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Wall Street Ripe For Profit Taking?


Stocks look set for a weak start on Tuesday, as the euphoria over positive earnings subside. The markets paused yesterday despite the psychological boost provided by Osama bin Laden's killing and a spate of deal announcements. The prices of commodities are showing softness amid a rebound by the dollar, as traders turn wary over the sustainability of the recent market uptrend.

As of 6:30 AM ET, the Dow futures are down 50 points, the S&P 500 futures are moving down 6 points and the Nasdaq 100 futures are slipping 7.75 points.

The economic calendar of the day is fairly light. At 10 am ET, the Commerce Department is set to release the factory goods orders report for March. Economists estimate a 2 percent increase in orders. A report released last week showed that orders for durable goods, which make up the bulk of factory goods, rose 2.5 percent, propped up by a surge in commercial aircraft orders. Orders for and motor vehicle orders, electrical appliance and general machinery orders also remained buoyant.

The nation's automakers are also due to release their monthly sales performance for April. Sales for the month are expected to have jumped in the month, as the quake-impact is yet to reflect fully on supply and prices.

The earnings season is continuing, with the bias titled mostly to the upside. Automatic Data Processing (ADP) reported in line earnings for its third quarter, while revenues were ahead of estimates. The company raised its 2011 guidance above estimates.

Forest Oil (FST) reported an adjusted profit of 19 cents per share for its first quarter, down from 42 cents per share in the year-ago period. Revenues fell to $203.14 million from the year-ago's $221.86 million. The results were below estimates.

Despite being lower, Anadarko's (APC) first quarter earnings exceeded expectations. Revenues rose from the year-ago period and also exceeded expectations.

Hologic (HOLX) reported better than expected results for its second quarter, while it also issued upbeat guidance for its third quarter and the full year.

Eli Lilly (LLY) announced that the FDA has approved TRADJENTA, the type 2 diabetes treatment it is jointly developing with Boehringer Ingelheim Pharma.

Sears Holdings (SHLD) expects a loss of $1.35-$1.81 per share for the first quarter. The company said its same store sales for the April quarter fell 3.6 percent, while it also said its board approved the repurchase of up to an additional $500 million shares.

Pfizer (PFE), First Solar (FSLR), Clorox (CLX), Unum (UNM), Comscast (CMCSA), THQ, Inc. (THQI) and Mastercard (MA) are among the companies due to report their quarterly results today.

The major European averages are trading lower amid a pullback in commodity prices. Additionally, the recent gains have also made traders wary, resulting in some profit taking. Across the Atlantic, Metro AG, France Telecom, Infineon (IFX) and MAN SE were among the companies that reported robust quarterly results.

The major Asian markets ended Tuesday's session mostly lower, with the exception of the Chinese market, which advanced moderately. The Japanese markets remain closed for a 3-day holiday beginning today. The Reserve Bank of Australia today left its official cash rate unchanged at 4.75 percent, in line with expectations. Commenting on the decision, JP Morgan said the official cash rate is headed up, but net yet.

Meanwhile, the Reserve Bank of India changed its calibrated approach to monetary policy and hiked short-term interest rates by 50 basis points to tame soaring inflation. The central bank projected a lower growth outlook and suggested that inflation will persist and may even get worse in the near term fueled by rising oil and other commodity prices.

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