Market Analysis

Beyond the Numbers

Negative Global Data Points May Lead to Pullback
3/22/2012 9:18 AM

The major U.S. index futures are pointing a lower opening on Thursday, with some lackluster manufacturing readings from China and the eurozone re-igniting economic worries and providing scope for a sell-off. A domestic report released earlier in the day showed that jobless claims unexpectedly fell. That said, the decline has served to alleviate only some of the weakness. European markets are seeing an across the board sell-off

U.S. stocks moved about in a lackluster fashion on Wednesday amid the release of a report showing small decline in existing home sales. The choppy trading reflected the uneasiness of traders over the overbought levels rather than disappointment over the housing data, which proved mixed.

The major U.S. averages opened amid apprehension and showed modest moves in early trading. The technology-weighted Nasdaq Composite Index received some support from Oracle’s (ORCL) better than expected results, remaining mostly above the unchanged line but closing well off the highs of the session. The Nasdaq Composite Index closed up 1.17 points or 0.04 percent at 3,075.32.

The Dow Industrials languished below the unchanged line for the better part of the session before closing down 45.57 points or 0.35 percent at 13,125. The S&P 500 Index closed 2.63 points or 0.19 percent lower at 1,403.

Twenty of the Dow components closed lower and one stock ended unchanged, while the remaining 9 stocks advanced. Alcoa (AA), Caterpillar (CAT), Chevron (CVX), Hewlett-Packard (HPQ) and Travelers Companies (TRV) were among the worst decliners in the session.

On the economic front, the National Association of Realtors reported that U.S. existing home sales fell 0.9 percent month-over-month to 4.59 million units. Meanwhile, the previous month’s reading was upwardly revised by 1.3 percent. Single-family home sales fell 1 percent, while condominium sales remained unchanged. The median price of an existing home rose 0.3 percent year-over-year to $156,600.

Currency, Commodity Markets

Crude oil futures are currently slipping $1.19 to $106.08 a barrel after gaining $1.20 to $107.27 a barrel on Wednesday.

The previous session’s advance came amid the release of the oil inventory report, which showed that crude oil inventories fell by 1.2 million barrel to 346.3 million barrels in the week ended March 16th. Stockpiles remained in the upper limit of the average range.

Gasoline inventories fell by 1.2 million barrels but remained in the upper limit of the average range. On the other hand, distillate inventories rose by 1.8 million barrels, remaining in the upper limit of the average range. Refinery capacity utilization averaged 83.1 percent over the four weeks ended March 16th compared to 83.9 percent in the previous week.

Gold futures are currently sliding $14.20 to $1,636.10 an ounce. In the previous session, the precious metal rose $3.30 to $1,650.30 an ounce.

Among currencies, the U.S. dollar is trading at 83.11 yen compared to the 83.42 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.3166 compared to yesterday’s $1.3216.


The major Asian markets witnessed lackluster trading, weighed down by the mixed cues from Wall Street overnight and a weak Chinese manufacturing data.

A survey by Markit Economics showed that Chinese factory activity shrank for the fifth consecutive month in March. The headline manufacturing purchasing managers’ index fell to 48.1 in March from 49.6 in February.

Japan’s Nikkei 225 average opened lower but turned higher shortly after, hitting a high by the mid-session. Thereafter, the average pared back its gains and showed a volatile trend before closing higher. At the close of trading, the index was up 40.59 points or 0.40 percent at 10,127.

Australia’s All Ordinaries hovered in positive territory throughout the session before ending up 17.90 points or 0.41 percent higher at 4,365.

Hong Kong’s Hang Seng Index moved back and forth across the unchanged line before closing up 44.93 points or 0.22 percent at 20,902.


The European markets are seeing marked weakness, weighed down by data showing a faster rate of contraction of the private sector in the eurozone region. The data raised fresh recession fears, The manufacturing purchasing managers’ index slid 1.3 points to 47.7 and the service sector activity index slid 0.1 point to 48.7.

Flash estimates released by Markit Economics showed that its composite output index fell to a 3-month low of 48.7 in March from 49.3 in February.

U.K. retail sales fell by a steeper than expected 0.8 percent month-over-month in February.

