Stocks May Consolidate Ahead Of Friday's GDP Data - RTTNews Daily Market Analysis

(RTTNews) - The major U.S. index futures are pointing to a higher opening on Thursday, with sentiment being supported by positive earnings and economic data released from across the globe. An economic report released earlier in the day showed that first time claims for unemployment benefits fell in the recent reporting week, and the data should offer some comfort. That said, some apprehension may be expressed by traders ahead of tomorrow's advance second quarter GDP estimate.

U.S. stocks declined on Wednesday, as an unexpected drop in durable goods orders gave traders a reason for profit taking after the markets held up fairly well in the previous five sessions. The major averages opened lower and saw some volatility in early trading.

Thereafter, they dipped below the unchanged line, with the Dow Industrials and the S&P 500 Index moving sideways with a modest loss until late trading, while the Nasdaq Composite moved steadily lower. The release of the Beige Book did not help much, as negative commentary on growth revealed in the report intensified the selling pressure and the major averages legged down further to close weaker.

The Dow Industrials ended down 39.81 points or 0.38% at 10,498 and the S&P 500 Index closed down 7.71 points or 0.69% at 2,265, while the Nasdaq Composite Index receded 23.69 points or 1.04% to close at 2,265.

Twenty-one of the thirty Dow components closed lower, with Alcoa (AA), Boeing (BA) Bank of America (BAC), Home Depot (HD), Intel (INTC) and Merck (MRK) declining sharply. However, Verizon (VZ) and Caterpillar (CAT) saw some degree of strength.

Among the sector indexes, the S&P Retail Index slid 1%, the Philadelphia Housing Sector Index receded 3.03%, the NYSE Arca Biotechnology Index declined 1.66%, the KBW Bank Index fell 1.32% and the Philadelphia Semiconductor Index ended down 1.81%. Among other technology indexes, the NYSE Arca Disk Drive Index fell 2.95%, the NYSE Arca Computer Hardware Index moved down 1.46%, the NYSE Arca Software Index lost 1.08% and the NYSE Arca Networking Index slipped 1.47%.

On the economic front, the Commerce Department reported that durable goods orders fell 1% month-over-month in June, belying expectations for a 1% increase. Excluding transportation orders, orders were down a more modest 0.6%, with softness in primary metal, computer/electronics and machinery orders responsible for the weakness.

However, non-defense capital goods orders, excluding aircraft, rose 0.6% and are on an uptrend. Going by the strength in this core category, Commerzbank believes that the medium term outlook for the economy is slightly encouraging. The loss of momentum in the core category may have been due to the fading boost from the inventory cycle as most restocking seems to be through.

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