Beyond the Number
Markets Hold Tightly To Slender Hopes
6/26/2012 9:07 AM
The major U.S. index futures are pointing to a higher opening on Tuesday, with sentiment holding up despite the eurozone debt travails. Reflecting the nervous mood of investors, separate debt auctions by Spain and Italy showed surge in borrowing costs and waning demand despite the nations succeeding in raising debt in line with their target. The U.S. consumer confidence report due before the markets open is likely to determine if the averages can sustain the modest upward momentum suggested by the index futures.
U.S. stocks declined sharply on Monday, as eurozone concerns roiled the markets despite the release of a report showing a bigger than expected increase in new home sales. After moving notably lower at the open, the major averages saw further downside in early trading before moving broadly sideways for the rest of the session.
The Dow Industrials ended down 138.12 points or 1.09 percent at 12,503 and the S&P 500 Index ended down 21.30 points or 1.60 percent at 1,314, while the Nasdaq Composite Index closed at 2,836, down 56.25 points or 1.94 percent.
Twenty-nine of the thirty Dow components closed lower, with Wal-Mart (WMT) bucking the downtrend with a 1.31 percent rally. Bank of America (BAC), Intel (INTC), Alcoa (AA), Microsoft (MSFT), Caterpillar (CAT), Travelers Companies (TRV) and United Technologies (UTX) were among the worst decliners of the session.
Financial, semiconductor, transportation, energy, basic material and biotechnology declined the most in the session.
On the economic front, the Commerce Department reported that new home sales rose 7.6 percent month-over-month to a seasonally adjusted annual rate of 369,000 in May from 343,000 in April. Region-wise, new home sales were higher in the Northeast and South but fell in the Midwest and South.
Inventories of new homes as measured in terms of the months of supply fell to 4.7 months from 5 months in the previous month. The median price of a new home rose 5.6 percent year-over-year, although it fell 0.64 percent month-over-month to $234,500. Currency, Commodity Markets
Crude oil futures are declining $0.15 to $79.05 a barrel after slipping $0.55 to $79.21 a barrel on Monday. Gold futures are currently moving down $9.70 to $1,578.70 an ounce. In the previous session, the precious metal rose $21.50 to $1,588.40 an ounce.
Among currencies, the U.S. dollar is trading at 79.36 yen compared to the 79.67 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2457 compared to yesterday’s $1.2504.Asia
The major Asian markets closed on a mixed note, as traders remained anxious about the situation in the eurozone. The markets in the region opened lower and saw lackluster trading, toeing in line with the unimpressive performance of Wall Street overnight. The news that Moody’s downgraded 28 Spanish banks also created some nervousness among traders.
Japan’s Nikkei 225 average languished below the unchanged line throughout the session before closing down 70.63 points or 0.81 percent at 8,664. Export stocks once again came under selling pressure, as the yen strengthened, while utility, pharma, construction and retail stocks found buying interest.
Australia’s All Ordinaries also remained confined below the unchanged line and ended down 15.70 points or 0.39 percent at 4,056. Energy and material stocks declined sharply, while healthcare stocks gained ground in the session. Miners Rio Tinto and BHP Billiton declined sharply in the session. On the other hand, bank stocks ended mostly higher.
Meanwhile, Hong Kong’s Hang Seng Index added 84.39 points or 0.45 percent before closing at 18,982.
A report released by the Bank of Japan showed that its corporate service price index edged up 0.1 percent year-over-year in May compared to expectations for a 0.3 percent increase. On a month-over-month basis, the index fell 0.4 percent.
South Korean consumer confidence slipped to the weakest level in three months in June, as the eurozone debt crisis dampened consumer sentiment. Europe
After opening higher on bargain hunting, the European averages have given back much of their recent gains. The averages are currently trading mixed.
Treasury bill auction in Spain saw the beleaguered nation raising 3.077 billion euros, above its 2-3 billion euro target, although yields surged and demand waned notably.
Italy also saw its borrowing costs climb to the highest level since December at a short-term debt auction, reflecting doubts among investors about the outcome of the upcoming European summit.
In economic news, a survey by the GfK Institute showed that German consumer sentiment is expected to increase in July. The institute’s forward looking consumer sentiment indicator for Germany is expected to increase to 5.8 from 5.7 in June. Economists expected the index to drop to 5.6.
Confidence among French households remained unchanged in June after improving modestly in the previous month, according to a report released by statistical office INSEE. The consumer confidence index remained unchanged at 90 in June, while economists had expected the index to drop to 89. U.S. Economic Reports
The S&P/Case-Shiller home price index, which tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S., is scheduled to be released at 9 am. Economists expect a seasonally adjusted 0.4 percent month-over-month increase by the 20-city composite house price index for April.
The Conference Board is scheduled to release its consumer confidence report for June at 10 am ET. The report, which is based on a survey of 5,000 U.S. households, is expected to show that the consumer confidence index declined to 63.5 in June.
In May, the consumer confidence index fell to 64.9 from 68.7 in April. The expectations index declined 2.8 points to 77.6 and the present situation index fell 5.3 points to 45.9. The May survey showed that consumers’ outlook for the labor market was also less positive. Stocks in Focus
H.B. Fuller (FUL) reported second quarter adjusted earnings from continuing operations of 62 cents per share, higher than 49 cents per share last year. Net revenues climbed to $527 million from $368.36 million last year. The company revised its 2012 earnings from continuing operations guidance to $2.10-$2.15 per share, while net revenue is expected at $1.93 billion to $1.98 billion. The results and the guidance were above estimates.
Apollo Group (APOL) said its third quarter adjusted earnings came in at $1.20 per share, while revenues were at $1.13 billion. The results beat expectations. For 2012, the company expects net revenues of $4.2 billion to $4.3 billion and operating earnings, excluding items, of $700 million to $740 million. The revenue guidance surrounded the consensus estimate.
RockTenn (RKT) announced that it has closed its acquisition of the assets of corrugated packaging manufacturer Mid South Packaging.
Standard & Poor’s announced that Seagate Technology (STX) will replace Progress Energy (PGN) in the S&P 500 Index after the close of trading on June 29th.
Watson Pharma (WPI) confirmed that its subsidiary Watson Labs has filed an ANDA seeking approval to market Desvenlafaxine Succinate, which is a generic version of Pfizer’s (PFE) Pristiq used for treating major depressive disorder in adults.
H&R Block (HRB) and Sealy (ZZ) are among the companies due to release their quarterly results after the markets close.