The major U.S. index futures are pointing to a lower opening on Wednesday, with sentiment reflecting traders' uneasiness amid cloudy economic data released earlier in the day and following yesterday's sharp gains. A Commerce Department report showed that housing starts fell sharply in May as a payback phenomena following the expiry of the first time homebuyers' credit at the end of April.
Additionally, an insipid guidance issued by FedEx (FDX) may also generate some apprehension over corporate profit growth, especially as doubts emerge about the sustainability of the economic recovery. Market direction of the session may also hinge on the industrial production report to be released from a short while from now and the direction of oil prices.
U.S. stocks opened Tuesday's session higher, helped by a positive lead from the rest of the global markets and bargain hunting amid oversold levels. The major averages advanced steadily through the session after the New York Federal Reserve's manufacturing survey for June showed continuing momentum in the sector. In the process, stocks largely ignored a downbeat earnings report from consumer electronics retailer Best Buy (BBY) and a weak homebuilder confidence reading.
The Dow Industrials jumped 213.88 points or 2.10% to end at 10,405 and the Nasdaq Composite advanced 61.92 points or 2.76%, closing at 2,306, while the S&P 500 Index closed 25.60 points or 2.35% higher at 1,115.
All thirty of the Dow components ended the session higher, with American Express (AXP), Boeing (BA), Caterpillar (CAT) and Microsoft (MSFT) recording handsome gains.
Among the sector indexes, the Dow Jones Transportation Average rose 2.88%, the Dow Jones Utility Average gained 2.13%, the Dow Jones U.S. Basic Materials Average ended up 2.87%, the NYSE Arca Oil Index advanced 2.96% and the Philadelphia Oil Service Index jumped 4.72%. The NYSE Arca Gold Bugs Index added 2.67% compared to a 3.97% advance by the NYSE Arca Airline Index and a 2.24% rise by the NYSE Arca Biotechnology Index.
The KBW Bank Index rose 2.72% and the Philadelphia Housing Sector Index ended up 2.73%. In the technology space, the Philadelphia Semiconductor Index rallied 5.54%, the NYSE Arca Computer Hardware Index rose 3.04% and the NYSE Arca Networking Index gained 3.45%, while the NYSE Arca Networking Index, the NYSE Arca Software Index and the NYSE Arca Internet Index all added over 2%.
On the economic front, the New York Federal Reserve's manufacturing survey in the region showed that conditions continued to improve. The general business conditions index rose to 19.6 in June from 19.1 in March. While the new orders index rose about 3 points to 17.5 and the shipments index improved 8.4 points to 19.7, the index of order backlogs climbed by 6 points, yet remained negative at -1.2. On the other hand, the employment index slid about 10 points to 12.4 and the prices paid index declined to 27.2 from 44.7. The future general business conditions index also fell, dropping to 40.7 from the month-ago's 42.11.
The Labor Department's import and export prices data showed that import prices fell 0.6% month-over-month in May following a 1.1% increase in April. The decline was mainly due to a 5% drop in petroleum prices and a 2.2% decline in the prices for industrial supplies.
Meanwhile, the National Association of Home Builders' builder confidence survey for June turned in disappointing results. The association's housing market index fell to 17 in June from 22 in May. The index measuring current sales trend fell 6 points to 17 and the index of traffic of prospective buyers declined to 14 from 16. The sales expectations index also declined, dropping to 23 from the month-ago's 27. Confidence apparently was dented by muted sales expectations, as the housing market prepares to stand on its own two feet without the support of fiscal stimulus.
Currency, Commodity Markets
Crude oil futures are moving down $0.67 to $76.27 a barrel after rising $1.82 to $76.94 a barrel on Tuesday. Gold futures, which rose $9.90 to $1,234.40 in the previous session, are currently rising $3.40 to $1,237.80 an ounce.
On the currency front, the U.S. dollar is trading at 91.19 yen compared to the 91.4565 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.2273.
Asia
Wall Street's scintillating run in the previous session kept the momentum going in the Asian markets on Wednesday, as they advanced for the fourth straight session. The Japanese market led the gains in the region, although the Chinese and the Hong Kong markets remained closed on account of public holidays.
Japan's Nikkei 225 average opened notably higher and moved sideways for the rest of the session to close up 179.26 points or 1.81% at 10,067, its highest level since May 19th, 2010.
