Market Analysis

The major U.S. index futures are pointing to a mixed opening on Wednesday, with sentiment still shaky, as traders look ahead to the EU summit. Ahead of the EU summit, the leaders of Germany and France are scheduled to meet later today. The U.S. durable goods orders report released showed an in line reading, with May order growth coming in better than expected, while the previous month’s reading was downwardly revised. However, capital goods orders rose less than expected. Now the focus shifts to the pending home sales report due to be released after the markets open and the news emerging out of the eurozone.

U.S. stocks rebounded on Tuesday, as bargain hunting on the heels of a positive house prices report and a rebound in oil prices supported sentiment. The major averages opened higher following the release of a report showing an increase in house prices but surrendered their gains and languished below the unchanged line until the afternoon in reaction to disappointing consumer confidence data. Thereafter, the averages moved steadily higher and closed moderately higher.

The Dow Industrials ended up 32.01 points or 0.26 percent at 12,535 and the S&P 500 Index closed at 1,320, up 6.27 points or 0.48 percent, while the Nasdaq Composite Index closed 17.89 points or 0.63 percent higher at 2,854.

Seventeen of the thirty Dow components closed higher, with Chevron (CVX), Disney (DIS), General Electric (GE), JP Morgan Chase (JPM), McDonald’s (MCD) and Exxon Mobil (XOM) leading the Dow’s gains. Three stocks closed unchanged, while the remaining ten stocks retreated.

Oil, retail and housing were among the best performing sectors in the session.

On the economic front, the results of the S&P Case-Shiller house price survey showed that the 20-city composite house price index rose 0.67 percent month-over-month in April and was down a less than expected 1.9 percent from a year ago. Prices increased relative to the previous month in 17 of the 20 cities surveyed.

The Conference Board’s consumer confidence survey showed that confidence declined by more than expected in June. The consumer confidence index fell 2.4 points to 62 in June. The expectations index declined by 5 points to a 7-month low of 72.3, while the present situation index rose 1.7 points to 46.6.

Currency, Commodity Markets

Crude oil futures are adding $0.04 to $79.33 a barrel after adding $0.62 to $79.98 a barrel on Tuesday. The API inventory report released late Tuesday showed that crude oil inventories rose by 507,000 barrels in the week ended June 22nd.

An ounce of gold is currently valued at $1,570.40, down $4.50 from the previous session’s close of $1,574.90. On Tuesday, gold fell $13.50.

Among currencies, the U.S. dollar is trading at 79.67 yen compared to the 79.52 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.2482 compared to yesterday’s $1.2492.

Asia

The major Asian markets rebounded from a 4-session slid, encouraged by the positive overseas cues and the rumors that China may announce more stimulus measures to reinvigorate domestic growth.

After languishing below the unchanged line in the morning, Japan’s Nikkei 225 average recovered in the afternoon, closing near the day’s high at 8,731, up 66.50 points or 0.77 percent. Most stocks, with the exception of some defensive stocks, advanced, as the yen’s weakening supported most export-dependent stocks.

Australia’s All Ordinaries advanced steadily over the course of the session before closing 27.70 points or 0.68 percent higher at 4,084. Consumer staple stocks led the gains, while financial and healthcare stocks also lent support. On the other hand, material stocks came under selling pressure.

Hong Kong’s Hang Seng Index ended the day up 195.11 points or 1.03 percent at 19,177. The market received a shot in the arm from a report in the Chinese official Xinhua News Agency that the government plans to push forward joint ventures between the stock exchanges in Hong Kong, Shenzhen and Shanghai, and encourage more exchange-traded funds that track mainland and local stocks.

On the economic front, New Zealand reported a trade surplus of 301 million New Zealand dollars for May compared to the surplus of 335 million New Zealand dollars in April. The surplus was wider than economists had expected.

Europe

The major European markets are higher as well, with the French CAC 40 Index rising 0.54 percent and the German DAX Index adding 0.76 percent, while the U.K.’s FTSE 100 Index is advancing 0.55 percent.

