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Beyond the Numbers

Fluctuations By Futures Point To Choppy Trading Day
4/20/2018 8:48 AM

The major U.S. index futures are pointing to a modestly lower opening on Friday, although the futures have fluctuated over the course of the morning.

Traders may be reluctant to make significant moves early in the day amid uncertainty about the near-term outlook for the markets.

The earnings season has been relatively positive thus far, although a slew of big-name companies are scheduled to release their quarterly results next week.

Following the lackluster performance seen on Wednesday, stocks moved mostly lower during trading on Thursday. The major averages all moved to the downside after ending Wednesday's trading mixed.

The major averages ended the day firmly in the red but well off their lows of the session. The Dow fell 83.18 points or 0.3 percent to 24,664.89, the Nasdaq slid 57.18 points or 0.8 percent to 7,238.06 and the S&P 500 dropped 15.51 points or 0.6 percent to 2,693.13.

A negative reaction to news from some well-known companies contributed to the weakness on Wall Street on the day.

Shares of Procter & Gamble (PG) moved to the downside after the consumer products giant released its first quarter results a day earlier than expected.

While P&G reported better than expected first quarter results, the company also announced it is buying the consumer health business of Germany's Merck for about $4.2 billion.

Apple (AAPL) also came under pressure after key Asian chip partner Taiwan Semiconductor Manufacturing (TSM) forecast weaker than expected second quarter revenues.

On the other hand, shares of American Express (AXP) moved significantly higher after the credit card giant reported first quarter results that beat analyst estimates on both the top and bottom lines.

In U.S. economic news, the Labor Department released a report showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended April 14th.

The report said initial jobless claims edged down to 232,000, a decrease of 1,000 from the previous week's unrevised level of 233,000. Economists had expected jobless claims to dip to 230,000.

A separate report released by the Federal Reserve Bank of Philadelphia showed regional manufacturing activity unexpectedly saw a modestly faster rate of growth in the month of April.

The Philly Fed said its diffusion index for current general activity inched up to 23.2 in April from 22.3 in March, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to dip to 20.1.

Shortly after the start of trading, the Conference Board released a report showing its index of leading economic indicators increased in line with economist estimates in the month of March.

The Conference Board said its leading economic index rose by 0.3 percent in March after climbing by an upwardly revised 0.7 percent in February.

Tobacco stocks showed a substantial move to the downside on the day, with the NYSE Arca Tobacco Index plunging by 5.2 percent. The index extended the sharp pullback seen over the two previous sessions.

Philip Morris (PM) posted a particularly steep loss after reporting first quarter earnings that exceeded analyst estimates but on weaker than expected revenues.

Significant weakness was also visible among semiconductor stocks, as reflected by the 4.3 percent slump by the Philadelphia Semiconductor Index. The disappointing guidance by Taiwan Semiconductor weighed on the sector.

Housing stocks also moved sharply lower over the course of the session, dragging the Philadelphia Housing Sector Index down by 2.7 percent.

Telecom, computer hardware, biotechnology, and real estate stocks also saw considerable weakness on the day, while financial stocks showed a strong move to the upside.

Commodity, Currency Markets

Crude oil futures are falling $0.39 to $67.90 a barrel after slipping $0.18 to $68.29 a barrel on Thursday. Meanwhile, after sliding $4.70 to $1,348.80 an ounce in the previous session, gold futures are down $3.60 at $1,345.20 an ounce.

On the currency front, the U.S. dollar is trading at 107.58 yen compared to the 107.37 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.2306 compared to yesterday’s $1.2345.

Asia

Asian markets drifted lower on Friday, led by losses in technology stocks amid falling demand for smartphones and a downward revision in revenue target by the world's largest contract chipmaker Taiwan Semiconductor.

Japanese stocks ended slightly lower, with the benchmark Nikkei 225 Index edging down by 28.94 points or 0.1 percent to 22,162.24.

In economic news, overall consumer prices in Japan were up 1.1 percent year-over-year in March, data from the Ministry of Internal Affairs and Communications showed. That was in line with expectations and down from 1.5 percent in February.

Core CPI, which excludes volatile food prices, gained an annual 0.9 percent, again matching forecasts and down from 1.0 percent in the previous month. On a monthly basis, overall inflation fell 0.4 percent and core CPI was down 0.1 percent.

Meanwhile, Japan's tertiary industry activity showed no variations in February, in line with expectations, data from the Ministry of Economy, Trade and Industry showed. On a monthly basis, the tertiary industry activity index remained flat in February after a 0.4 percent decrease in January.

In the Australian market, shares from the telecom and utility sectors trended lower. The benchmark S&P/ASX 200 Index ended down 12.20 points or 0.2 percent at 5,868.80. The broader All Ordinaries Index declined 12 points or 0.2 percent to 5,964.40.

G8 Education, the biggest loser in the benchmark index, slumped 7.2 percent. Evolution Mining, Independence Group, Eclipx Group, NB Holdings, JB Hi-Fi and TPG Telecom ended lower by 2 to 5 percent.

Among big four banks, ANZ Bank and Westpac ended flat, while Commonwealth Bank of Australia and Bank of Queensland ended lower by 0.5 percent and 1.5 percent, respectively.

Chinese stocks ended notably lower, with the benchmark Shanghai Composite Index tumbled 45.90 points or 1.5 percent to 3,071.47 1due largely to heavy selling in telecom and software stocks. Hong Kong's Hang Seng Index slumped 290.11 points or 0.9 percent to 30,418.33.

Shares of China Huarong Asset Management Co., the country's biggest bad debt manager, plunged about 11 percent after the company's chairman Lai Xiaomin stepped down amid an investigation into alleged corruption.

AAC Technologies and Sunny Optical Technologies tumbled 8.1 percent and 6 percent, respectively. Lenovo Group, China Petroleum and Hengen International Group lost 2.5 to 4 percent.

Europe

European stocks are turning in another lackluster performance on the day after ending the previous session mixed. While the German DAX Index has fallen by 0.3 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both up by 0.3 percent.

Shares of Ericsson have moved sharply higher after the telecom giant reported a narrower first quarter loss on improved gross margin and reduced operating expenses.

Meanwhile, consumer good company Reckitt Benckiser has come under pressure after reporting weaker than expected first quarter results.

In economic news from the eurozone, German producer price inflation accelerated for the first time in six months in March, albeit marginally.

Data released by Destatis showed German producer price inflation rose to 1.9 percent in March from February's 14-month low of 1.8 percent. The rate was forecast to increase to 2.0 percent.

On a monthly basis, producer prices edged up 0.1 percent from February, when prices dropped 0.1 percent. Prices were expected to rise by 0.2 percent.

U.S. Economic Reports

At 9:40 am ET, Chicago Federal Reserve President Charles Evans is due to speak about current economic conditions and monetary policy at the Graaskamp Center Spring Board Conference in Chicago

San Francisco Fed President John Williams is scheduled to participate in a fireside chat at the UC Berkeley Fischer Center for Real Estate and Urban Economies in Pebble Beach, California, at 11:15 am ET.

Stocks In Focus

Shares of Skechers (SKX) are moving substantially lower in pre-market trading after the footwear company reported better than expected first quarter results but provided disappointing guidance for the current quarter.

Online broker E*Trade (ETFC) may also see early weakness despite reporting first quarter results that exceeded analyst estimates.

On the other hand, shares of General Electric (GE) are likely to move to the upside after the conglomerate reported better than expected adjusted first quarter earnings.

Food supplier Pinnacle Foods (PF) is also moving significantly higher in pre-market trading after activist hedge fund Jana Partners disclosed a 9.1 percent stake in the company.
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