The major U.S. index futures are pointing to a higher opening on Wednesday, with sentiment reflecting the buoyancy in the rest of the global markets, which rallied sharply on bargain hunting triggered by some upbeat data. Risky bets like commodities are advancing, reflecting the increase in the risk appetite of traders. That said, concerns still persist, with some domestic economic reports pointing to aggravation of the soft patch.
A private sector employment report released earlier in the day showed that the sector lost jobs unexpectedly- definite cause of concern, especially when jobless claims remain at elevated levels. Traders may look ahead to the results of the manufacturing survey to be released shortly after the markets open
After spending the better part of Tuesday's session above the unchanged line, the major averages closed mixed. Stocks began the day amid anxiety about the data due on the day. However, with the consumer confidence reading allaying some fears about the economic slowdown, the major averages moved above the unchanged line in early trading. Thereafter, the Dow Industrials and the S&P 500 Index remained above the unchanged, although they went about a consolidation move, before retreating in late trading following the release of the FOMC minutes.
The Dow Industrials and the S&P 500 Index recovered in the final few minutes of trading to close modestly higher, while the Nasdaq Composite Index, which showed a lack of direction and moved back and forth in a range for most of the session, ended lower. The Dow Industrials added 4.99 points or 0.05% to close at 10,015 and the S&P 500 Index edged up 0.41 points to close at 1,049, while the Nasdaq Composite ended down 5.94 points or 0.28% at 2,114.
Seventeen of the thirty Dow components closed higher, with AT&T (T), Merck (MRK), JP Morgan (JPM), DuPont (DD), Caterpillar (CAT) and Bank of America (BAC) advancing over 1% each. On the other hand, Boeing (BA) slid 1.56%, Cisco Systems (CSCO) lost 1.65%, Intel (INTC) fell 1.64% and 3M Co. (MMM) receded 1.38%.
Among the sector indexes, the NYSE Arca Airline Index gained 1.56%, the KBW Bank Index rose 1.09% and the NYSE Arca Gold Bugs Index added 1.15%, while the Philadelphia Oil Service Index declined 1.40%, the NYSE Arca Disk Drive Index slipped 2.84% and the Philadelphia Semiconductor Index receded 1.94%.
On the economic front, the S&P/Case-Shiller house price index rose 1.3% month-over-month in June, marking the third straight month of growth. On a year-over-year basis, house prices climbed 4.2%. Economists expect a drop off in the rate of growth going forward, primarily due to the waning impact of homebuyers tax credit.
The Conference Board's consumer confidence reading came as a relief to the markets, as the consumer confidence index rose 2.5 points in August to 53.5, marking the first increase since May. The present situations index fell 1.5 points to 24.9, but the expectations index rose about 5 points to 72.5.
The FOMC minutes released in the afternoon on Tuesday showed that the central bank's decision to reinvest principal payments on mortgage backed securities and agency was due to mitigate pre-payment risk rather than to provide additional stimulus. The Fed also lowered its forecast for GDP growth for the second half of 2010, while increasing its headline and core inflation forecast to reflect higher commodity prices and the depreciation of the dollar. That said, the Fed expects a modest strengthening of economic activity in 2011.
Currency, Commodity Markets
Crude oil futures are rising $0.50 to $72.42 a barrel after declining $2.78 to $71.92 a barrel in Tuesday's session. Gold futures are currently trading up $4.80 at $1,255.10 an ounce. In the previous session, the precious metal gained $11.10 to $1,250.60.
On the currency front, the U.S. dollar is trading at 83.835 yen compared to the 84.1955 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.2822 compared to yesterday's $1.268.
Asia
The major Asian markets closed Wednesday's session higher, with most markets rebounding on bargain hunting amid a rebound in commodity prices. Some positive economic reports released from the region also eased recent concerns. The Australian market led from the front, with the Indonesian, India, New Zealand and South Korean markets also posting strong advances.
A private survey showed that manufacturing activity in China expanded in August. Markit Economics said the HSBC manufacturing purchasing managers' index was at a seasonally adjusted 51.9, up from 49.4 in July.
Chinese manufacturing output rose in August, albeit only slightly, ending a two-month period of contraction. This was mainly due to an increase in the inflow of new orders, which rose for the first time in three months.
Japan's Nikkei 225 average saw some apprehension in early trading before advancing thereafter in the morning session. In the afternoon, the index consolidated its gains, closing up 102.96 points or 1.17% at 8,927. Most stocks, barring auto, pharma and some financial stocks, gained ground in the session.
Australia's All Ordinaries opened higher and advanced steadily throughout the session to close up 88 points or 1.98% at 4,527, its best closing level since August 10th, 2010. The market witnessed broad based buying interest, with energy and material stocks showing strong advances.
On an encouraging note, the Australian Bureau of Statistics reported that Australia's GDP for the June quarter rose 1.2%. Economists had expected a more modest 0.9% increase. Consumer spending rose 1.6%, contributing 0.9 percent points to growth.