In corporate news, Standard Chartered said it expects its profit before tax for the first-half to grow at a high single digit rate, below its performance in recent years, as the company grapples with the weakening of Asian currencies against the dollar. Meanwhile, the company also confirmed its outlook for the full year.

A report released by the German Federal Statistical Office showed that German annual import price inflation eased to 2.2 percent in May from 2.3 percent in April, while export prices were up 1.6 percent.

French statistical agency INSEE said it expects the domestic unemployment rate to continue to rise, given the weaker economic growth. The agency expects the jobless rate to come in at 10.3 percent in the fourth quarter.

After German Chancellor Angela Merkel reportedly said that there will be no shared total liability in the European Monetary Union as long as she is alive, Merkel and her French counterpart Francois Hollande are set to meet today to discuss the EU summit beginning Thursday, the international situation and future Franco-German exchanges.

Italy raised 9 billion euros from the issue of 6-month Treasury bills, in line with the target, although at yields higher than at a late-May auction. Meanwhile, demand was slightly better than at the earlier auction.

U.S. Economic Reports

Driven by increases in the transportation sector, U.S. durable goods orders rebounded to a notably higher than expected level in May, according to figures released by the Commerce Department. New orders for manufactured durable goods in May increased by $2.3 billion in May, a 1.1 percent increase over revised April levels.



The April levels of durable goods orders were, however, revised down to show a 0.2 percent decline rather than the relatively level rate previously reported.The May increase partially reverses two consecutive months of declining durable goods orders with a sharp 3.7 percent decline recorded for March. Most economists had expected the partial rebound though most estimates had forecast a more conservative 0.4 percent growth rate.

Data on Pending Home Sales, which is a leading indicator of housing market activity released by the National Association of Realtors, is due out at 10 AM ET. A pending sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. The index is expected to have risen 1.2 percent in May.



The pending home sales index fell 5.5 percent to 95.5 in April. Economists had expected a modest increase.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended June 22nd at 10:30 am ET.



Crude oil inventories rose by 2.9 million barrels to 387.3 million barrels in the week ended June 15th. Inventories were above the upper limit of the average range.

Gasoline inventories edged up by 0.9 million barrels, remaining in the lower limit of the average range. Distillate stockpiles climbed by 1.2 million barrels and were in the lower limit of the average range. Refinery capacity utilization averaged 91 percent over the four weeks ended June 15th compared to 90 percent over the previous four weeks.

Stocks in Focus

O’ Reilly Automotive (ORLY) lowered its second quarter comparable store sales guidance to 2-2.5 percent from 3-5 percent. The company also lowered its second quarter earnings guidance to the lower end of its previously announced guidance range of $1.13-$1.17 per share.

Monsanto (MON) said its third quarter profit improved from the prior year period. Net sales increased 17 percent and topped the consensus estimate. The company also confirmed its 2012 earnings per share guidance.

General Mills’ (GIS) fourth quarter profit and sales improved from the year-ago quarter. The company expects its fiscal 2013 adjusted earnings per share below Wall Street view and its net sales to grow at a mid-single-digit rate.

Lennar reported second quarter earnings of $2.06 per share, including a deferred tax asset valuation allowance of $1.85 per share, compared to earnings of 7 cents per share last year. Revenues climbed about 22 percent to $930.16 million. The results exceeded estimates.

Guess (GES) announced that its board has authorized a new $500 million stock buyback program.

Bristol-Myers Squibb (BMY) announced board authorization of the repurchase of additional $3 billion worth of shares.

H&R Block (HRB) reported fourth quarter income from continuing operations of $2.01 per share on revenues of $2 billion, down 1.7 percent year-over-year. Analysts’ estimates, which typically exclude one-time items, called for earnings of $2.05 per share on revenues of $2.01 billion.

Casella Waster (CWST), Herman Miller (MLHR), Paychex (PAYX) and Progress Software (PRGS) are among the companies due to report their quarterly results after the markets close.