All but sixteen of the 225 index components closed the session higher, with Ebara, Itochu, Japan Steel Work, JFE Holdings, Mitsui & Co., Mitsumi Electric, Nikon, Okuma, Sumitomo Metal Industries and Sumitomo Osaka seeing notable buying interest.
Meanwhile, a report released by Japan's Ministry of Economy, Trade and Industry showed that its tertiary industry activity index rose 2.1% month-over-month following a revised 2.7% decline in the previous month.
Australia's All Ordinaries opened moderately higher and climbed sharply in early trading before consolidating its gain. The index ended up 54.50 points or 1.21% at 4,572. Material and energy stocks showed solid gains, while healthcare stocks came under selling pressure.
Meanwhile, Westpac Bank and Melbourne Institute said that its leading index for Australia rose 7.6% on an annualized basis in April, well above its long term trend of 3%. In March, the annualized rate of growth was at 8.8%, a twelve and a half year high.
Westpac senior economist Matthew Hassan said this was the first slowing in the growth rate of the leading index after ten months of sharp acceleration. He said the slowdown was notable, given it came before the sharp sell-off in global markets amid the European debt crisis.Separately, the Australian Bureau of Statistics said the total number of dwelling units commenced in Australia rose a seasonally adjusted 4.3% in the March quarter compared with the December quarter. This follows a 16.8% surge in the December quarter and trails the 7% increase expected by economists.
Europe
After seeing some strength in Monday's morning session, the major European markets have given back their gains following the release of the U.S. housing starts report. The French CAC 40 Index and the German DAX Index are moving down 0.26% and 0.35%, respectively, while the U.K.'s FTSE 100 Index is declining 0.02%.
In corporate news, U.K. grocery chain J Sainsbury said its first quarter like-for-like sales, excluding fuel, rose 1.1% year-over-year. The sales growth slowed from the 7.8% rate in the year-ago period.
On the economic front, the Nationwide Building Society reported that its consumer confidence index for the U.K. slid to 65 in May from an upwardly revised reading of 75 for April. Economists had expected a more modest drop to 72.
A report released by the U.K. Office for National Statistics showed that the number of jobseeker's allowance in the U.K. fell by 30,900 to 1.48 million in May, marking the first time the claimant count had fallen below the 1.5 million mark since March 2009. In the three months to April, the unemployment rate in the U.K. rose 0.1 points from the previous three-month period to 7.9%. The average total pay including bonuses rose by 4.2% year-over-year in the three months to March.
The final consumer price inflation report released by Eurostat showed that the euro area's inflation rate rose to 1.6% in May from 1.5% in the previous month. The increase came in line with expectations.
Hourly labor costs of the euro area grew a working day adjusted 2.1% year-over-year in the first quarter, faster than the 1.7% growth in the previous quarter, a separate report released by Eurostat showed. Economists had expected an increase of 2.1%. In the same period last year, labor costs had risen 3.1%.
U.S. Economic Reports
A Commerce Department report showed that housing starts fell 10% month-over-month to a seasonally adjusted annual rate of 593,000 in May from the previous month's downwardly revised rate of 659,000. Economists had expected starts to decline to 655,000 from the originally reported rate of 672,000 for April.
Single-family starts fell 17.2% to 565,000, while starts of units in buildings with five units or more were at 112,000. Meanwhile, building permits, an indicator of future housing activity, declined 5.9% to 574,000.
Meanwhile, producer prices fell 0.3% month-over-month in May following a 0.1%drop in the previous month. Economists had expected the headline index to show a steeper 0.5% decline. The core consumer price index rose 0.2% compared to the 0.1% growth expected by economists.
Food prices fell 0.6% compared to the 0.2% drop in the previous month, while energy prices fell 1.5%. Prices of intermediate goods rose 0.4%, while prices of crude goods fell 2.8%.
The industrial production report of the Federal Reserve is due out at 9:15 AM ET. Economists estimate a 0.8% increase in industrial production in May, while capacity utilization is expected to come in at 74.4%.
