Market Analysis

The major U.S. index futures are pointing to a lower opening on Thursday, with sentiment still reflecting fears concerning Eurozone’s precarious condition. Greece is slated to go to polls in mid-June and there have been rampant fears of the Mediterranean nation facing the predicament of exiting from the eurozone. The euro is also facing an uncertain future in the wake of the fiscal crisis plaguing the eurozone.

Meanwhile, an economic report released earlier in the day showed that jobless claims remained largely unchanged with the previous week, which saw a modest upward revision to claims. The markets now await the results of a regional manufacturing survey for more trading cues. Earnings from retail giant Wal-Mart (WMT) has been encouraging, while other retail earnings have been mixed. Commodities have stemmed the slide, while the euro is seen extending its slide.

U.S. stocks retreated yet again on Wednesday, although positive U.S. economic data helping to allay some of the concerns about Greece. The major averages opened higher after separate reports showed that housing starts rose more than expected and industrial production growth exceeded expectations. However, the early rally fizzled, with the release of the FOMC minutes doing little to alleviate concerns. After moving back and forth across the unchanged line, the averages ended moderately lower.

The Dow Industrials ended down 33.45 points or 0.26 percent at 12,599 and the S&P 500 Index closed 5.86 points or 0.44 percent lower at 1,325, while the Nasdaq Composite closed 19.72 points or 0.68 percent lower at 2,874.

Seventeen of the thirty Dow components closed lower, with Alcoa (AA), Bank of America (BAC), Hewlett-Packard (HPQ), Intel (INTC), JP Morgan (JPM), Microsoft (MSFT) and United Technologies (UTX) declining the most. On the other hand, General Electric (GE) jumped 3.26 percent, Pfizer (PFE) rose 1.52 percent and Merck (MRK) added 1.30 percent.

Among the major sector indexes, basic resource, financial, housing and semiconductor stocks were the worst performing sectors of the session.

On the economic front, the Commerce Department reported that housing starts rose 2.6 percent month-over-month in April to a 2-month high of 717,000. Starts were up in the Midwest and the South, while they declined in the Northeast and West. Building permits, an indicator of future housing activity, fell 7 percent to 715,000.

U.S. industrial output rose a better than expected 1.1 percent month-over-month in April, thanks to a 4.6 percent jump in utility output. Manufacturing output also rebounded, rising 0.6 percent on solid support lent by motor vehicle and parts and business equipment. Capacity utilization rose by a better than expected 0.8 points to 79.2 percent.

Currency, Commodity Markets

Crude oil futures are adding $0.43 to $93.24 a barrel after declining $1.17 to $92.81 a barrel on Wednesday. The previous session’s drop came amid the risk aversion triggered by Greece and the release of the weekly oil inventory report. According to the report, crude oil stockpiles rose by 2.1 million barrels to 381.6 million barrels in the week ended May 11th. Inventories were above the upper limit of the average range.

Meanwhile, gasoline inventories fell by 2.8 million barrels and dropped to the lower limit of the average range. Distillate inventories dipped 1 million barrels, remaining in the lower limit of the average range. Refinery capacity utilization averaged 86.3 percent over the four weeks ended May 11th compared to 85.4 percent over the previous four weeks.

Gold futures, which fell $20.50 to $1,536.60 an ounce in the previous session, are currently adding $16.80 to $1,553.40 an ounce.

On the currency front, the euro is extending its slide and is trading at $1.2699 versus the dollar after closing at $1.2718 in New York on Wednesday. The dollar is trading at 80.20 yen compared to the 80.23 yen it fetched at the close of trading on Wednesday.

Asia

The major Asian markets ended mixed, with the Australian, Hong Kong, Indonesian and Singaporean markets ending lower, while the rest of the markets closed higher. The positive U.S. economic data released overnight along with a better than expected Japanese GDP report offered some support even as the weakness in the commodity space and the risk currencies weighed.

After seeing a see-sawing trend for much of the session, Japan’s Nikkei 225 average advanced after the Japanese Cabinet Office released first quarter GDP data, which showed a 4.1 percent increase year-over-year compared to expectations for 3.5 percent growth. The index closed up 75.42 points or 0.86 percent at 8,877.

Meanwhile, Australia’s All Ordinaries closed down 6.20 points or 0.15 percent at 4,209 and Hong Kong’s Hang Seng Index fell 58.90 points or 0.31 percent before closing at 19,201.

Europe

European stocks are extending their declines, with the financial space weighing on the markets.

A Spanish debt auction received a mixed response. While the nation sold debt at the upper end of its target and attracted healthy demand, borrowing costs were up sharply. That said, borrowing costs were up sharply.

