The major U.S. index futures are pointing to a lower opening on Wednesday. A bleak employment report released earlier in the day and a few insipid earnings reports should stir recession fears and traders who bought into stocks in the last few sessions on factoring in a victory for the Democrats may choose to take profits on their recent gains. Commodity prices have begun to pullback, which could lead to selling in the commodity space. Specifically, oil prices should see some volatility amid the release of the weekly oil inventory report. Traders could also focus on the results of the Institute of Supply's non-manufacturing sector survey.
U.S. stocks advanced solidly on Tuesday ahead of the elections, as traders bid up stocks on hopes of seeing the regular year-end rally. The Dow Industrials jumped 305.45 points or 3.28% to 9,625 and the Nasdaq Composite Index rose 53.79 points or 3.12% to 1,780, while the S&P 500 Index gained 39.45 points or 4.08% to 1,006.
Twenty-nine of the thirty Dow components ended the session higher, with only Hewlett-Packard bucking the downtrend with a 0.96% decline. Caterpillar (CAT) (up 8.31%) was the biggest gainer among the Dow components, while American Express (AXP) (up 5.30%), Chevron (CVX) (up 6.11%), General Electric (GE) (up 7.62%), Home Depot (HD) (up 5.27%), AT&T (T) (up 5.29%), United Technologies (UTX) (up 5.53%) and Verizon (VZ) (up 6.05%) also showed notable advances.
Among the sector indexes, the Amex Securities Broker/Dealer Index climbed 5.75% and the KBW Bank Index rallied 5.18%. The Dow Jones Transportation Average and the Dow Jones Utility Average advanced 3.94% and 2.92%, respectively. Reflecting buoyancy in commodity prices, the Amex Oil Index surged up 6.80% compared to a 10.11% jump by the Philadelphia Oil Service Sector Index. The Amex Gold Bugs Index ended up 14.80% for the session. Retail, housing and technology stocks also showed significant strength. On the other hand, the Amex Airline Index fell 1.36%.
On the economic front, the Commerce Department's factory goods orders report showed a 2.5% decline in September, extending the 4.3% drop witnessed in the previous month. The weakness was due to falling commodity costs. Durable goods orders were up 0.9%, while non-durable goods orders plunged 5.5%. Core capital goods orders, excluding defense aircraft orders, were revised down to show a 1.5% decline.
Markets and an Obama Victory
In his victory speech, the U.S. President elect, Barack Obama promised "a new dawn of American leadership." Can he live up to the promise at a trying time when the economy is in the doldrums? He has a tall order before him. With a change of guard from Republicans to Democrats, one can expect sweeping changes in all areas, including taxes, energy and healthcare. Initially, the markets are likely to react positively on hopes of seeing more concrete measures to tackle the global financial crisis. Since an Obama-victory is already priced in by traders, sometimes the development may not serve as a near-term positive for markets. The rest of the world markets showed a lukewarm response to the election of Obama. The Asian markets ended firmer, while the European markets are showing weakness.
Currency, Commodity Markets
Crude oil futures are currently sliding $1.59 to $68.94 a barrel. On Tuesday, the black gold rose $6.62 to $70.53 a barrel. Tuesday's strength was attributed to the weakness of the dollar and on the news that Saudi Arabia and other OPEC members were implementing the agreed-upon production cuts announced in October.
Meanwhile, gold futures are rising $5.10 to $762.40 an ounce after the commodity rose $32.50 to $759.30 an ounce in the previous session.
On the currency front, the U.S. dollar is trading at 98.87 yen compared to the 99.7095 yen it was worth at the close of New York trading on Tuesday. The dollar is currently valued at $1.2866 versus a euro, stronger than yesterday's $1.2981.
Asia
Stock markets across the Asia-Pacific region closed mostly higher on Wednesday, hitting three-week highs, and the U.S. dollar advanced, recovering from its biggest one-day slide in 13 years on Tuesday after Democrat Barack Obama was elected as the next U.S. president, raising hopes of fresh action to revive the economy. However, India's Sensex, Taiwan's weighted index, and Indonesia's Jakarta composite index pared their early gains and finished in negative terrain.
Japan's Nikkei 225 average opened higher and advanced throughout the session before closing up 406.64 points or 4.46% at 9,521. Banks and trading firms led the gainers.
On the economic front, the Bank of Japan said that the monetary base in Japan was up 1.4% year-over-year in October to 88.98 trillion yen, extending the 0.9% annual gain recorded in September. On a seasonally adjusted basis, the monetary base was up 6.6% year-over-year at 89.87 trillion yen following a 15.8% annual gain in September.
Exporters and commodity-related stocks advanced. Banks rebounded, with Mizuho Financial Group climbing 16.1%, Mitsubishi UFJ Financial Group gaining 11.3%, and Sumitomo Mitsui Financial Group rising 11.9%.
In the tech space, Advantest slipped 0.1%, but Fanuc rose 3.9%, Kyocera gained 2.4% and Fujitsu jumped 14.9%. Fujitsu said Tuesday that it will buy Siemens AG's 50% stake in their joint computer venture for 450 million euros.
