The major U.S. index futures are pointing to a mixed opening on Wednesday, with the sentiment likely to reflect caution ahead of the release of the Federal Open Market Committee's post-meeting policy statement in the afternoon. Global cues are extremely pessimistic, with the Asian averages slumping to their lowest level in more than a month, while the European averages are retreating after yesterday's recovery.
The economic uncertainty is clouding out the optimism generated by some positive earnings and has increased risk aversion. The President's state of the union address due to be delivered after the markets close and the World Economic Forum that gets underway today should also lead to some apprehension and push some traders to the sidelines.
After showing some indecision in early trading on Tuesday, the major U.S. averages moved firmly into positive territory by late morning, helped by a better than expected consumer confidence reading and fairly in-line house prices data. Selling pressure picked up in the afternoon as uncertainty worried investors, resulting in the major averages paring back their gains gradually over the afternoon and dipping into negative territory in late trading.
The Dow Industrials ended down 2.57 points or 0.03% at 10,194, while the Nasdaq Composite fell 7.07 points or 0.32% to 2,204 and the S&P 500 Index receded 4.61 points or 0.42% to 1,092.
Nineteen of the thirty Dow components ended the session lower, with Bank of America (BAC) (down 1.40%), Intel (INTC) (down 1.57%), JP Morgan Chase (JPM) (down 1.96%) and Verizon Communications (VZ) (down 1.66%) declining sharply in the session. However, Alcoa (AA) rose 1.12%, Caterpillar (CAT) gained 1.29% and McDonald's (MCD) closed up (up 1.14%). Travelers Co. (TRV) and Wal-Mart (WMT) advanced 2.74% and 1.38%, respectively.
Among the sector indexes, the NYSE Arca Airline Index fell 1.50% and the Dow Jones U.S. Basic Materials Average slid 1.07%. The NYSE Arca Securities Broker/Dealer Index declined 1.60% compared to a 2.20% loss by the KBW Bank Index.
On the economic front, the S&P Case-Shiller 20-city composite index declined 5.3% year-over-year in November, slightly worse than the 5% drop expected by economists. However, the decline was the smallest since September 2007. Four cities, Denver, Dallas, San Francisco and San Diego saw year-over-year gains.
Meanwhile, the results of another house price survey released yesterday showed that national house prices rose 0.7% month-over-month in November following a revised 0.6% increase in the previous month. Economists had expected a more modest improvement of 0.2%. On a year-over-year basis, the Federal Housing Finance Agency's house price index increased 0.5%.
Meanwhile, the Conference Board's consumer confidence survey for January showed that the consumer confidence index rose to 55.9 from 53.6 in December, with the latest month's reading representing the highest level since September 2008. The present situations index rose about 5 points to 25, while the expectations index increased by 0.6 points to 76.5.
Commodity, Currency Markets
Crude oil futures are trading up $0.04 at $74.75 a barrel after receding $0.55 to $74.71 a barrel in Tuesday's session. Gold futures for April delivery, which rose $2.70 to $1,099.50 an ounce in the previous session, are currently trading down $6.70 at $1,092.80 an ounce.
On the currency front, the U.S. dollar is trading at 89.485 yen compared to the 89.6498 yen it fetched at the close of New York trading on Tuesday. The dollar is currently valued at $1.4052 versus the euro compared to yesterday's $1.4071.
Asia
The major Asian averages ended lower across the board on Wednesday, amid apprehensions over a disruption to the fledgling recovery that had begun to taken root. The Indian market, which opened following Tuesday's public holiday, led the declines in the region, with the Sensex slumping 2.92%.
Japan's Nikkei 225 average, which managed to hold above the unchanged line in the morning, moved decisively into negative territory in the afternoon. The index closed down 73.20 points or 0.71% at 10,252. Financial, steel, auto, construction, shipping, transport, resource and technology stocks saw notable weakness.
Meanwhile, the Bank of Japan in its monthly report maintained its stance that the nation's economy is picking up, although it said the economy does not yet have sufficient momentum to support a self-sustaining recovery in domestic demand. The bank also sees deflation moderating due mainly to a rise in the prices of petroleum products, while it expects public investment to decrease gradually.
A report released by Japan's Ministry of Finance showed that exports rose 12.1% year-over-year to 5.41 trillion yen in December, reversing the 6.3% drop in the previous month. The export growth was led by Asia, with exports to the region rising 31.2%, while exports to the U.S. fell 7.1%. At the same time, imports fell 5.5%.
