Market Analysis

The major U.S. index futures are pointing to a higher opening on Tuesday, with sentiment getting a shot in the arm from a report released by the Commerce Department showing a rebound in the U.S. retail sales for July. Core retail sales, excluding autos, gasoline and building materials, which go into GDP calculation also rose more than expected. The newfound optimism over consumer spending could strengthen the positive sentiment generated earlier on in the global trading day by better than expected GDP numbers reported by Germany and France. Reflecting the mood, risky bets are all gaining ground.

U.S. stocks extended their lackluster run on Monday due to a lack of catalysts to provide direction for the markets.

The major averages opened lower after Japan released weak second quarter GDP data. The averages declined throughout the morning but began paring back their losses over the course of the afternoon before ending mixed.

The Dow Industrials ended down 38.52 points or 0.29 percent at 13,169 and the S&P 500 Index closed at 1,404, down 1.76 points or 0.13 percent. Meanwhile, the Nasdaq Composite closed 1.66 points or 0.05 percent higher at 3,023.

Twenty-five of the thirty Dow components closed lower, with Alcoa (AA), Cisco Systems (CSCO), DuPont (DD) and Pfizer (PFE) leading the declines.

Resource and semiconductor stocks came under selling pressure.

Currency, Commodity Markets

Crude oil futures are rising $0.30 to $93.03 a barrel after edging down $0.14 to $92.73 a barrel on Monday. Gold futures are currently slipping $12.40 to $1,600.20 an ounce. In the previous session, gold fell $10.20 to $1,612.60 an ounce.

On the currency front, the U.S. dollar is trading at 78.86 yen compared to the 78.32 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2332 compared to yesterday’s $1.2333.

Asia

The major Asian markets closed higher following the declines of the previous two sessions, although the sentiment was cautious amid the economic uncertainties.

The minutes of the Bank of Japan’s July meeting engendered optimism and strengthened stimulus hopes. Positive GDP data from some major European nations gave a late-session boost.

Japan’s Nikkei 225 average hovered in positive throughout the session, although finishing off the highs at 8,930, up 44.73 points or 0.50 percent. Most sectors, barring defensive stocks, declined in the session. Utilities advanced, while Dainippon Screen Manufacturing, Nippon Sheet Glass, Yaskawa Electric were among the worst decliners in the session.

Australia’s All Ordinaries ignored a weak start and some early apprehension and moved decisively into positive territory in late morning trading. Thereafter, the average held above the unchanged line, closing up 7.90 points or 0.18 percent at 4,317. Healthcare stocks rallied strongly, while the financial space witnessed some weakness.

Hong Kong’s Hang Seng Index closed at 20.292, up 210.32 points or 1.05 percent.

On the economic front, the minutes of the Bank of Japan’s July meeting, at which the central bank tweaked its asset purchase program, showed that members were wary of the developments overseas and were of the view that no option should be ruled out in advance.

A survey by the National Australia Bank showed that Australia’s business confidence improved notably in July, although business conditions worsened. The business confidence index rose to 4 in July from –3 in June, while the business conditions index deteriorated to –3 in July from –1 in June.

Europe

The European markets are also advancing, as traders digest GDP data from some of the nations in the region and a slew of mixed earnings.

In corporate news, German utility RWE reported recurrent net income of 1.67 billion euros for the first half, with the metric coming in below the estimates of most analysts. The company also announced plans to eliminate 2,400 positions. Tour operator, TUI reported higher underlying EBITA for its third quarter. German drug maker Merck KgaA reported better than expected second quarter sales and profits.

Denmark’s container shipping company AP Moller-Maersk reported a 2 percent drop in second quarter profits yet said it expects its 2012 performance to be better than last year.

Boosted by consumer spending and net exports, Germany’s economy grew a better than expected 0.3 percent sequentially in the second quarter. Meanwhile, the French economy stagnated compared to expectations for a 0.1 percent contraction.

U.K. annual inflation rose 2.6 percent in July, according to estimates released by the Office for National Statistics. Economists expected inflation to ease to 2.3 percent from 2.4 percent in June. A survey by the Royal Institution of Chartered Surveyors showed that U.K. house prices declined in July. The house price balance fell to –24 in July from –22 in June.

U.S. Economic Reports

U.S. producer prices rose 0.3 percent month-over-month in July, steeper than the 0.2 percent increase expected by economists. Meanwhile, core producer prices jumped 0.4 percent, ahead of the 0.2 percent growth expected by economists.


Annually, prices were up an unadjusted 0.5 percent. Food prices rose 0.5 percent, the same pace as in June, while energy prices dropped by 0.4 percent, a more modest decline than the 0.9 percent drop reported a year-ago.

U.S. retail sales posted an unexpectedly strong rebound in July despite a contraction in June that was worse than initially reported, according to figures released by the Commerce Department. Overall U.S. retail sales were up 0.8 percent in July to a seasonally adjusted level of $403.9 billion, a notably stronger growth than the 0.3 percent predicted by most economists.



However, June retail sales figures, which had initially shown a 0.5 percent decline, were revised even further down to show a 0.7 percent drop for that month. Excluding the automotive sector, retail sales for June were up 0.8 percent, also notably above the 0.4 percent growth predicted by most economists. Excluding both the automotive and gasoline sectors, retail sales for July were up 0.9 percent.

The Commerce Department is scheduled to release its business inventories report for June at 10 am ET. The report summarizes the results from the monthly retail trade, wholesale trade and factory goods orders surveys. The report is expected to show a 0.2 percent increase in business inventories for the month.



Stocks in Focus

Home Depot (HD) reported second quarter earnings that beat estimates, while revenues were shy of expectations. The company raised its earnings expectation for the full year.

Teleflex (TFX) announced a deal to acquire substantially all assets of LMA International for 343.5 million Singapore dollars in cash or $276 million. LMA had revenues of $123.9 million in the fiscal year ended December 31st, 2011.

IAMGOLD (IAG) reported adjusted net earnings from continuing operations of 20 cents per share for its second quarter compared to 18 cents per share last year. Revenues rose 19 percent to $410.6 million. The earnings were in line, while the revenues exceeded estimates. The company reiterated its production forecast for 2012.

Salesforce.com (CRM) completed its acquisition of social media marketing platform Buddy Media.

Pfizer (PFE) said it has entered into an agreement with AstraZeneca (AZN) to buy the over-the-counter rights for NEXIUM, a prescription drug approved to treat gastroesophageal reflux disease, for $250 million. The British drug maker is also eligible to receive milestone and royalty payments. The companies are also exploring a strategic partnership that could include similar agreements for other prescription products of AstraZeneca.

Coinstar (CSTR) announced that its president and COO Gregg Kaplan will leave the company to pursue other opportunities.

Monster Beverage (MNST) said its board has increased its stock buyback authorization by $250 million.

Groupon (GRPN) reported second quarter adjusted earnings of 8 cents per share, ahead of the 3 cents per share consensus estimate. However, revenues were below estimates. The company’s third quarter revenue guidance surrounded the consensus estimate.

Bob Evans (BOBE), Jack Henry (JKHY), JDS Uniphase (JDSU), Myriad Genetics (MYGN) and Photronics (PLAB) are among the companies due to report their quarterly results after the markets close.