The major U.S. index futures are pointing to a lower opening on Friday, with the weakness intensifying after the release of the advance second quarter GDP estimate, which showed a slower than expected 2.4% increase. However, the negativity is neutralized to some extent by the sharp upward revision to the previous quarter's growth. Traders now look ahead to a private manufacturing survey and a consumer sentiment survey to be released shortly after the markets open.
The month's strong performance increases the risk of a pullback, provided these reports disappoint to the downside. Earnings have largely been encouraging and therefore the focus shifts to Main Street, as traders seek clarity on the recovery's progress.
U.S. stocks experienced weakness in Thursday's session despite the continued trickling in of positive earnings. Recent gains may have made traders wary ahead of the GDP report. The major averages began the session higher and after a short uptick in early trading, they began moving southwards and dipped into negative territory by early afternoon trading.
Selling continued till mid-afternoon trading, dragging the indexes to their intra-day lows. Thereafter, the major averages snapped back some of their losses before closing moderately weak.
The Dow Industrials fell 30.72 points or 0.29% to end at 10,467 and the S&P 500 Index closed 4.60 points or 0.42% lower at 1,102, while the Nasdaq Composite ended down 12.87 points or 0.57% at 2,252.
Nineteen of the thirty Dow components closed lower, with Procter & Gamble (PG), Kraft Foods (KFT), Intel (INTC), Hewlett-Packard (HPQ) and Disney (DIS) seeing steep losses.
Among the sector indexes, the Dow Jones Utility Average fell 1.47%, the NYSE Arca Internet Index slipped 3.01% and the Philadelphia Semiconductor Index receded 1.93%, while the NYSE Arca Disk Drive Index, the NYSE Arca Computer Hardware Index and the NYSE Arca Software Index all ended down over 1%. However, the Philadelphia Oil Service Index rose 1.40% and the NYSE Arca Securities Broker/Dealer Index gained 1.49%.
Currency, Commodity Markets
Crude oil futures are moving down $0.54 to $77.82 a barrel after rising $1.37 to $78.36 a barrel on Thursday. Gold futures, which rose $8.80 to $1,171.20 an ounce in the previous session, are currently advancing $4.0 to $1,175.40 an ounce.
Among currencies, the U.S. dollar is trading at 86.115 yen compared to the 86.786 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3050 compared to yesterday's $1.3079.
Asia
The major Asian markets fell across the board on Friday, as some disappointing economic data and apprehension about the advance second quarter U.S. GDP data generated selling pressure. The New Zealand market bucked the downtrend with a slight advance.
Japan's Nikkei 225 average opened lower and declined steadily until late afternoon trading before paring back some of its losses. The index closed down 158.72 points or 1.64% at 9,537, declining for the second straight session.
Disappointing jobs data weighed on stocks on a day when the selling was broad based. Ebara, Mitsubishi Estate, Mizuho Securities, Nippon Express, Sanyo Electric, Taiyo Yuden and Yamato Holdings were among the worst decliners. On the other hand, the market witnessed some stock specific buying. Panasonic extended its gains following its stellar results, while Sony ended up 3.60%, also in reaction to its results.
Japanese automaker Honda reported a profit of 272.49 billion yen for its fiscal first quarter compared to 7.56 billion yen in the year-ago quarter, as revenues rose to 2.36 trillion yen from 2 trillion yen last year. The company raised its full year profit forecast to 455 billion yen from its earlier forecast of 340 billion yen, while it expects sales growth of 6.1%.
In economic news, Japan's Ministry of Health Labor and Welfare reported that Japan's unemployment rate rose 0.1 percentage points to 5.3% in June, marking the fourth straight month of increase. A separate report released by the Ministry of Economy, Trade and Industry showed a 1.5% month-over-month decline in industrial output in June. However, the ministry expects the contraction to slow to 0.2% in July followed by a solid 2% rebound in August.
Meanwhile, Japanese household spending rose 0.5% year-over-year and climbed 2.9% month-over-month, according to a report released by the Ministry of Internal Affairs and Communication. In a separate report, the ministry said core consumer prices fell 1% annually in June, declining for the sixteenth straight month. Despite the deflationary reading, the fact that the rate of decline has been easing for the past two months is comforting. Economists had expected a 1.1% drop.
Australia's All Ordinaries opened lower and declined steeply in early trading before moving sideways. The index closed down 28.80 points or 0.63% at 4,507. A majority of sectors, barring utility stocks, declined, with energy and material stocks among the worst decliners.In corporate news, Australian conglomerate Macquarie Group said earnings at its core divisions would decline year-over-year in fiscal year 2011 unless market conditions improve. The stock slid 3.1%.
Meanwhile, South Korean chip giant Samsung Electronics reported 83% profit growth for its first quarter on buoyant sales of memory chips. However, the company expressed doubts about the sustainability of current profit growth.
Europe
The major European markets are retreating for the third straight session on Friday, as mixed earnings and caution has led to calculated moves in the markets. The French CAC 40 Index is currently down 1.25% compared to a 0.58% drop by the German DAX Index and a 0.61% decline by the FTSE 100 Index.
Telecommunication equipment maker Alcatel-Lucent (ALU) reported a loss of 184 million euros for its second quarter compared to a profit of 14 million euros in the year-ago quarter, as revenues declined 2.4% year-over-year. However, the company reiterated its forecast for flat to 5% growth in the telecom equipment and related services market.
EADS reported a net profit of 185 million euros for the first half of the year compared to 378 million euros last year, as revenues rose 1% year-over-year to 20.31 billion euros. However, the adjusted EBIT for the first half fell 54% to 406 million euros, while it declined 51% for the second quarter to 323 million euros. The company reaffirmed its full year EBIT guidance of 1 billion euros.
