Market Analysis

The major U.S. index futures are pointing to a higher opening on Thursday, with sentiment still fragile after yesterday’s rally. This is despite some positive catalysts such as successful debt auctions by France and Spain and some deal news. The jobless claims report released earlier in the day showed that claims fell by more than expected and productivity in the U.S. also rose about in line with expectations. Sentiment across the Atlantic is mixed, while earlier in the global trading day, Asian stocks closed higher. Traders may now focus on some Fed speeches and the developments on the Greek debt front.

U.S. stocks advanced on Wednesday, as economic reports reinforced the view that the economic momentum has not faltered. After opening higher on the back of a relatively upbeat private sector jobs report, the major averages held their gains for the much of the session before easing slightly before closing notably higher.

The Dow Industrials added 83.55 points or 0.66 points before closing at 12,717 and the S&P 500 Index ended at 1,324, up 11.68 points or 0.89 percent. The Nasdaq Composite Index closed up 34.43 points or 1.22 percent at 2,848.

Twenty-seventy of the thirty Dow components closed higher, with Bank of America (BAC), Hewlett-Packard (HPQ) and United Technologies (UTX) leading the gains.

Airline, biotechnology, financial, housing and semiconductor stocks were among the best performers in the session.

On the economic front, the ADP’s survey showed that the private sector added jobs at a pace a touch lower than expected in January. The private sector added 170,000 jobs in January, while the previous month’s gains were downwardly revised by 33,000 to 292,000.

The Institute for Supply Management’s manufacturing survey showed that its headline manufacturing index rose to 54.1 in January from 53.1 in December. The new orders rose 3 points to 57.6 and the order backlogs index climbed 4.5 points to 52.5. Meanwhile, the employment index eased 0.5 points to 54.3. However, out of 18 industries surveyed only 9 reported expansion.

Additionally, auto sales came in at a healthy pace of 14.2 million vehicles, matching the pace seen since August 2009, when sales benefited from the government’s cash for clunkers program.

Construction spending rose 1.5 percent month-over-month in December, marking the fourth increase in a row. Non-residential construction spending climbed 3.3 percent, while non-residential construction spending also increased from the previous month.

Commodity, Currency Markets

Crude oil futures are receding $0.60 to $97.01 a barrel after declining $0.87 to $97.61 a barrel on Wednesday. The previous session’s drop came despite the fairly encouraging economic readings and the release of the weekly inventory report.

Gold futures are rising $1 to $1,750.50 an ounce. In the previous session, the precious metal added $9.10 to $1,749.50 an ounce.

Among currencies, the U.S. dollar is trading at 76.11 yen compared to the 76.21 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.3112 compared to yesterday’s $1.3162.

Asia

The major Asian markets caught on with Wall Street’s optimism and advanced strongly, with the Hong Kong and the Chinese markets leading the gains. The Hang Seng Index advanced 2 percent and the Shanghai Composite Index closed up about 2 percent.

Japan’s Nikkei 225 average ended 67.03 points or 0.76 percent higher at 8,877. Stocks benefited from positive earnings news out of the nation and a modest weakening of the yen. Meanwhile, Australia’s All Ordinaries closed at 4,333, up 42.20 points or 0.98 percent.

Europe

Meanwhile, European stocks are seeing lackluster sentiment, with the major averages in the region seeing mixed sentiment.
The nervousness comes despite a couple of deal announcements and successful bond auctions by Spain and France.

Shell (RDS) reported fourth quarter clean current cost of supplies of $4.11 billion, which was lower than most analysts had expected. Weak refining margins weighed on results. However, the company said it will raise its dividend next quarter.
Unilever also reported lackluster sales growth, with underlying sales advancing by 6.6 percent.

British pharma company AstraZeneca (AZN) reported better than expected fourth quarter earnings, while it unveiled 7,300 job cuts in a bid to cut costs.

Deutsche Bank (DB) reported fourth quarter profits that declined 76 percent to 147 million euros, which was notably below estimates. The results were hurt by write-downs and weak trading revenues.

U.S. Economic Reports

New unemployment claims in the U.S. fell to a lower level than most experts had expected according to figures released by the Labor Department. For the week ending January 28, the DOL reported a seasonally adjusted level of 367,000 initial claims for unemployment.



That marks a decrease of 12,000 from the previous week's revised figure of 379,000 - slightly higher than the 377,000 initially reported.

U.S. labor productivity increased by slightly less than expected in the fourth quarter of 2011, with output gains outpacing an increase in hours worked. According to statistics released by the Labor Department, fourth quarter worker productivity increased by 0.7 percent.

The increase was a reflection of a 3.6 percent increase in output, somewhat offset by a 2.9 percent increase in hours worked. The overall productivity increase fell slightly short of the 0.8 percent increase predicted by most economists.



Despite the increase in productivity, unit labor costs increased by 1.2 percent in the fourth quarter as the productivity increase grew slower than the 1.9 percent increase in hourly compensation.

Federal Reserve Chairman Ben Bernanke is due to speak on “The Economic Outlook and the Federal Budget Situation before the House Budget Committee at 10 am ET.

Dallas Federal Reserve Bank President Richard Fisher is scheduled to speak to the Headliners Club of Austin, Texas, on the economy and monetary policy at 7:15 pm ET.

Stocks in Focus

Earnings

In corporate news, Allstate (ALL) reported fourth quarter operating income that exceeded estimates, as catastrophe losses declined.

Qualcomm (QCOM) reported first quarter adjusted earnings of 97 cents per share, ahead of the 90 cents per share consensus estimate. Revenues grew 40 percent and also exceeded estimates. The company also issued healthy second quarter and full year guidance.

Electronic Arts’ (EA) third quarter earnings and revenues exceeded estimates, while it issued weak guidance for its fourth quarter.

Las Vegas (LVS) reported fourth quarter adjusted net income of 57 cents per share, in line with estimates. Revenues rose 26.3 percent to $2.54 billion but were slightly shy of estimates.
Merck (MRK) reported better than expected fourth earnings, while sales missed estimates.

Boston Scientific (BSX) said its fourth quarter earnings declined from the year-ago, while sales missed estimates.
Green Mountain Coffee (GMCR) reported better than expected first quarter results, while it issued below consensus guidance for the second quarter. Meanwhile, it reaffirmed its 2012 earnings guidance, which was mostly above consensus estimates.

Bebe Stores (BEBE), Digital River (DRIV), Edward LifeSciences (EW), Extreme Networks (EXTR), Gilead Sciences (GILD), Fiserv (FISV), International Rectifier (IRF), Netsuite (N), Novellus (NVLS), Principal Financial Group (PFG), Wynn Resorts (WYNN), THQ (THQI) and Take Two Interactive (TTWO) are among the companies due to release their results after the markets close.

Other Corporate News

SandRidge Resources (SD) announced a deal to buy Dynamic Offshore Resources for $1.275 billion in cash.