Honk Kong's Hang Seng Index held above the unchanged line for much of the session before closing up 87.34 points or 0.43% at 20,624. Most stocks, with the exception of some property and resource stocks advanced.
Europe
The major European averages are rising sharply on Wednesday, with the French CAC 40 Index and the German DAX Index rising 1.88% and 0.97%, respectively, while the U.K.'s FTSE 100 Index is gaining 1.28%.
Emphasizing the slackness in consumer spending, the German Federal Statistical Office reported that German retail sales fell a seasonally adjusted 0.3% month-over-month in July in real terms. However, on a year-over-year basis, retail sales were up 0.8%.
U.S. Economic Reports
Individual automakers are scheduled to release their monthly U.S. sales results for August. The data will reveal the unit sales of domestically produced cars and light duty trucks, including sports utility vehicles and mini-vans, during the month.
In a report likely to add to recent concerns about the outlook for the labor market, payroll processor Automatic Data Processing said that employment unexpectedly showed a modest decrease in the month of August.
The report showed that private sector employment fell by 10,000 jobs in August following a downwardly revised increase of 37,000 jobs in July. Economists had expected employment to increase by 13,000 jobs compared to the addition of 42,000 jobs originally reported for the previous month.
The results of the manufacturing survey of the Institute for Supply Management, which are based on data compiled from purchasing and supply executives nationwide, are due out at 10 AM ET. Economists expect the index to show a reading of 52.9 for August.
The manufacturing index based on the national survey declined 0.7 points to 55.5 in July, while economists had expected a steeper 1.7-point decline. The new orders index fell by 5 points to 53.5 and the order backlog index slipped 2.5 points. However, on an encouraging note, the employment index rose a point to 58.6. That said, the fact that only 10 of the 18 industries surveyed reported growth is worrisome.
The Commerce Department's construction spending report to be released at 10 AM ET is expected to show a 0.7% decline in spending for July.
Construction spending rose 0.1% month-over-month in June. However, taking some sheen off the growth, May's reading was downwardly revised to show a 1% decline compared to the 0.2% drop estimated initially. The strength reflected a 1.5% jump in public construction spending, which benefited from government stimulus support. However, private construction spending edged down 0.6%.
The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended August 27th at 10:30 AM ET.
Crude oil stockpiles rose by 4.1 million barrels to 358.3 million barrels in the week ended August 20th. Inventories remained above the upper limit of the average range.
Gasoline inventories climbed by 2.3 million barrels, remaining above the upper limit of the average range. Distillate stockpiles also increased, rising by 1.8 million barrels and remaining above the upper boundary of the average range. Refinery capacity utilization averaged 87.7% over the four weeks ended August 20th compared to 90% in the previous week.
Dallas Federal Reserve Bank President Richard Fisher is due to speak about the U.S. economy before the Greater Houston Partnership at 12:30 PM ET.
Stocks in Focus
Procter & Gamble (PG) may be in focus after it announced a voluntary recall of a small number of bags of cat food from a specific lot of one of its dry cat food products due to potential salmonella exposure.
Dollar Thrifty (DTG) is expected to react to its announcement that it has upwardly revised its adjusted EBITDA guidance for 2010 by $40 million to $240 million to $260 million. The company attributed the optimism to solid operating performance in July and August and its revised outlook for fleet costs for the balance of 2010. However, the company said it maintains its previously announced revenue guidance.
Burger King Holdings (BKC) is also likely to be in focus after a Wall Street Journal report said the company is in talks with private equity players to take it private.
ABM industries (ABM) could be in focus after it reported that its third quarter adjusted earnings from continuing operations rose to 42 cents per share from 36 cents per share last year. However, revenues edged down 0.2% to $869 million. Analysts estimated earnings of 41 cents per share on revenues of $889.17 million.
Dun & Bradstreet (DNB) could react to its announcement that it has acquired privately held Dun & Bradstreet Australia Holdings, a member of the D&B Worlwide Network, for $205 million in cash. The company expects the deal to add $15 million to $20 million in revenues to the company but reduce earnings by 4-5 cents per share due to acquisition related charges. The company also said it remains comfortable with its current guidance range.
PerkinElmer (PKI) is also expected to be in focus after it said it has agreed to sell its illumination and detection solutions business to private equity firm Veritas Capital Fund III L.P. for $500 million in cash. The company also updated its guidance to give effect to the transaction and now expects third quarter non-GAAP earnings per share from continuing operations in the range of 27-29 cents.
Heinz (HNZ) is likely to be react to its announcement that its first quarter income from continuing operations rose to 75 cents per share from 68 cents per share last year, as sales rose to $2.48 billion from the year-ago's $2.44 billion. Analysts estimated earnings of 73 cents per share on revenues of $2.53 billion. The company reaffirmed its 2011 guidance, which calls for sales growth of 3%-4% and earnings per share growth of 7%-10%.
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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.