Market Analysis

The major U.S. index futures are pointing to a sharply higher opening on Thursday, with sentiment getting a boost from solid domestic economic data and soothing comments from the European Central Bank President Mario Draghi. Draghi said in a conference in London that the central bank is ready to do whatever it takes to preserve the euro. This boosted risk sentiment, rallying traders around risky bets. Additionally, two separate reports released earlier in the day showed that the domestic economy may not fall off the cliff despite the recent slackness.

U.S. stocks moved about in a lackluster fashion on Wednesday before closing mixed, as economic worries and Apple’s (AAPL) earnings miss curbed risk appetite even as a few high profile earnings beats helped offset some of the pessimism.

The major U.S. averages opened slightly higher and rose slightly in early trading only to pare back their gains following the release of the new home sales report. The averages took divergent routes thereafter, with the Dow Industrials holding up fairly well following encouraging earnings from companies such as Caterpillar (CAT) and Boeing (BA), while the S&P 500 Index and the Nasdaq Composite were pressured by Apple’s earnings.

After languishing in the red for much of the morning, the S&P 500 Index and the Nasdaq Composite Index recouped their losses and were found trading higher along with the Dow until late trading. The former two averages retreated in late trading, while the Dow ended higher for the session.

The Dow Industrials added 58.73 points or 0.47 before closing up 12,676, while the S&P 500 Index edged down 0.42 points or 0.03 percent to 1,338 and the Nasdaq Composite Index closed at 2,854, down 8.75 points or 0.31 percent.

Eighteen of the thirty Dow components closed higher and two stocks closed unchanged, while the remaining ten stocks ended in negative territory. Boeing, Cisco Systems (CSCO), AT&T (T), Caterpillar and JP Morgan Chase (JPM) were among the biggest gainers of the session.

Semiconductor, biotechnology and gold stocks advanced strongly, while housing stocks retreated sharply on the new home sales report.

On the economic front, the Commerce Department said new home sales came in at a seasonally adjusted annual rate of 350,000 in June, down from 382,000 in May. This represented the lowest level since January. Sales plunged the most in the North.

Inventories as measured in terms of the months of supply rose to 4.9 months from 4.5 months in the previous month. The median price of a new home declined 3.2 percent year-over-year and fell 1.9 percent from the previous month.

Currency, Commodity Markets

Crude oil futures are rising $1.19 to $90.16 a barrel after advancing $0.47 to $88.97 a barrel on Wednesday.

The increase in the previous session came against the backdrop of lackluster risk appetite and the release of the inventory report, which showed that crude oil inventories rose by 2.7 million barrels to 380.1 million barrels in the week ended July 20th. Inventories were above the upper limit of the average range.

Distillate inventories increased by 1.7 million barrels but remained below the lower limit of the average range. Gasoline stockpiles climbed by 4.1 million barrels and were in the lower half of the average range. Refinery capacity utilization averaged 92.4 percent over the four weeks ended July 20th compared to 92.3 percent over the previous four weeks.

Gold futures, which jumped $4.30 to $1,612.40 an ounce in the previous session, are currently slipping $2.30 to $1,605.80 an ounce.

Among currencies, the U.S. dollar is trading at 78.17 yen compared to the 78.17 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2305 compared to yesterday’s $1.2158.

Asia

The Asian markets closed on a mixed note, with the Australian, Hong Kong, Japanese, New Zealand, Singaporean and South Korean markets advancing, while the Taiwanese, Malaysian, Indonesian, Indian and Chinese markets retreated.

Japan’s Nikkei 225 average went about a volatile ride in the morning before advancing sharply in late afternoon trading. Thereafter, the index moved sideways before closing up 77.20 points or 0.92 percent at 8,443.

Olympus rallied close to 10 percent on the news that Terumo is looking to invest in and merge with the company, while Yahoo Japan gained about 8 percent. Nomura added over 5 percent ahead of its earnings release. The company also announced the resignation of its CEO and CEO due to an insider trading scandal. Most tech stocks also rebounded after yesterday’s decline.

Meanwhile, defensive utility, pharma and telecom stock retreated. Canon slipped 7.77 percent and led the pack of losers.

After some early apprehension, Australia’s All Ordinaries hovered in positive territory for the bulk of the session. The index closed up 22.40 points or 0.54 percent at 4,174. Most sectors advanced, with energy stocks leading the rebound.

Hong Kong’s Hang Seng Index closed at 18,893, up 15.46 points or 0.08 percent.

In a central bank decision, the Reserve Bank of New Zealand opted to leave its official cash rate unchanged at 2.50 percent, the level at which it has been since March 2011.

Japan’s corporate service prices eased in June, according to a report released by the Bank of Japan. The corporate service price index fell 0.3 percent year-over-year, while economists had expected a 0.1 percent increase.

Europe

The major European averages are trading lower amid the release of mixed earnings reports. The apprehension reflected caution ahead of a trio of key U.S. economic reports due to be released later in the global trading day and the fluid domestic fiscal situation.

