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Wall Street Turns Cautious As Manufacturing, Housing Data Loom

Wall Street Turns Cautious As Manufacturing, Housing Data Loom

U.S. index futures suggest a positive open on Wall Street on Monday, although they have come off their overnight highs. The global markets took heart from the back-to-back gains Wall Street recorded last Friday and a report released from Japan, showing a smaller than expected contraction in the second quarter.

The New York Federal Reserve's manufacturing report, the results of a homebuilder confidence survey along with a slew of M&A news may set the tempo for today's market movement.

As of 6:30 am ET, the Dow futures are rising 29 points, the S&P 500 futures are advancing 4 points and the Nasdaq 100 futures are gaining 6 points.

U.S. stocks extended their weekly losses in the week ended August 12th, ending the volatile week lower, although after trimming much of their losses. For the week ended August 12th, the Dow Industrials fell 1.53 percent and the S&P 500 Index lost 1.72 percent, while the Nasdaq Composite Index receded 0.97 percent.

The unfolding week has a fairly busy calendar, with housing manufacturing and inflation reports among the prominent releases of the week. Traders may closely track the results of the New York and the Philadelphia Federal Reserves' manufacturing surveys for August, the National Association of Homebuilder's housing market index for August, the Commerce Department's housing starts report for July, the National Association of Realtors' existing home sales report for July, the Federal Reserve's industrial production report for July and the weekly jobless claims report.

The results of the New York Federal Reserve's empire state manufacturing survey are slated to be released at 8:30 am ET. The headline general business conditions index for August is expected to come in at 1 compared to 4 points in July, when it rebounded from the previous month's reading of a negative 3.8.

The Treasury Department is due to release a report on the flows of financial instruments into and out of the U.S. for June at 9 am ET.

Additionally, the National Association of Homebuilders is scheduled to release the results of its August survey on homebuilders' confidence at 10 am ET. The index is expected to remain unchanged at 15 after it improved by 2 points in June.

Atlanta Federal Reserve President Dennis Lockhart is due to speak on the U.S. economy at 1:25 pm ET.

In deal news, a Financial Times report suggested that Wal-Mart (WMT) is interested in the Brazilian business of French retailer Carrefour.

A Wall Street Journal report suggested that Time Warner Cable (TWC) is close to announcing a deal by buy cable operator Insight Communications, which is owned by the Carlyle Group. The deal is valued at $3 billion, including the assumption of debt.

Transocean (RIG) said it has offered to acquire Norway's Aker Drilling for 26.50 Norwegian Krone per share.

Ralcorp.'s (RAH) board said it has determined that ConAgra's latest offer was not in the best interest of its shareholders. A revised proposal from ConAgra valued Ralcorp at $94 per share, trumping its own earlier of $86 per share made in May.

Home improvement retailer Lowe's (LOW) reported second quarter earnings of 64 cents per share compared to 58 cents per share last year, as sales rose 1.3 percent to $14.5 billion. The results trailed expectations. The company issued a lackluster guidance for its third quarter and the full year.

Estee Lauder Companies (EL) and Sysco (SYY) are among the other prominent companies due to release their quarterly earnings before the markets open.

Agilent Technologies (A) and Urban Outfitters (URBN) are scheduled to report their results after the markets close.

The Asian markets ended higher across the board, although the South Korean and Indian markets removed closed on account of public holidays. Optimism stemmed from the Japanese GDP data and the U.S. retail sales report released last Friday.

The Japanese market received some support from the modest pullback in the yen in reaction to comments by Japanese finance minister Yoshihiko Noda said that Japan will intervene again in the currency market to rein in the rise of the yen, which is seen to hurt the nation's export prospects.

Earlier in the day, Japan released second quarter GDP report, showing a 0.3 percent quarter-quarter GDP decline following a worse 0.9 percent drop in the first quarter. The seasonally adjusted annualized rate of GDP showed a 1.3 percent decline compared to the 3.6 percent drop in the first quarter. The declines were not as much as economists had feared, bring in some relief to the global markets.

The European markets are also seeing a firm trend, with the major averages in the region seeing modest to moderate advances. The French CAC 40 Index is nearly flat, while the German DAX Index and the U.K.'s FTSE Index are rising 0.90 percent and 0.33 percent, respectively.

The safe haven Swiss franc has come off its record high after the speculation that the Swiss National Bank will step in and set an exchange rate target against the euro gained ground.

Commodities are weaker, as the dollar is gaining ground.

by RTT Staff Writer

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