMT) are likely to move to the upside after the retail giant reported first quarter results that exceeded analyst estimates on both the top and bottom lines.

Trading may also be impacted by reaction to the latest economic news, with a report from the Labor Department showing a bigger than expected increase in initial jobless claims in the week ended May 12th.

The report said initial jobless claims rose to 222,000, an increase of 11,000 from the previous week's unrevised level of 211,000. Economists had expected jobless claims to inch up to 215,000.

Meanwhile, a separate report from the Philadelphia Federal Reserve unexpectedly showed a significant acceleration in the pace of growth in regional manufacturing activity in the month of May.

The Philly Fed said its diffusion index for current general activity jumped to 34.4 in May from 23.2 in April, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to dip to 21.0.

Shortly after the start of trading, the Conference Board is scheduled to release its report on leading economic indicators in the month of April. The leading economic index is expected to climb by 0.4 percent.

Stocks fluctuated over the course of the trading session on Wednesday but largely maintained a positive bias before closing mostly higher. The upward move on the day came on the heels of the sharp pullback seen in the previous session.

The major averages closed in positive territory but well off their highs of the session. The Dow rose 62.52 points or 0.3 percent to 24,768.93, the Nasdaq advanced 46.67 points or 0.6 percent to 7,398.30 and the S&P 500 climbed 11.01 points or 0.4 percent to 2,722.46.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index climbed by 0.5 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index has advanced by 0.5 percent, the German DAX Index and the U.K.'s FTSE 100 Index are up by 0.3 percent and 0.2 percent, respectively.

In commodities trading, crude oil futures are climbing $0.56 to $72.05 a barrel after edging up $0.18 to $71.49 a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,288.10, down $3.40 compared to the previous session's close of $1,291.50. On Wednesday, gold rose $1.20.

On the currency front, the U.S. dollar is trading at 110.79 yen compared to the 110.40 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1793 compared to yesterday's $1.1808.

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