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Beyond the Numbers

Futures Pointing To Another Mixed Performance On Wall Street
6/23/2017 8:41 AM

The major U.S. index futures are pointing to a mixed open on Friday, with stocks poised to move in opposite directions once again after closing mixed for two consecutive sessions. Lingering uncertainty about the near-term outlook for the markets may keep some traders on the sidelines going into the first weekend of the summer.

Stocks saw modest strength for much of the trading session on Thursday but gave back ground going into the close. The major averages pulled back near the unchanged line, with the Dow and the S&P 500 dipping into negative territory.

The major averages finished the day mixed for the second consecutive session. While the Nasdaq inched up 2.73 points or less than a tenth of a percent to 6,236.69, the Dow slipped 12.74 points or 0.1 percent to 21,397.29 and the S&P 500 edged down 1.11 points or 0.1 percent to 2,434.50.

Earlier in the day, stocks benefited from a positive reaction to the release of the details of the Senate Republican plan to repeal and replace Obamacare.

Healthcare stocks showed a strong move to the upside following the release of the draft of the bill but gave back ground along with the broader markets late in the session.

The pullback may partly have reflected uncertainty about the future of the bill after four Republican Senators said they cannot support the plan in its current form.

Senate Majority Leader Mitch McConnell, R-Ken., has little margin for error with the bill, as he can only afford to lose the support of two Republicans and still pass the legislation.

On the U.S. economic front, the Labor Department released a report before the start of trading showing a modest uptick in first-time claims for unemployment benefits in the week ended June 17th.

The report said initial jobless claims inched up to 241,000, an increase of 3,000 from the previous week's revised level of 238,000. Economists had expected jobless claims to edge up to 240,000.

A separate report from the Conference Board showed that its index of leading economic indicators rose in line with economist estimates in the month of May.

The Conference Board said its leading economic index climbed by 0.3 percent in May after rising by a downwardly revised 0.2 percent in April.

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Gold stocks held on to strong gains, however, with the NYSE Arca Gold Bugs Index climbing by 1.8 percent. The index continued to rebound after ending Tuesday's trading at its lowest closing level in over a month. The strength among gold stocks came amid an increase by the price of the precious metal.

Significant strength also remained visible among pharmaceutical stocks, as reflected by the 1.7 percent gain posted by the NYSE Arca Pharmaceutical Index. With the upward move, the index reached its best closing level in ten months.

Within the pharmaceutical sector, Novartis (NVS) posted a standout gain after trial results revealed its Canakinumab reduces the risk of major adverse cardiovascular events in patients with a prior heart attack.

Steel, biotechnology, and software stocks also saw some strength on the day, while banking and tobacco stocks moved to the downside.

Commodity, Currency Markets

Crude oil futures are inching up $0.10 to $42.84 a barrel after rising $0.21 to $42.74 a barrel on Thursday. Meanwhile, after climbing $3.60 to $1,249.40 an ounce in the previous session, gold futures are jumping $9 to $1,258.40 an ounce.

On the currency front, the U.S. dollar is trading at 111.22 yen compared to the 111.33 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1177 compared to yesterday’s $1.1152.

Asia

Asian stocks turned in another mixed performance on Friday as the dollar remained bolstered against the yen and crude oil prices climbed off ten-month lows.

Chinese shares recovered from early losses to close higher as tight liquidity conditions eased and investors shrugged off news that the country's banking regulator has ordered lenders to check exposure to rapidly growing firms.

China's Shanghai Composite Index rose 9.98 points or 0.3 percent to 3,157.43, although Hong Kong's Hang Seng Index edged down 4.48 points or less than a tenth of a percent to 25,670.05.

Japanese shares closed a tad higher as a recovery in oil prices helped offset a firmer yen. The Nikkei 225 Index inched up 22.16 points or 0.1 percent to 20,132.67, gaining around 1 percent for the week. The broader Topix Index closed 0.1 percent higher at 1,611.34.

Activity in Japan's manufacturing sector continued to expand in May, albeit at a slower pace, the latest survey from Nikkei showed today with a seven-month low manufacturing PMI score of 52.0.

Australian shares rose modestly, led by gains by materials and healthcare stocks. The benchmark S&P/ASX 200 Index gained 9.90 points or 0.2 percent to finish at 5,715.90, while the broader All Ordinaries Index rose 12.30 points or 0.2 percent to 5,754.60.