Japan Airlines closed unchanged after the Nikkei business daily reported Wednesday that the airline might report a 40% drop in operating profit for the first half. Sanyo Electric surged for a second day on a plan by Panasonic to buy control of the company. Sanyo soared 15.4%, while Panasonic gained 7.6%.
South Korea's Kospi also remained above the unchanged line throughout the day, although it closed off the highs of the session. The index closed up 28.2 points, or 2.4% at 1,182.
In the financial sector, leading brokerage Mirae Asset & Securities soared 6.8% and state-run Industrial Bank of Korea surged up 7.1%. Exporters closed mixed on signs of a slowdown in global demand. Market leader Samsung Electronics edged up 0.2%, but Hyundai Motor lost 0.7%. Builders also finished mixed.
The Chinese stock market closed higher for the first time in four trading sessions, led by financial and construction-related stocks. Reports that the transport ministry was working on a plan to invest 5 trillion yuan over the next three to five years also boosted investor sentiment. The benchmark Shanghai Composite Index climbed 53.91 points or 3.2% to close at 1,761.
Hong Kong's Hang Seng Index gap-opened notably higher and moved sideways for the rest of the session. The index closed up 455.8 points at 14,840. Among market heavyweights, HSBC Holdings rose 2.5% and China Mobile edged up 0.3%. Offshore oil producer CNOOC jumped 5.8%, Sinopec advanced 5.3%, and PetroChina gained 4.3%.
Australia's All Ordinaries opened unchanged, but it rose sharply in early trading before moving sideways for the rest of the session. The index climbed 117.5 points or 2.8% to 4,287.
Miners showed strong gains, while banks closed mixed. Wealth manager AMP lost 1.5% after the company raised A$450 million in new capital following an institutional placement of shares.
CSR advanced 3.2% after the company said that it saw opportunities to restructure its wide-ranging business, but the housing market downturn and general market volatility prevented it from acting in the short term.
Europe
The major European markets are receding, as traders have resorted to profit taking after recent gains. The French CAC 40 Index and the German DAX Index are receding 2.30% and 1.43%, respectively, while the U.K.'s FTSE 100 Index is losing about 1.80%.
In corporate news, French oil giant Total reported that its third quarter profits edged down 2% to 3.05 billion euros due to higher one-off tax and accounting charges. On an adjusted basis, earnings were up 35% to 4.07 billion euros. Meanwhile, French banking giant BNP Paribas said its third quarter profits declined to 901 million euros from 2.03 billion euros last year, as the provision the bank set aside for risk loans increased sharply.
The U.K. Nationwide reported today that U.K. consumer confidence index rose 8% in October to 55 from 51 in September, suggesting that consumer sentiment may have bottomed out. The expectations index climbed 17% to 69 in October, while the present situations index fell by 10% to 35.
Meanwhile, the U.K.'s Office of National Statistics reported that industrial production fell 0.2% in September, with the weakness mainly due to a 0.8% drop in manufacturing output. In September, mining and quarrying output rose by 7%, while energy output declined 1.5%.
A report released by the Eurostat showed that retail sales in the euro area fell by 0.2% month-over-month in September. In August, retail sales rose by 0.3%. Annually, retail sales slid by 1.6%.
U.S. Economic Reports
The ADP National Employment report released today showed that the nation's non-farm private employment declined by 157,000 in October from the previous month. Economists had expected private employment to have declined by 100,000.
The previous month's decline was revised to a decrease of 26,000 from the previously reported decline 8,000. In October, the goods producing sector lost 126,000 jobs, with the manufacturing sector losing 85,000 jobs. Meanwhile, the service providing sector lost jobs for the first time since November of 2002, as it showed a loss of 31,000 jobs.
The ISM is scheduled to release the results of its non-manufacturing survey at 10 AM ET on Wednesday. The non-manufacturing index is likely to show a reading of 47 for October.
Meanwhile, in September, economic activity in the non-manufacturing sector grew, albeit at a slower pace. The purchasing managers' index edged down 0.4 points to 50.2 in September. However, the business activity and the news orders indexes rose 0.5 points and 1.1 points, respectively to 52.1 and 50.8. Inventories and employment showed weakness, with the respective indexes falling by 8 points and 2 points, respectively to 45.5 and 44.2. While the prices paid index eased 2.9 points to 70, the backlog of orders index fell 2.5 points to 46.5.
The Energy Information Administration is due to release its weekly oil inventory report at 10:30 AM ET on Wednesday.
The weekly oil inventory report for the week ended October 24th showed that crude oil stockpiles rose by 0.5 million barrels to 311.9 million barrels. Crude oil inventories are now in the upper half of the average range for this time of the year.
Gasoline stockpiles fell by 1.5 million barrels, while distillate inventories rose by 2.3 million barrels, but they are still in the lower half of the average range for this time of the year. Refinery capacity utilization averaged 83.3% over the four-weeks ended October 24th compared to 80% in the previous week.