U.S. Economic Reports

New claims for unemployment in the U.S held relatively level for the week, according to figures released by the Labor Department. Department figures put the level of new unemployment claims at a seasonally adjusted level of 370,000 for the week ending May 12.

The new figures, while essentially unchanged from the previous week's revised level of 370,000. Additionally the Department reported that the previous figure was revised only slightly from the 367,000 initially reported.



Nevertheless, most economists had expected a slight drop in new claims to a seasonally adjusted level of 365,000. The four-week rolling average of new unemployment claims, a figure that eases some of the week-to-week volatility in the reports, showed a decrease of 4,750 new claims to 375,000 - down from the previous average of 379,750.

The results of the Philadelphia Federal Reserve's manufacturing survey are due out at 10 am ET. Economists expect the diffusion index of current activity to show a reading of 10 for May.



The diffusion index of activity in the sector fell to 8.5 in April from 12.5 March, while economists had expected a more modest decline to 12. The new orders index slipped 0.6 points to 2.6 and the shipments index fell by 0.7 points to 2.8. The employment indexes were mixed, with the number of employees index rising 11.1 points to 17.9, while the average employee work week index declined 5 points to -2.3. Meanwhile, the future business conditions index rose about a point to 33.8.

The Conference Board is scheduled to release a report on its U.S. leading economic indicators index for April at 10 am ET. The consensus estimate calls for a 0.1 percent increase by the leading indicators index for the month.



The leading economic indicators index rose 0.3 percent month-over-month in March, the sixth straight months of gains. Building permits, higher stock prices and lower jobless claims supported the index. The coincident economic index was up 0.2 percent and the lagging economic index advanced 0.3 percent.

St. Louis Federal Reserve Bank President James Bullard is scheduled to speak to the Rotary Club of Louisiville on The U.S. Economy and Monetary Policy at 12:35 pm ET.

Stocks in Focus

NetEase.com (NTES) reported first quarter earnings of $1.14 per ADS compared to 89 cents per ADS in the year-ago quarter. Revenues rose to $318.2 million. The results were better than expected.

Altria (MO) said it would record one-time non-cash gains of 11 cents per share in its reported earnings per share for 2012 resulting from its investment in SABMiller. Accordingly, the company revised its reported earnings per share guidance for the full year to $2.25-$2.31, while it reaffirmed its adjusted earnings per share guidance of $2.17-$2.23.

CostPlus (CPWM) reported first quarter net income from continuing operations of 1 cent per share compared to a loss of 14 cents per share last year, as net sales rose 7.4 percent to $214.6 million. The results were better than expected. For the second quarter, the company expects a net loss from continuing operations of 15 to 22 cents per share on net sales of $210 million to $216 million. The company expects full year earnings from continuing operations of $1.13-$1.16 per share on net sales of $1 billion to $1.1 billion. The guidance was fairly positive.

Hot Topic (HOTT) reported break-even results on a non-GAAP basis for its first quarter on 6.4 percent sales growth to $171.5 million, about in line with estimate.

Sears Holdings (SHLD) reported a first quarter adjusted loss from continuing operations of 31 cents per share on revenues of $9.3 billion. The loss was narrower than what analysts had expected, while the revenues exceeded estimates.

MEMC Electronics (WFR) announced the resignation of CFO Mark Murphy, effective May 16th and also announced the appointment of Brian Wuebbels as its CFO.

Medtronic (MDT) said it has received notification from the U.S. Department of Justice and the Office of the U.S. Attorney for the District of Massachusetts that federal prosecutors have closed their investigation of Medtronic related to its INFUSE bone graft.

Wal-Mart’s (WMT) first quarter profit and revenues increased from the year-ago period, and were also above Wall Street view. The company’s U.S. comparable store sales at its namesake stores rose 2.6 percent, which is above its guidance range.

Red Robin Gourmet (RRGB) reported first quarter earnings of 71 cents per share on revenues of $299.5 million. The earnings exceeded estimates, while revenues were shy of expectations.

Agilent Technologies (A) agreed to acquire Dako, Denmark-based cancer diagnostic company. The $2.2 billion acquisition, on a debt-free basis, is the largest in the company's history.

Dollar Tree’s (DLTR) first quarer profit and net sales improved from the year-ago period and also were above analysts' estimates. However, the company provided a weak outlook for its second quarter.

Aeropostale (ARO), Applied Materials (AMAT), Aruba Networks (ARUN), Autodesk (ADSK), Brocade (BRCD), Gap (GPS), Intuit (INTU), Marvell (MRVL), Pacific Sunwear (PSUN), Salesforce.com (CRM), Shoe Carnival (SVCL) and Zumiez (ZUMZ) are among the companies due to release their quarterly results after the markets close.