Increases in commodity prices helped lift miners, with BHP Billiton rising 1.2 percent and Rio Tinto adding 0.8 percent. Mineral sands explorer Iluka Resources rallied 4.7 percent after it decided to restart the Jacinth-Ambrosia mine.

CSL advanced 1.7 percent after the U.S. FDA approved its drug for hereditary angioedema. Bega Cheese entered a trading halt after announcing a capital raising.

Meanwhile, Singapore's Straits Times Index moved modestly lower after separate reports showed the country's industrial output growth unexpectedly eased in May and consumer price inflation spiked in the month, mainly due to a change in the timing of the disbursement of a Service & Conservancy Charges rebate.

The Taiwan Weighted Index eased 0.2 percent after the country's central bank left its key interest rate unchanged for the fourth consecutive quarterly meeting as widely expected.

Europe

European stocks have fallen on Friday as investors digest disappointing private sector growth data and keep a close eye on developments at the EU Summit in Brussels. Oil prices edged up in European trading but remained on course for a fifth weekly loss.

While the U.K.’s FTSE 100 Index has dipped by 0.2 percent, the French CAC 40 Index is down by 0.5 percent and the German DAX Index is down by 0.7 percent.

The euro area private sector grew at the slowest pace in five months in June, flash survey data from IHS Markit showed today. The composite output index fell to 55.7 in June from a joint six-year high of 56.8 in May.

Slower growth was recorded in both France and Germany, down to five and four-month lows respectively, largely reflecting weaker rates of service sector expansion.

Meanwhile, the French economy expanded more than previously estimated in the first quarter, a separate report from statistical office Insee showed.

The pound has strengthened as British Prime Minister Theresa May laid out what she called a "fair deal" for EU citizens living in the U.K. and Kristin Forbes, a member of the Bank's Monetary Policy Committee, said the U.K.'s "overstimulated" economy is "behind the curve" on rate hikes.

Given that U.K. inflation is now likely to reach 3 percent and is forecast to remain above 2 percent for at least three years, this suggests "some urgency" to hike rates, Forbes said at the London Business School.

Pizza delivery business Domino's has slumped in London after Berenberg Bank lowered its price target on the stock.

On the other hand, ITV has jumped as Liberum Capital reiterated its buy rating on the stock. Centrica is also moving higher after JP Morgan upgraded its rating on the stock.

U.S. Economic Reports

The Commerce Department is scheduled to release its report on new home sales in the month of May at 10 am ET. New home sales are expected to jump to an annual rate of 600,000 in May after tumbling to a rate of 569,000 in April.

At 11:15 am ET, St. Louis Federal Reserve President James Bullard is due to discuss the U.S. economy and monetary policy at the Illinois Bankers Association Annual Conference in Nashville, Tennessee.

Cleveland Fed President Loretta Mester is scheduled to deliver the keynote address at a Policy Summit on Housing, Human Capital and Inequality in Cleveland, Ohio at 12:40 pm ET.

At 2:15 pm ET, Fed Governor Jerome Powell is due to speak at the Federal Reserve Bank of Chicago Symposium on Central Clearing with audience Q&A.

Stocks In Focus

Shares of Bed Bath & Beyond (BBBY) are moving sharply lower in pre-market trading after the home goods retailer reported fiscal first quarter results that came in below analyst estimates.

Athletic apparel and footwear retailer Finish Line (FINL) may also see early weakness after reporting fiscal first quarter earnings that matched estimates but on weaker than expected sales.

Shares of BlackBerry (BBRY) could move to the downside after the communication software and services company reported better than expected fiscal first quarter earnings but revenues missed forecasts.

Restaurant chain Sonic (SONC) may also come under pressure after reporting fiscal third quarter revenues that misses estimates and providing disappointing guidance.

On the other hand, shares of Synchronoss Technologies (SNCR) are moving sharply higher in pre-market trading after Siris Capital Group sent a letter indicating it could be a position to acquire the mobile technologies company for $18 per share.

Medical device maker Medtronic (MDT) could also move higher after raising its quarterly dividend by 7 percent to $0.46 per share and announcing a $5.0 stock repurchase.

U.S. Steel (X) and AK Steel (AKS) may benefit from upgrades by Deutsche Bank, which raised its rating on both steel makers to Buy from Hold.
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