British Airways reported a net loss of 122 million pounds for its fiscal first quarter compared to a loss of 106 billion pounds a year-ago, hurt by a cabin crew strike and losses related to flight disruptions due to volcanic ash.
In economic news, market research firm GfK NOP said its consumer confidence index for the U.K. slid to -22 in July from -19 in the previous month, marking the fifth straight month of declines. Analysts had expected the sentiment indicator to fall to -20. The annual moving average of the consumer sentiment index remained unchanged at -18.
A report released by the German Federal Statistical Office showed that Germany's retail sales fell by a calendar and seasonally adjusted 0.9% month-over-month in June. This follows 3% growth in May. Economists had expected a more modest decline of 0.2%. However, year-over-year, retail sales rose 3.1% in June, faster than the 1% increase expected by economists and the 0.7% pace in May.
Eurostat reported that the euro area's inflation rose to 1.7% year-over-year in July, with the increase coming in line with expectations. A separate report released by the agency showed that the euro area's unemployment rate held steady at 10% in June.
Economic News
U.S. economic activity increased at a slightly slower than expected pace in the second quarter, according to a report released by the Commerce Department, with the report also showing a notable upward revision to the pace of growth in the first quarter.
The report showed that gross domestic product increased at an annual rate of 2.4 percent in the second quarter compared to the revised 3.7 percent jump seen in the first quarter. Economists had expected GDP to increase by 2.5 percent compared to the 2.7 percent growth that had been reported for the first quarter. A separate report released by the Labor Department showed that the employment cost index rose 0.5% quarter-over-quarter in the second quarter. The increase came in line with expectations. Wages and salaries, making up about 70% of compensation costs, rose 0.4%, while benefits increased 0.6%.
The results of the Institute for Supply Management-Chicago's business survey for July are scheduled to be released at 9:45 AM ET. Economists expect the business barometer index based on the survey to come in at 56.3.
In June, the business barometer index came in at 59.1, in line with expectations. However, the new orders index fell by 3.6 points and the order backlogs index slipped by 2 points. Meanwhile, the inventories index slipped 10 points to 46.5, its lowest level since February, suggesting that the inventory cycle may be running its course. On a positive note, the employment index rose 5 points to 54.2.
The Reuters/University of Michigan's final report on the consumer sentiment index for July is scheduled to be released at 9:55 AM ET. The consumer sentiment index is expected to be revised up by a point to 67.5.
Stocks in Focus
DTE Energy (DTE) reported second quarter earnings of 51 cents per share, flat with last year, while operating earnings declined 17 cents to 39 cents per share. Operating revenues rose to $1.79 billion, up 6.2%. Analysts estimated earnings of 60 cents per share on revenues of $1.74 billion. The company also announced a 3 cents per share-increase in its quarterly dividend to 56 cents per share. The company reiterated its operating earnings guidance of $3.45-$3.80 per share for the full year, while analysts estimate earnings of $3.60 per share.
Eastman Chemical (EMN) reported second quarter adjusted earnings of $2.05 per share, higher than 86 cents per share last year. Sales revenues rose about 38% to $1.72 billion. The consensus estimates had called for earnings of $1.65 per share on revenues of $1.63 billion. The company expects third quarter earnings of $1.65-$1.75 per share and full year earnings of $6.20-$6.40 per share. Meanwhile, analysts estimate third quarter earnings of $1.34 per share and full year earnings of $5.43 per share.
KLA-Tencor (KLAC) reported fourth quarter non-GAAP earnings of 70 cents per share compared to a loss of 9 cents per share last year. Revenues nearly doubled to $559.42 million. Analysts estimated a profit of 60 cents per share on revenues of $558.15 million.
Amgen (AMGN) reported its second quarter adjusted earnings per share of $1.38 per share, up 7% year-over-year, while revenues rose 2% to $3.80 billion. The Street estimated earnings of $1.30 per share on revenues of $3.74 billion. The company said its adjusted earnings per share guidance remains unchanged at towards the low end of the range of $5.05-$5.25 per share, while analysts estimate earnings of $5.12 per share.
Genworth Financial (GNW) reported second quarter net income of 8 cents per share and net operating income of 24 cents per share, trailing the consensus estimate of 28 cents per share.
Fortune Brands (FO) said its second quarter sales rose 9% to $1.90 billion. The company's earnings climbed to $1.48 per share from 66 cents per share last year. Analysts, on average, estimated earnings of 76 cents per share on revenues of $1.80 billion. For the full year, the company expects adjusted earnings in the range of $2.60-$2.90 per share, up from its earlier guidance of $2.50-$2.80 per share, while analysts estimate earnings of $2.84 per share.
Coventry Health Care (CVH) reported that its second quarter adjusted earnings were $1.01 per share and its operating revenues were $2.9 billion. Analysts estimated earnings of 52 cents per share on revenues of $2.84 billion. The company raised its adjusted earnings per share guidance for 2010 to $2.55-$2.70, while it expects revenues of $11.25 billion to $11.50 billion. The Street estimates earnings of $2.45 per share on revenues of $11.37 billion.
Other Corporate News
Disney (DIS) could be in focus after it confirmed that it has agreed to sell Miramax Films to Filmyard Holdings for over $660 million. The deal is expected to close between September 10 and the end of the calendar year.
Steven Madden (SHOO) is expected to see some strength after Standard & Poor's announced that the company would replace inVentiv Health (VTIV) in the S&P SmallCap 600 Index
Honeywell (HON) may also see some activity after the company said its "Total InteGrated Engine Revitalization" program with the U.S. Army has been extended through Option Year 5, with a not-to-exceed value of $190 million.
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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.