The major U.S. index futures are pointing to a modestly higher opening on Wednesday after the Asian markets retreated sharply on concerns that recovery hasn't taken root firmly. A report released earlier in the day showed that mortgage application volumes rose 14% in the week ended January 8 compared to the previous week. That said, earnings as well as pre-announcements have been mixed. Amid this backdrop, stocks may show a lack of direction, given the fact that some traders may prefer to go to the sidelines ahead of some key economic data due Thursday and Friday.
U.S. stocks opened Tuesday's session notably lower amid nervousness over lackluster results from Alcoa (AA), negative pre-announcements from companies and the Chinese central bank's indication that interest rates would be raised soon. The major averages languished in negative territory throughout the session to close lower.
The Dow Industrials declined 36.73 points or 0.34% to 10,627, while the Nasdaq Composite Index receded 30.10 points or 1.30% to 2,282 and the S&P 500 Index ended down 10.76 points or 0.94% at 1,136.
Eighteen of the thirty Dow components closed the session lower, with Alcoa leading the pack of losers with an 11.06% slump. Bank of America (BAC) (down 3.37%), Caterpillar (CAT) (down 2.95%), Cisco Systems (down 1.59%) Disney (DIS) (down 1.72%), Intel (INTC) (down 1.63%) and JP Morgan Chase (JPM) (down 2.34%) were notable decliners. However, Wal-Mart (WMT), Procter & Gamble (PG), Coca Cola (KO) and Kraft Foods (KFT) gained some ground.
Among the sector indexes, the Dow Jones Transportation Average slid 1.39%, the NYSE Arca Airline Index slipped 1.80% and the Dow Jones U.S. Basic Materials Average receded 2.09%. The NYSE Arca Biotechnology Index and the KBW Bank Index fell 1.25% and 1.70%, respectively. In the resource space, the NYSE Arca Gold Bugs Index declined 3.91%, while the NYSE Arca Oil Index and the Philadelphia Oil Service Index moved down over 2% each. The S&P Retail Index and the Philadelphia Housing Sector Index receded more than 1.20% each.
Among the technology indexes, the Philadelphia Semiconductor Index slumped 3.59% and the NYSE Arca Disk Drive Index fell 2.24%, while the NYSE Arca Hardware Index, the NYSE Arca Software Index, the NYSE Arca Internet Index and the NYSE Arca Networking Index all receded over 1%.
On the economic front, the Commerce Department reported that the trade balance for November showed a deficit of $36.4 billion, representing a 10-month high. The November deficit compared to expectations for a deficit of $34.6 billion and the revised October deficit of $33.2 billion. Exports rose at an anemic rate of 0.9% month-over-month compared to a 2.6% surge in imports. Excluding petroleum imports, which rose 2.3%, import growth was 2.4%. Peter Boockvar from Miller Tabak expects the wider than expected deficit to reduce fourth quarter GDP growth by 0.1%-0.2%.
The Treasury auction of $40 billion worth 3-year noteS was fairly encouraging, with the yield coming in roughly in line with expectations and the bid to cover ratio coming in at 2.98. The level of indirect bidders accounted for 38% of the total.
Commodity, Currency Markets
Crude oil futures are declining $0.74 a barrel to $80.05 a barrel after receding $1.73 to $80.79 a barrel in Tuesday's session. Gold futures, which slipped $22 to $1,129.40 an ounce in the previous session, are currently rising $5.40 to $1,134.80 an ounce.
On the currency market, the U.S. dollar is trading at 91.25 yen compared to the 90.98 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is currently valued at $1.4570.
Asia
Stung by the negative close on Wall Street overnight, the major Asian markets fell across the board on Wednesday, with the Chinese, Hong Kong, Japanese, South Korean and Taiwanese markets receding sharply.
Japan's Nikkei 225 average opened lower, but pared back some of its losses in early trading. Thereafter, selling pressure intensified, pushing the average lower again. The index showed volatility in the afternoon before closing down 144.11 points or 1.32% at 10,735.
A majority of the stocks declined in the session, with technology stocks and other export stocks leading the slide. On the other hand, defensive pharma, utility and telecom stocks showed modest advances. Some financial stocks also ended the session higher.
Australia's All Ordinaries opened unchanged, but it dipped sharply in early trading before showing some consolidation at lower levels. The index closed down 31.50 points or 0.64% at 4,900.
Most sector stocks receded, with the exception of defensive telecommunication and utility stocks. Mining stocks fell across the board, while among the four major banks, Westpac, Commonwealth Bank and National Australia Bank declined, but ANZ Bank gained some ground. However, Macquarie Group and ASX advanced modestly in the session.
Hong Kong's Hang Seng Index opened notably lower and saw further weakness over the course of trading to close down 578.04 points or 2.59% at 21,749. Thirty-eight of the forty-two index components ended lower, with only FIH, Tencent, China Mobile and Cathay Pacific Airways showing some strength.
Europe
The European markets are seeing some volatility and are showing mixed sentiment. While the German DAX Index is moving up 0.18% and the French CAC 0 Index is advancing 0.49%, the U.K.'s FTSE Index is moving down 0.11%.
In economic news, the German Federal Statistical Office reported that Germany's real GDP fell 5% in 2009 compared to 1.3% growth in the previous year. Weakness in exports and capital formation in machinery and equipment was responsible for the bulk of the contraction.
Meanwhile, French statistical agency INSEE released its report on consumer prices, showing a 0.9% year-over-year increase in the headline index, slightly higher than the 0.8% increase expected by economists. On a monthly basis, consumer prices edged up 0.3% following a 0.1% increase in November.
