Beyond the Numbers
Traders Hopeful of Central Bank Support
8/7/2012 9:19 AM
The major U.S. index futures are pointing to a higher opening on Tuesday, with sentiment getting a lift from stimulus hopes. Stocks in Europe have moved uniformly higher despite the release of weak German factory goods orders data. Even amid a lack of any compelling catalysts, global markets have remained firm in recent sessions, primarily banking on hopes that the European Central Bank and the Federal Reserve will act to prevent further deterioration of economic conditions. Earlier in the day, Boston Federal Reserve Bank President Eric Rosengren called for more aggressive actions from the central bank.
U.S. stocks advanced on Monday, helped by some positive corporate news and expectations that the eurozone crisis will not be allowed to escalate. The major averages opened higher and legged up further in early trading before moving sideways until late trading. The averages gave back some ground in late trading yet closed higher for the session.
The Dow Industrials added 21.34 points or 0.16 percent before closing at 13,118 and the S&P 500 Index ended up 3.24 points or 0.23 percent at 1,394, while the Nasdaq Composite closed at 2,990, up 22.01 points or 0.74 percent.
Nineteen of the thirty Dow components closed higher, with Alcoa (AA), Bank of America (BAC), Caterpillar (CAT), Cisco System (CSCO), DuPont (DD) and Hewlett-Packard (HPQ) rising strongly in the session.
Airline, basic material and gold stocks were among the biggest advancers of the session.Currency, Commodity Markets
Crude oil futures are rising $0.33 to $92.53 a barrel after gaining $0.80 to a 2-week high of $92.20 a barrel on Monday. Gold futures are currently adding $1.10 to $1,617.20 an ounce. In the previous session, the precious metal rose $6.90 to $1,616.20 an ounce.
Among currencies, the U.S. dollar is trading at 78.54 yen compared to the 78.25 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2423 compared to yesterday’s $1.2401.Asia
Most Asian stocks advanced, as traders suddenly began sensing some relief for the debt strapped eurozone nations. The retreating Spanish and Italian bond yields renewed hopes concerning diffusion of the eurozone debt crisis.
Japan’s Nikkei 225 average shrugged off a lackluster opening and moved steadily higher, ending up 77.02 points or 0.88 percent at 8,803.
Electric utilities Kansai Electric and Chubu Electric rallied 10.43 percent and 9.15 percent, respectively. Mitsui Chemicals, Maruha Nichiro, Pioneer, Sumitomo Metal, Nippon Steel and Denki Kagaku also advanced strongly. On the other hand, resource and real estate stocks came under some selling pressure.
Australia’s All Ordinaries opened slightly higher and advanced till the afternoon. Thereafter, the average consolidated before closing up 18.50 points or 0.43 percent at 4,311. Energy and material stocks firmed up, helping to offset weakness in the healthcare and utility spaces.
Hong Kong’s Hang Seng Index closed at 20,073, up 73.83 points or 0.37 percent.
The Reserve Bank of Australia left its key official cash rate unchanged at 3.5 percent for the second month in a row. The move was in line with expectations. Meanwhile, the monetary policy board termed the global economic outlook as more subdued than a few months ago. Europe
The major European markets are uniformly higher after seeing volatility in the morning. The indexes have advanced in the past two sessions. The recent gains have taken the averages to their highest closing levels in about 4 months. The overbought levels have introduced caution among traders.
On the economic front, German factory orders fell by a worse than expected 1.7 percent in June compared to the previous month. Meanwhile, a report released by the U.K. Office for National Statistics showed that the U.K.’s industrial production fell 2.5 percent month-over-month, although the decrease was not as steep as the 3.5 percent drop expected by economists. Manufacturing output declined 2.9 percent.U.S. Economic Reports
Bernanke hosts a town hall meeting with educations from across the country at Board headquarters at 2:30 pm ET.
The U.S. Federal Reserve is scheduled to release its monthly consumer credit report at 3 pm ET. Consumer credit for June is expected to show an increase of $10.3 billion.
Outstanding consumer credit rose a better than expected $17.1 billion or 8 percent in May. Revolving credit tied to credit cards rose by $8 billion compared to a $9.1 billion increase in non-revolving credit tied to auto loans.Stocks in Focus
CVS Caremark reported second quarter profit that increased from the same period prior year. Net revenues for the quarter rose 16.3 percent from the year-ago quarter. The company also raised its earnings forecast for full year 2012.
SIRIUS XM Radio’s (SIRI) second quarter profit jumped from the year-ago period, benefited by a hefty tax gain. Revenue for the quarter advanced 13 percent. The company raised its 2012 subscriber, revenue, and adjusted EBITDA guidance.
Vornado Realty (VNO) reported second quarter adjusted funds from operation of $1.13 per share, lower than $1.15 per share last year. Revenues rose to $700.59 million from $696.04 million last year. The results exceeded estimates.
H.B. Fuller (FUL) announced the completion of the sale of its Central America paints business to a company of Grupo Mundial for $120 million.
Boston Properties (BXP) reported second quarter funds from operation of $1.24 per share on revenues of $372.29 million. The company expects full year funds from operation of $4.85 to $4.91 per share. The company’s results exceeded expectations, while it issued healthy guidance.
Manitowoc’s (MTW) second quarter adjusted earnings from continuing operations rose to 32 cents per share from 15 cents per share last year. Sales rose 5.9 percent to $1 billion. The earnings exceeded estimates, while the revenues were slightly shy of estimates. For 2012, the company expects crane revenue growth of 10-15 percent.
Pfizer (PFE) announced that the co-primary clinical endpoints of a Phase III trial of its Alzheimer’s treatment bapineuzumab were not met. The company also said it has decided to discontinue all other bapineuzumab IV studies.
JDA Software (JDAS) reported second quarter adjusted non-GAAP earnings of 54 cents per share on revenues of $168.8 million. For 2012, the company expects adjusted earnings of $2.05-$2.20 per share on revenues of $675 million to $690 million. The company’s results trailed estimates, while its guidance was also bleak.
TW Telecom (TWTC) reported below consensus results for its second quarter.
Intersil (ISIL) announced that its board has authorized the repurchase of up to $50 million worth of its common stock. Hutchison Technology (HTCH) announced the appointment of Richard Penn as its president and CEO, effective October 1, 2012.
AIG (AIG) said the Treasury expects to receive an additional $750 million from its underwritten public offering of AIG’s common stock, as the underwriters have exercised their over allotment option in full to purchase an additional 24.59 million shares at the public offering price of $30.50 per share.
Buckeye Technology (BKI), Charles River (CRL), Cree (CREE), Express Scripts (ESRX), Live Nation (LYV), MEMC Electronics (WFR), Priceline.com (PCLN), Protective Life (PL), Sonus Networks (SONS), Sotheby’s (BID) and Disney (DIS) are among the companies due to release their results after the markets close.
Scientific Games (SGMS) reported a loss of 14 cents per share on revenues of $229.30 million. The results trailed expectations.
THQ, Inc. (THQI) reported a second quarter loss of $3.41 per share on a non-GAAP basis compared to a loss of $9.42 per share last year. The company’s non-GAAP net sales fell to $38.5 million from the year-ago quarter’s $141.2 million. However, the company’s results were better than expected.