Market Analysis

Beyond the Number

Economic Anxiety Continues Ahead of Housing Data
3/23/2012 9:20 AM

The major U.S. index futures are pointing to a mixed opening on Friday, with sentiment wavering before the release of a key housing data. With no compelling catalysts to offer further thrust, the lull the markets have been witnessing the past couple of session may continue. That said, if new home sales rise notably more than expecting, the indexes could see some bounce. Earnings of the news have been mixed. Across the Atlantic, the major European averages are declining for the fifth straight sessions.

U.S. stocks declined on Thursday, as global economic fears offset the optimism generation by continued strength suggested by domestic data. The major averages opened lower, after separate reports showed continued contraction by the Chinese manufacturing sector and the private sector in the eurozone.

The averages languished below the unchanged line for the better part of the session before closing lower. The Dow Industrials ended down 78.48 points or 0.60 percent at 13,046 and the S&P 500 Index lost 10.11 points or 0.72 percent before closing at 1,393, while the Nasdaq Composite Index closed at 3,063, down 12 points or 0.39 percent.

Twenty-two of the thirty Dow components closed higher, with Alcoa (AA) (down 2.53 percent), Caterpillar (CAT) (down 2.36 percent), Bank of America (BAC) (down 2.24 percent) and Chevron (CVX) (down 2.37 percent) leading the declines.

Airline, resource, housing and financial stocks came under selling pressure.

Currency, Commodity Markets

Crude oil futures are rising $0.41 to $105.76 a barrel after declining $1.92 to $105.35 a barrel on Thursday. Gold futures, which fell $7.80 to $1,642.50 an ounce in the previous session, are currently rising $7.20 to $1,649.70 an ounce.

On the currency front, the U.S. dollar is trading at 82.53 yen compared to the 82.53yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3256 compared to yesterday’s $1.3201.


The major Asian markets ended mixed, as economic worries kept sentiment subdued. The strengthening of the yen sent Japanese stocks lower, while lower resource prices weighed on the Australian market.

Japan’s Nikkei 225 average opened notably lower and moved sideways for the rest of the session. The index closed down 115.61 points or 1.14 percent. Most export stocks, including Honda Motor, Sharp, Sony, Toyota Motor and Nissan Motor, tumbled in the session.

Australia’s All Ordinaries saw marked weakness in early trading but it clawed back its way up before closing down merely 4.20 points or 0.10 percent at 4,361. Material stocks fell sharply, while gains by healthcare and energy stocks helped to offset some of the losses. Hong Kong’s Hang Seng Index ended down 232.76 points or 1.11 percent at 20,669.

China’s Shanghai Composite ended down over 1 percent, while India’s Sensex ended up over 1 percent and the Indonesia’s Jakarta Composite Index, Malaysia’s KLSE Composite Index, South Korea’s Kospi and Taiwan’s Weighted Average all advanced moderately.


The European averages are languishing in the red amid a lack of any major catalysts, remaining on track for their fifth straight session of losses.

In economic news, a survey by French statistical agency INSEE showed that French business confidence improved markedly in March. The headline index rose to 96 in March from 93 in February.

Meanwhile, U.K. consumer confidence deteriorated in February, according to results of a survey by Nationwide. The consumer confidence index fell 3 points to 44.

U.S. Economic Reports

The Commerce Department is due to release its new home sales report for February at 10 am ET. The consensus estimate calls for new homes sales of 325,000.

In January, new home sales unexpectedly fell by 0.9 percent month-over-month to 321,000, marking the first decline in five months. Nevertheless, offsetting some of the negativity, there were upward revisions to the numbers of the previous three months.

Federal Reserve Chairman Ben Bernanke will deliver brief opening remarks at the Fed Conference on Central Banking "Before, During, and After the Crisis" at 1:45 pm ET.

Atlanta Federal Reserve Bank President Dennis Lockhart is due to speak to students at Georgetown University in Washington on his career and the Fed at 2:30 pm ET. He will also take questions from the audience. Additionally, St. Louis Federal Reserve Bank President James Bullard is scheduled to speak to the 15th Asian Investment Conference in Hong Kong at 9 pm ET.

Stocks in Focus

Nike (NKE) reported third quarter earnings of $1.20 per share, up 11 percent year-over-year. Revenues rose 15 percent to $5.8 billion. The results came in ahead of estimates. The company also said its worldwide future orders for the period from March through July 2012 were 15 percent higher from the year-ago period.

Cost Plus (CPWM) said its fourth quarter earnings rose to $1.55 per share from $1.23 per share in the year-ago period. Net sales were up 6.7 percent to $341.6 million. The results were better than expected. For the first quarter, the company expects a net loss from continuing operations of 3-7 cents per share on net sales of $210 million to $214 million. For 2012, the company expects net income from continuing operations of $1.07-$1.12 per share on revenues of $1 billion to $1.1 billion. The quarterly and full year guidance was robust.

Accenture (ACN) reported second quarter earnings of 97 cents per share compared to 75 cents per share last year. Net revenues rose 12 percent to $6.8 billion. The results were better than expected. The company also said it expects net revenues of $7.05 billion to $7.25 billion for the third quarter, while it raised its revenue growth outlook for the full year to 10-12 percent from the previous range of 7-10 percent. The guidance was upbeat.

Micron Technology (MU) reported a second quarter loss of 23 cents per share compared to a profit of 7 cents per share last year, while revenues fell to $2.1 billion. The loss was wider than expected, while revenues exceeded estimates.

AIG (AIG) announced that it has made a final $1.5 billion payment to the U.S. Treasury Department to retire the Treasury’s interest in AIA. The repayment would mean that the Treasury’s outstanding assistance is reduced by more than 75 percent.
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