Market Analysis

The major U.S. index futures are pointing to a slightly higher opening on Tuesday, with sentiment precariously poised, as traders look ahead to the existing home sales data and Wednesday’s European Union meeting. The Asian markets ended mostly higher, while the European markets are also advancing strongly. However, commodities and risk currencies are pulling back, reflecting the wary sentiment of traders. If the existing home sales data comes in stronger than expected, there is likelihood that the upward momentum is sustained.

U.S. stocks snapped a six-session losing streak on Monday, with the gains primarily due to a technical rebound rather than due to fundamental strength. Strengthened by the G8 leaders’ resolve to keep Greece in the eurozone, the major averages moved to the upside at the open and advanced steadily to end notably higher.

The Dow Industrials rose 135.10 points or 1.09 percent to12,505 and the S&P 500 Index added 20.77 points or 1.60 percent before closing at 1,316, while the Nasdaq Composite closed up 68.42 points or 2.46 percent at 2,847.

Twenty-three of the thirty Dow components closed higher, with Boeing (BA), Caterpillar (CAT), Alcoa (AA) and Hewlett-Packard (HPQ) leading the gains. On the other hand, Bank of America (BAC) and JP Morgan Chase (JPM) declined close to 3 percent each.

Basic material, oil service, gold, housing, semiconductor, hardware and networking stocks were among the best performing sectors of the session.

Currency, Commodity Markets

The most actively traded crude oil futures for July delivery are trading down $0.42 at $92.44 a barrel, while the June futures are down $0.37 at $92.20 a barrel. The June futures ended Monday’s session at $92.57 a barrel, up $1.09 from last Friday. The commodity broke a six-session losing streak yesterday on a technical rebound from a 6-month low.

Gold futures are currently slipping $12.70 to $1,576 an ounce. Gold fell $3.20 to $1,588.70 an ounce in the previous session.

Among currencies, the U.S. dollar is trading at 79.85 yen compared to the 79.31 yen it fetched at the close of trading on Monday. Against the euro, the dollar is valued at $1.2749 compared to yesterday’s $1.2817.

Asia

The major Asian markets latched on to the positive lead from Wall Street, with stocks rebounding from their multi-month lows. The Indonesian market led the gains in the region, with the Jakarta Composite Index advancing by 2.06 percent.

Japan’s Nikkei 225 average opened notably higher and moved roughly sideways for the rest of the session before closing up 95.40 points or 1.10 percent at 8,729. Apart from the global cues, stocks also got some support from a weaker yen.

The Bank of Japan is sitting for a 2-day monetary policy meeting today. The yen has been seeing weakness on expectations that the central bank will embark on another round of quantitative easing.

Australia’s All Ordinaries added 49.10 points or 1.19 percent before closing at 4,174 and Hong Kong’s Hang Seng Index settled at 19,039, up 116.83 points or 0.62 percent.

Europe

European stocks are advancing, with the major averages all posting strong gains.
Underlying sentiment is likely to remain cautious ahead of the European Union summit scheduled for Wednesday.

In corporate news, U.K. telecom giant Vodafone (VOD) reported a decline in its full year EBITDA even as pre-tax profits rose marginally. On an adjusted basis, pre-tax profits declined. The company also trimmed its adjusted operating profit outlook for the next fiscal year, citing weakness in Europe.


U.K. department store operator Marks & Spencer reported a drop in its full year pre-tax profit and lowered its sales guidance.

The OECD lowered its economic outlook for the eurozone, with the organization now expecting a 0.1 percent contraction in 2012 compared to the 0.2 percent growth it estimated earlier.

The inflation report released by the Office for National Statistics showed that U.K. core annual inflation slowed to 2.1 percent compared to the 2 percent expected by economists.

Spain auctioned treasury bills, with the embattled nation successful in raising debt at the higher end of its target. That said, the borrowing costs increased compared to the previous auction.

U.S. Economic Reports

The National Association of Realtors is scheduled to release its report on existing home sales for April at 10 am ET. Economists estimate existing home sales of 4.66 million for the month.



Existing home sales unexpectedly fell 2.6 percent month-over-month to an annualized rate of 4.48 million units in March. Sales of single-family homes declined 2.5 percent compared to a 3.8 percent drop in condominium and other multi-family home sales.

Inventories fell 1.3 percent in absolute terms to 2.37 million units, while inventories measured in terms of months of supply held steady at 6.3 months. The median price of an existing home rose 5.3 percent to $163,800.

Stocks in Focus

EMC (EMC) announced that it has acquired privately held cloud-based management solutions provider Syncplicity. The company did not reveal the terms of the deal.

Nordson (NDSN) reported second quarter earnings of 80 cents per share, which included a charge of 4 cents per share, on sales of $315 million. For the third quarter, the company expects earnings of 96 cents to $1.04 per share. The second quarter results were below estimates, while the third quarter guidance exceeded expectations.

Williams-Sonoma (WSM) reported first quarter non-GAAP earnings of 34 cents per share on net revenues of $818 million, up 6.1 percent year-over-year. For the second quarter, the company expects net revenues of $850 million to $870 million, and for the full year, net revenues are expected at $3.95 billion to $4.02 billion. The company estimates non-GAAP earnings of 38-41 cents per share for the second quarter and $2.42-$2.49 per share for the full year. The results exceeded estimates, while the guidance surrounded the consensus estimates.

Analog Devices (ADI), Collective Brands (PSS), Compuware (CPWR), Dell (DELL), Guess (GES), Take-Two (TTWO) and West Seal (WTSLA) are among the companies due to report their quarterly results after the markets close.

Best Buy’s (BBY) first quarter profit declined from the year-ago quarter, while its revenue improved 2 percent. The company reaffirmed its previously provided annual guidance for fiscal 2013.

Medtronic (MDT) reported first quarter profit that increased from the year-ago period, while its adjusted earnings per share topped estimate by a penny.

Williams-Sonoma, Inc. (WSM) is gaining. The company's first quarter non-GAAP earnings per share were above Wall Street view. Net revenues rose 6.1 percent, with comparable brand revenue improving 5.4 percent.

AutoZone’s (AZO) third quarter profit increased from the previous year period. Net sales advanced 6.7 percent, but missed the consensus estimate.

Ralph Lauren (RL) reported fourth quarter profit and net revenues that rose from the year-ago quarter. The results were above Wall Street’s view. The company also said it expects first quarter consolidated net revenues to increase by a low single-digit percentage, and operating margin from continuing operations to be approximately 250-300 basis points below prior year.