Australia's All Ordinaries opened unchanged, but it declined sharply in early trading. Thereafter, the pace of decline slowed, with the index beginning to consolidate in the afternoon. The index closed down 73.10 points or 1.54% at 4,670. The market witnessed broad based selling pressure, with almost all sectors moving to the downside. Material and energy stocks were the worst hit.
After holding above the unchanged line in the morning, Hong Kong's Hang Seng Index receded in the afternoon to close down 76.26 points or 0.38% at 20,033. Thirty-one of the forty-two index components closed lower.
Europe
The major European averages are moving to the downside on Wednesday after they broke a 5-session losing streak in the previous session. While the French CAC 40 Index and the German DAX Index are losing 0.97% and 0.21%, respectively, the U.K.'s FTSE 100 Index is declining 0.63%.
In corporate news, German software maker SAP AG (SAP) reported that its fourth quarter net income fell to 727 million euros, down 12% year-over-year. Revenues declined 9% to 3.2 billion euros. The company expects software and services revenue to rise in the range of 4%-8% in 2010.
On the economic front, French Statistical Agency INSEE reported that its French consumer confidence indicator rose to -29 in January from -30 in December. Economists had expected a reading of -31. Consumer perception of their own past and future situation remained unchanged, while their views on past and future economic conditions improved.
U.S. Economic Reports
The Commerce Department is due to release its new home sales report for December at 10 AM ET. The consensus estimate calls for an increase in new homes sales to 366,000.
The payback effect of stimulus-induced home sales was evident in November's new home sales report, which showed sales at a 355,000 annualized rate, marking the lowest level since April. In October, new home sales came in at 400,000. On the pricing front, the price of a new home declined 1.9% year-over-year but was up 3.7% compared to the previous month.
The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended January 22nd at 10:30 AM ET.
Crude oil inventories edged down by 0.4 million barrels to 330.6 million barrels in the week ended January 15th. Inventory levels of crude oil were above the upper level of the average range.
Distillate stockpiles declined by 3.3 million barrels, but remained above the upper boundary of the average range. On the other hand, gasoline inventories rose by 3.9 million barrels and were above the upper limit of the average range. Refinery capacity utilization averaged 80% over the four-weeks ended January 15th compared to 80.4% in the previous week.
The Federal Open Market Committee is scheduled to make an announcement regarding its near-term direction of monetary policy at 2:15 PM ET following the end of the 2-day monetary policy committee meeting. The Federal Open Market Committee consists of seven Governors of the Federal Reserve Board and five Federal Reserve Bank Presidents.
At its December meeting, as expected, the FOMC decided to keep interest rates unchanged at 0-0.25% and reiterated its commitment to maintain ultra loose monetary policy for an extended period. The statement released following the end of the 2-day meeting in December did not show any significant change. The central bank retained its assessment that economic activity has continued to pick up, while it turned modestly positive on the labor market. The Fed commented that the deterioration in the labor market is abating. The Fed dropped its reference to businesses cutting staff but noted reluctance on the part of the firms to add to payrolls.
Earnings
Boeing (BA) reported that its fourth quarter revenues rose 42% to $17.94 billion. The company reported earnings of $1.75 per share compared to a loss of 12 cents per share in the year-ago quarter. Analysts estimated earnings of $1.36 per share on revenues of $17.57 billion. For 2010, the company expects revenues of $64 billion to $66 billion and earnings of $3.70-$4 per share. The consensus estimates call for earnings of $4.26 per share and revenues of $65.42 billion.
United Technologies (UTX) reported fourth quarter earnings per share of $1.15 per share, down 7% year-over-year. On an adjusted basis, earnings rose 5% to 6 cents per share. Consolidated revenues fell 5% to $14.1 billion. The consensus estimates called for earnings of $1.14 per share on revenues of $13.84 billion. The company reaffirmed its 2010 earnings of $4.40-$4.65 per share. Analysts estimate earnings of $4.60 per share for the year.
WellPoint's (WLP) fourth quarter adjusted net income was $1.16 per share, while operating revenues slid 2.4% to $15.06 billion. Analysts estimated earnings of $1.02 per share on revenues of $15.13 billion.
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Stocks in Focus
Yahoo (YHOO) advanced in Tuesday's after hours session after it reported fourth quarter earnings of 11 cents per share compared to a loss of 22 cents per share last year. Excluding charges, the company reported earnings of 15 cents per share, ahead of the 11 cents per share consensus estimate. Revenues fell to $1.26 billion compared to the $1.23 billion consensus estimate.