Industrial production growth continued to outperform, with output rising 0.8% month-over-month in April following an upwardly revised 0.2% increase in March. Machinery output rose 2.6%, helping to offset the 2.2% decline in the production of motor vehicle/parts and a 1.3% decline in utility output. Mining output was up 1.4% and computer/electronics output rose 0.8%. Capacity utilization rose six-tenths of a percentage point to 73.7%, its highest level since November 2008.
The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended June 12th at 10:30 AM ET.
The inventory report for the week ended June 4th showed that crude oil stockpiles fell by 1.8 million barrels to 361.4 million barrels. Despite the drop, inventories were above the upper limit of the average range.
Gasoline stockpiles were unchanged at 219 million barrels, remaining above the upper limit of the average range. Meanwhile, distillate stockpiles rose by 1.8 million barrels and remained above the upper boundary of the average range. Refinery capacity utilization averaged 89.1% over the four weeks ended June 4th compare to 87.5% in the previous week.
Philadelphia Federal Reserve Bank President Charles Plosser is scheduled to take part on a panel discussion at an academic forum on fixing the financial system, in New York at 2:15 PM ET.
Stocks in Focus
FedEx (FDX) is expected to move in reaction to its fourth quarter results, which showed a profit of $1.33 per share compared to a loss of $2.82 per share last year, which included a charge of $3.46 per share. Excluding the charge, the year-ago earnings would have been 64 cents per share. Revenues rose 20% year-over-year to $9.43 billion. The consensus estimates had called for earnings of $1.32 per share on revenues of $9.04 billion. The company guided first quarter earnings to 85 cents to $1.05 per share and 2011 earnings to $4.40-$5 per share. Analysts estimate earnings of $1.04 per share for the first quarter and $5.06 per share for the full year.
Polo Ralph Lauren (RL) could be in focus after it said it has priced its underwritten secondary public offering of 9 million Class A shares at $81 per share. The company clarified that it would not sell any shares in the offering and would not receive any proceeds from the offering. The stock closed Tuesday's session at $82.44.
Transocean (RIG) may see weakness after Fitch downwardly revised its rating outlook on the company to 'Negative' from 'Stable', citing uncertainties surrounding the increasing cost estimates and increased political response associated with the Macondo spill in the Gulf of Mexico region. However, the rating agency reaffirmed its ratings for the company.
Meanwhile, Halliburton (HAL) is likely to see some activity after Fitch reaffirmed its issuer default ratings for Halliburton at 'A-', with rating outlook at 'Stable.' Fitch noted that Halliburton is unlikely to be exposed to the costs associated with the current BP (BP) oil spill.
Ball Corp. (BLL) may react to its announcement that it has agreed to sell its packaging business for about $280 million. Of the consideration, $265 million will be paid in cash at closing and the remaining $15 million in contingent consideration. The company also said its board has authorized the repurchase of up to 12 million shares, with the new plan replacing all its previous authorization.
Coca-Cola Enterprises (CCE) saw modest strength in Tuesday's after hours session after it said it expects full year earnings to grow in a range of 10%-12% in 2010. The company also said currency is expected a negative impact of 10 cents on comparable earnings per share. Analysts currently estimate about 8% earnings per share growth. Additionally, the company said its pending merger with Coca-Cola remains in track.
Progressive Corp. (PGR) may see some activity after it said its net premiums earned rose 5% year-over-year to $1.11 billion. However, net income per share fell to 7 cents per share from 8 cents per share in the year-ago period. The company's combined ratio rose 0.3 percentage points to 95.6%.
CLARCOR (CLC) rallied strongly in Tuesday's after hours session after it said its second quarter net sales rose 12% to $257.9 million and earnings per share climbed to 47 cents per share from 33 cents per share last year. Analysts estimated earnings of 41 cents per share on revenues of $237.59 million. Despite sounding cautious, given the macroeconomic backdrop, the company raised its 2010 earnings per share guidance to $1.70-$1.85 from $1.55-$1.70, while the Street estimates earnings of $1.69 per share.
PDL BioPharma (PDLI) could move in reaction to its announcement that it expects second quarter revenues of $120 million, lower than $125.9 million last year. The company noted that it does not expect to receive royalties for Synagis sales in the second quarter die to the ongoing legal dispute with MedImmune.
TD Ameritrade (AMTD) could also be in focus after it announced that its average clients trades per day rose 18% year-over-year in May and were 13% higher than in April 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.