U.K. industrial production rose 0.4% month-over-month in November following a mere 0.1% gain in the previous month, according to a report released by the Office for National Statistics. The monthly growth rate came in slightly above the consensus forecast of 0.3%. Annually, industrial production fell at a slower pace of 6% in November following October's 8.4% decline. Economists were looking for a decrease of 6.1%.
U.S. Economic Reports
The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended January 8th at 10:30 AM ET.
The inventory report for the week ended January 1st showed a 1.3 million increase in crude oil stockpiles to 327.3 million barrels. Inventories of crude oil were above the upper limit of the average range for this time of the year.
Gasoline stockpiles also increased, rising by 3.7 million barrels, with the inventories of gasoline remaining above the upper limit of the average range. However, distillate inventories edged down by 0.3 million barrels, although they remained above the upper boundary of the average range. Refinery capacity utilization averaged 80% over the four weeks ended January 1st compared to 80.3% in the previous week.
The Federal Reserve is due to release its Beige Book, which is a compilation of anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts, at 2 PM ET. The report is normally released about two weeks before the monetary policy meeting is held.
The Treasury Budget, a monthly account of the surplus or deficit of the federal government is also due to be released at 2 PM ET. The budget is considered an indicator of budgetary trends and the thrust of fiscal policy. Economists estimate a deficit of $92 billion for December.
Stocks in Focus
Google (GOOG) is likely to react to indications from the company that it will exit the Chinese market after alleged attacks by Cyber spies, who were apparently attempting to hack into the email accounts of many human right activists. Google had rolled out a Chinese version of search in January 2006 and has since then been having a rough ride.
Kraft Foods (KFT), which has launched a hostile bid for U.K. confectioner Cadbury (CBY), could be in focus after it said it raised its 2009 earnings per share estimate to at least $2 compared to its earlier estimate of $1.97. The company attributed the revision to strong operating gains and a significant increase in marketing investments. On Tuesday, Cadbury advised its shareholders not to accept Kraft's revised offer of 767 pence per share.
Linear Technology (LLTC) rose in Tuesday's after hours session after it reported that its second quarter revenues rose 3% to $256.4 million. The company reported earnings of 33 cents per share, including a 2 cents per share non-cash expense, compared to 38 cents per share last year. Analysts estimated earnings of 31 cents per share on revenues of $247.05 million. The company expects 7%-10% sequential revenue growth in the third quarter. However, analysts expect only a slight increase in revenues.
H.B. Fuller (FUL) is also likely to see some strength after it reported fourth quarter net income of 50 cents per share compared to a loss of $1.12 per share in the year-ago period. On an adjusted basis, the year-ago's net income would have been 24 cents per share. Net revenues fell 2.5% to $341.6 million. The consensus estimates called for earnings of 42 cents per share on revenues of $332.71 million.
Developers Diversified (DDR) may move to the downside after it lowered its operating funds from operations guidance for 2009 to $1.83- $1.85 per share due to a loss on the sale of land and higher interest costs. For 2010, the company expects funds from operations to be $1.05-$1.15 per share compared to the $1.14 per share consensus estimate.
Cablevision (CVC) could see some activity after it announced that its board has approved the spin off of its Madison Square Garden business to Cablevision shareholders. Each Cablevision shareholder will receive 1 share of Madison Square Garden Class A common stock for every four shares of Cablevision Class A common stock they hold as of the record date of January 25th, 2010.
Furniture Brands (FBN) is expected to trade lower after it reported fourth quarter net sales of $280 million to $290 million, notably lower than the consensus estimate of $312.52 million. The company also said it expects to achieve its guidance of being cash flow positive for fiscal year 2009, excluding the effects of debt paydown and tax refunds.
Bunge (BG) may move in reaction to its announcement that it has reached agreements to become the owner of additional stakes in the Moema Group cluster of sugarcane mills in Brazil. For the additional stake, Bunge will issue 3.5 million common shares.
Pall Corp. (PLL) could react to its announcement that it has acquired privately held U.S. biotechnology company MicroReactor Technologies, which has developed an easy-to-use and cost-effective miniature bioreactor technology platform. The companies did not reveal the financial terms of the deal.
First Midwest Bancorp. (FMBI) declined in Tuesday's after hours session after reporting a fourth quarter loss of 73 cents per share compared to a year-ago loss of 57 cents per share. Total interest income fell to $82.37 million from $97.93 million in the year-ago period. Analysts' estimates, which typically exclude one-time items, called for a loss of 7 cents per share on revenues of $87.29 million. Separately, the company also announced that it intends to sell about $150 million shares in an underwritten public offering.
Qlogic (QLGC) is likely to see some strength after it released preliminary third quarter results, forecasting net revenues in the range of $147 million to $149 million. Earlier the company had estimated revenues of $134 million to $140 million. On a non-GAAP basis, the company expects earnings of 29-30 cents per share, higher than its earlier forecast of 22-24 cents per share. The company attributed the potential revenue upside to strong sequential growth for its Host products. Analysts estimate earnings of 24 cents per share on revenues of $138.34 million.
Health Management Associates (HMA) is likely to move in reaction to its announcement that it expects to report fourth quarter net revenues from continuing operations of about $1.2 billion and earnings per share from continuing operations of 11-12 cents per share. The Street had estimated earnings of 11 cents per share on revenues of $1.16 billion. For 2009, the company expects net revenue from continuing operations of $4.6 billion and adjusted earnings from continuing operations of 49-50 cents per share. The consensus estimates call for earnings of 48 cents per share on revenues of $4.62 billion. The company also announced the appointment of Kelly Curry as EVP and CFO, effective January 21st, 2010.
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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.