Earnings
Medco Health (MHS) reported that its third quarter earnings rose to 58 cents per share from 39 cents per share in the year-ago period. Revenues rose 15% to $12.56 billion. The consensus estimates had called for earnings of 62 cents per share on revenues of $12.53 billion. The company reaffirmed its full year earnings guidance of $2.30-$2.33 per share.
Time Warner (TWX) said its third quarter earnings rose to 30 cents per share from 29 cents per share in the year-ago period. On an adjusted basis, the company reported income from continuing operations of 31 cents per share, exceeding the 27 cents per share consensus estimate. Revenues were flat at $11.71 billion, slightly shy of the mean analysts' estimate of $11.9 billion.
Devon Energy's (DVN) third quarter net earnings climbed to $5.92 per share, higher than $1.65 per share last year. The company's adjusted earnings were $3.09 per share. Total revenues climbed to $5.98 billion from $2.76 billion in the year-ago period. Analysts, on average, estimated earnings of $3.06 per share on revenues of $4.02 billion.
Stocks in Focus
Dell (DELL) is likely to be in focus after it unveiled a series of measures to trim spending. The company is reportedly considering measures such as freezing hiring, offering 1 to 5 days off without pay and offering voluntary buyouts for employees. Additionally, the company is seeking to reduce its contract employee, reduce travel expenses and capital spending. The company also filed with the SEC to sell an undetermined about of debt securities from time to time.
Equity One (EQY) may be in focus after it said its third quarter funds from operations was a negative 13 cents per share. On an adjusted basis, the company reported funds from operations of 31 cents per share compared to 30 cents per share last year. Revenues fell to $56.72 million from $61.64 million in the year-ago period. Analysts, on average, estimated earnings of 30 cents per share on revenues of $59.58 million. The company lowered its adjusted FFO guidance for 2008 to $1.34-$1.37 per share from $1.36-$1.40 per share.
Pioneer (PXD) could come under selling pressure after it reported third quarter adjusted earnings of 91 cents per share on revenues of $615.78 million, higher than $490.12 million last year. The consensus estimates had called for earnings of $1.21 per share on revenues of $664.23 million. The company said it expects to reduce its capital budget for 2009 by 30%-60% from 2008.
Weight Watchers (WTW) is expected to see some strength after it said its third quarter net revenues rose to $352.6 million from $337.5 million. On an adjusted basis, the company reported earnings of 70 cents per share, up 13% from the year-ago period. Analysts, on average, estimated earnings of 67 cents per share on revenues of $356.26 million. The company also narrowed its 2008 earnings guidance for 2008 to $2.75-$2.78 per share compared to the consensus estimate of $2.78 per share.
D.R. Horton (DHI) move to the upside in Tuesday's after-hours session after it released preliminary fourth quarter results, expecting home sales revenues of $1.5 billion compared to $3 billion last year. The company expects a loss of $800-$900 million for the year.
Blue Nile (NILE) could come under pressure after it reported that its third quarter net sales declined to $65.4 million from $67.4 million last year. The company's earnings fell to 15 cents per share from 18 cents per share last year. Analysts expected earnings of 16 cents per share on revenues of $68.77 million. Citing a lack of visibility amid uncertain economic conditions, the company said it is not providing guidance for the fourth quarter and the full year.
Columbia Sportswear (COLM) is likely to see some weakness after it announced a reduction in its workforce that is expected to hurt about 75 or 4% of its 1,800 U.S. employees. The decision was prompted by the 11% order decline the company reported for September 2009 and its expectations that market conditions will remain challenging through 2009.
Greatbatch (GB) is expected to react to its third quarter adjusted earnings that came in at 44 cents per share on 72% revenue growth to $136.2 million. The Street had estimated earnings of 32 cents per share on revenues of $128.4 million. The company affirmed its full year guidance of $1.20-$1.50 per share in earnings and $490-$530 million in revenues.
Invitrogen (IVGN) could be in focus after it provided an update on its pending merger with Applied Biosystems (ABI). Once the deal is completed, the combined company is to be called Life Technologies and its shares will trade under the ticker symbol LIFE. Instruments and systems solutions will be sold under the Applied Biosystems brand name, while reagents will be sold under the Invitrogen brand name. Three members of the Applied Biosystems are being named to the new company's board.
Jack Henry & Associates (JKHY) is likely to move in reaction to its first quarter revenues that rose 5% from the year-ago period to $183.1 million. The company's net income declined to $22.5 million from last year's $23.5 million, although net income per share remained flat at 26 cents per share. The consensus estimates had called for earnings of 27 cents per share on revenues of $187.42 million.
HealthSouth (HLS) may trade higher after it raised its 2008 adjusted earnings estimate to 58-60 cents per share from its earlier estimate of 50-55 cents per share. The company maintained its net operating revenues guidance at $1.83-$1.88 billion. The company reported third quarter adjusted income from continuing operations of 15 cents per share compared to a loss of 7 cents per share last year, as net operating revenues rose 6.5% to $456.2 million. Analysts, on average, estimated earnings of 7 cents per share on revenues of $450.7 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.