Rock-Tenn (RKT) could see weakness after it reported that its first quarter adjusted earnings slipped to 94 cents per share from 96 cents per share last year. Net sales fell to $690.8 million. Analysts estimated earnings of $1.01 per share on revenues of $707.92 million.
Berkshire Hathaway (BRKA) may gain ground after Standard & Poor's announced that the company would replace Burlington Santa Fe (BNI) in the S&P 500 Index and the S&P 100 Index. Burlington has agreed to be acquired by Berkshire Hathaway.
Meritage Homes (MTH) rallied in Tuesday's after hours session after it reported a profit of $1.35 per share for its fourth quarter compared to a loss of $2.58 per share last year. Total closing revenues fell to $285.82 million from the year-ago's $399.58 million. Analysts expected a loss of 44 cents per share on revenues of $285.01 million.
STMicroelectronics (STM) could react to its announcement that its fourth quarter net sales rose to $2.57 billion from $2.28 billion in the year-ago period, while analysts estimated revenues of $2.56 billion. The company reported a net loss attributable to parent company of 8 cents per share compared to a loss of 42 cents per share last year. On an adjusted basis, the company reported a profit of 4 cents per share compared to the 2 cents per share estimated by analysts. The company expects a 7%-13% decline in revenues for the first quarter compared to the previous quarter, while analysts estimate a 13% drop.
Parlux Fragrances (PARL) may see weakness after it announced the resignation of Neil Katz from his position as Chairman and CEO due to what the company termed as philosophical differences about the future direction of the company. The company appointed Frederick Purches, the company's founder and previous Chairman, to the position of Chairman and CEO.
South Financial Group (TSFG) tumbled in Tuesday's after hours session after it reported a net loss available to common shareholders of 90 cents per share for its fourth quarter compared to a loss of $4.29 per share in the year-ago period. The loss marked the eighth in a row.
Williams-Sonoma (WSM) also retreated in Tuesday's after hours session after it announced the retirement of its Chairman and CEO Howard Lester. The company said Lester would don the title of Chairman Emeritus and continue to assist the company. The company also announced the appointment of Laura Alber as its new CEO and its lead independent director Adrian Bellamy as the non-executive Chairman.
Qlogic (QLGC) could move in reaction to its announcement that its third quarter net revenue fell to $149 million from $163.7 million last year. The company's non-GAAP net income fell to 31 cents per share from the year-ago's 34 cents per share. Analysts estimated earnings of 29 cents per share on revenues of $147.32 million.
Altera (ALTR) moved to the upside in Tuesday's after hours session after its fourth quarter revenues rose 16% year-over-year to $365 million. The company's net income rose to 34 cents per share from 28 cents per share in the year-ago period. Analysts estimated earnings of 29 cents per share on revenues of $334.88 million. The company estimates 5%-10% sequential sales growth for the first quarter compared to the consensus estimate for a 7.3% decline.
Callaway Golf (ELY) could be in focus after it announced a fourth quarter pro forma loss of 27 cents per share compared to a pro forma loss of 24 cents per share last year. Net sales rose 9% year-over-year to $186 million. Analysts estimated a bigger loss of 28 cents per share on revenues of $171.48 million. The company estimates full year 2010 pro forma earnings of 25-35 cents per share on revenues of $990 million to $1.05 million. The consensus estimates call for earnings of 31 cents per share on revenues of $980.08 million.
McKesson (MCK) may see some activity after it reported third quarter revenues of $28.3 billion, higher than the year-ago's $27.1 billion. The company reported a profit of $1.19 per share compared to a year-ago loss of 7 cents per share, which included a charge of $1.12 per share. Analysts estimated a profit of $1.19 per share on revenues of $27.67 billion.
Sanmina-SCI (SANM) jumped in Tuesday's after hours session after it reported a non-GAAP profit of 23 cents per share for its first quarter compared to a loss of 1 cents per share in the year-ago quarter. Non-GAAP revenues were flat at $1.48 billion. Analysts estimated earnings of 13 cents per share on revenues of $1.40 billion. For the second quarter, the company estimates non-GAAP earnings of 22-27 cents per share on revenues of $1.45 billion to $1.55 billion. The Street estimates earnings of 9 cents per share on revenues of $1.36 billion.
Toyota (TM) could also be in focus after it said it would stop building and selling 8 of its models, including the Camry, in the U.S. The move was apparently triggered by recalls of millions of vehicles following the incidence of gas pedals sticking and resulting in unintentional acceleration.
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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.