The results of a consumer confidence survey by the GfK Institute showed that German consumer sentiment is set to improve slightly in August. The forward looking consumer confidence indicator rose to 5.9 in August from 5.8 in July. Economists expected an unchanged reading for the month.

In corporate news, Alcatel-Lucent (ALU) announced plans to slash 5,000 jobs, as the beleaguered telecommunication equipment struggles to turn around its business. The company reported an adjusted operating loss of 31 million euros for its second quarter.

Unilever (UL) reported underlying sales growth of 5.8 percent for its second quarter, which was ahead of estimates by most analysts. German engineering company Siemens (SI) reported lower than expected second quarter earnings and sales and also cautioned that it may be tough to attain its full year earnings target.

Shell (RDS) reported a 13 percent decline in its second quarter earnings, excluding one-time items and inventory changes, as crude oil prices retreated. Sanofi-Aventis (SNY) reported a decline in its second quarter profits, although the drop was less than expected. Meanwhile, Roche said its first-half profit slipped, dragged down by costs associated with a plant closure in the U.S., despite sales rising 3.5 percent.

German chemical maker BASF reported a second quarter profit that fell from the year-ago period and also trailed estimates. The company affirmed its full year guidance for increases in sales and earnings.

U.S. Economic Reports

Fueled by a second month in a row of increases in the transportation sector, U.S. durable goods orders increased to a notably higher level than expected in June. According to figures released Thursday by the Commerce Department overall new orders for durable goods came in at $221.6 billion, a 1.6 percent increase from May levels.



Furthermore the increase, which was much higher than most economists expected, came atop revised figures for May that showed a 1.6 percent increase in durable goods orders for that month, higher than the 1.1 percent increase initially reported.

Strong growth in the transportation sector drove much of the increase in overall durable goods orders. Excluding transportation orders, however, the durable goods orders for June were less encouraging, falling 1.1 percent for the month.

First-time claims for U.S. unemployment benefits fell by much more than expected in the week ended July 21st, according to a report released by the Labor Department, with claims pulling back near the four-year low set earlier this month.



The Labor Department said initial jobless claims tumbled to 353,000 from the previous week's revised figure of 388,000. Economists had expected jobless claims to edge down to 380,000 from the 386,000 originally reported for the previous week. With the steep drop, jobless claims pulled back near the 352,000 level seen in the week ended July 7th, which was the lowest since April of 2008.

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 pending home sales index is expected to have risen 0.9 percent in June.



The pending home sales index surged up 5.9 percent month-over-month in May. The index was up 13.3 percent from the year-ago period. Pending home sales rose in all four regions.

The Kansas City Federal Reserve is due to release the results of its manufacturing survey for July at 11 am ET. The manufacturing index based on the survey is expected to improve to 4 in July from 3 in June.

Stocks in Focus

Exxon Mobil Corp. (XOM) reported that its second quarter profit surged from the previous year period, helped by a net gain of $7.5 billion associated with divestments and tax-related items. Total revenues and other income improved from the year-ago quarter and surpassed the consensus estimate.

O’Reilly (ORLY) reported better than expected second quarter earnings, while its revenues were slightly shy of estimates. The company raised its earnings outlook for the full year.

Helca Mining (HL) announced an offer to buy all outstanding shares of U.S. Silver Corp. for C$1.80 per share in cash.

Raytheon (RTN) announced a $925 million contract award by the Missile Defense Agency for the development of the Standard Missile-3 Block IIA missile.

Cliffs Natural’s (CLF) second quarter earnings exceeded expectations, while its revenues were below estimates.

Lam Research (LRCX) reported fourth quarter non-GAAP earnings of 60 cents per share on revenues of $741.81 million. The results trailed estimates.

Zynga (ZNGA) reported below consensus second quarter earnings and revenues. The company also lowered its 2012 adjusted earnings per share guidance to below consensus estimates.

Western Digital (WDC) reported fourth quarter earnings and revenues that comfortably beat analysts’ estimates.

Flextronics (FLEX) reported better than expected first quarter earnings, while its revenues were slightly shy of estimates. The company’s second quarter guidance was downbeat.

Akamai Technologies (AKAM) reported strong second quarter results and issued upbeat guidance for the third quarter. Meanwhile, Las Vegas Sands’ (LVS) second quarter earnings and revenues trailed estimates.

Amazon (AMZN), Amgen (AMGN), BJ Restaurants (BJRI), CA Tech (CA), Expedia (EXPE), Facebook (FB), Gen-Probe (GPRO), Gilead Sciences (GILD), Global Payment (GPN), Hutchinson Technology (HTCH), Ingram Micro (IM), Maxim Integrated (MXIM), Netsuite (N), Qlogic (QGLC), Starbucks (SBUX), Tellabs (TLAB) and VeriSign (VRSN) are among the companies due to release their results after the markets close.