Ericsson (ERIC) announced that it increased its stake in LG-Ericsson, bringing up its ownership interest to 75 percent from 50 percent previously. U.K. retailer Kingfisher reported higher profits and sales for 2011.

The U.K.’s United Utilities said in its trading update that it expects full year revenues to increase between 3-4 percent and also said it remains on tack to a good underlying financial performance for the year ended March 2012.

France’ Hermes reported 41 percent profit growth for 2011 and also proposed a 5 euros per share dividend in addition to a regular dividend of 2 euros per share.

U.S. Economic Reports

First-time claims for unemployment benefits showed an unexpected decrease in the week ended March 17th, according to a report released by the Labor Department on, with claims falling to their lowest level in four years.

The report showed that initial jobless claims fell to 348,000 from the previous week's revised figure of 353,000. The drop surprised economists, who had expected jobless claims to edge up to 352,000 from the 351,000 originally reported for the previous week. With the unexpected decrease, jobless claims fell to their lowest level since coming in at 347,000 in the week ended March 8, 2008.

The Federal House Finance Agency, or FHFA, is set to release its house price index for January at 10 am ET. The index is a weighted, repeat-sales index that measures average price changes of single-family houses in repeat sales or refinancings on the same properties. Economists expect a 0.4 percent month-over-month increase in the house price index following a 0.7 percent increase in the previous month.

The Conference Board is scheduled to release a report on the U.S. leading economic indicators index for February at 10 am ET. The consensus estimate calls for a 0.6 percent increase in the leading indicators index for the month.

In January, the leading economic indicators index rose 0.4 percent month-over-month following a 0.5 percent increase in December. The coincident economic indicators index rose by 0.2 percent compared to a 0.4 percent increase in the lagging indicators index.

Stocks in Focus

CLARCOR (CLC) reported first quarter earnings of 46 cents per share compared to 43 cents per share last year. Net sales rose 5 percent to $257.3 million. For 2012, the company estimates 5.5-7 percent sales growth, while it confirmed its earnings per share guidance at $2.55-$2.70.

Strum Ruger & Company (RGR) said it has received orders of more than 1 million units in the first quarter of 2012. Therefore, the company said it has suspended the acceptance of new orders.

Raytheon’s (RTN) board has voted to increase the company’s annual dividend payout rate by 16 percent to $2 per share.

Shoe Carnival (SCVL) reported fourth quarter earnings of 24 cents per share, lower than 33 cents per share last year. Net sales rose 1.1 percent to $181.9 million. For the first quarter, the company expects earnings of 75-78 cents per share on net sales of $219 million to $222 million. The results were better than expected and the guidance was upbeat.

Sonic Corp. (SONC) reported second quarter adjusted earnings of 2 cents per share on revenues of $115.1 million, up 1.4 percent year-over-year. The earnings were below estimates, while revenues exceeded expectations.

FuelCell Energy (FCEL) announced its intention to offer shares in an underwritten public offering.

Herman Miller (MLHR) reported third quarter adjusted earnings of 26 cents per share, lower than 29 cents per share last year, as sales fell 3.6 percent to $399.8 million. The earnings came in line with estimates, while revenues trailed estimates. For the fourth quarter, the company expects earnings of 28-32 cents per share on revenues of $415 million to $435 million. The guidance was downbeat.

Intuit (INTU) said its total Turbo federal units were up 8 percent year-over-year for the period through March 17th. Additionally, TurboTax Online units were up 14 percent compared to a 3 percent drop in desktop units. The company also reiterated its full year consumer tax revenue growth guidance of 10-13 percent and company revenue growth guidance of 9-11 percent.

Dollar General (DG) reported better than expected fourth quarter earnings.

FedEx (FDX) reported third quarter earnings that were above estimates, while revenues missed expectations.

McDonald’s (MCD) announced that its Vice Chairman and CEO Jim Skinner has informed the company of his decision to retire, effective June 30, 2012. The board named current president and COO Don Thompson to succeed Skinner as CEO, effective July 1st, 2012.

Accenture (ACN), Cost Plus (CPWM), Micron (MU), Nike (NKE), Steelcase (SCS) and Wet Seal (WTSLA) are among the companies due to report their quarterly results after the markets close.
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