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Stocks May Open Lower On Disappointing Economic Data - U.S. Commentary


Stocks futures have moved to the downside in recent trading on Thursday following the release of some disappointing economic data. The major index futures are currently pointing to a modestly lower open for the markets, with the Dow futures down by 26 points.

The pullback by the futures came after a report from the Philadelphia Federal Reserve unexpectedly showed a contraction in regional manufacturing activity in the month of February.

The Philly Fed said its index for current manufacturing activity in the region tumbled to a negative 4.1 in February from a positive 17.0 in January, with a negative reading indicating contraction. The index had been expected to slip to 14.0.

A separate report from the Commerce Department also showed a smaller than expected increase in durable goods orders in January.

The report said durable goods orders surged up by 1.2 percent in December after jumping by an upwardly revised 1.0 percent in November.

Economists had expected durable goods orders to soar by 1.5 percent compared to the 0.7 percent increase that had been reported for the previous month.

Excluding a jump in orders for transportation equipment, durable goods orders inched up by just 0.1 percent in December after slipping by 0.2 percent in November. Ex-transportation orders had been expected to rise by 0.3 percent.

The Commerce Department also said orders for non-defense capital goods excluding aircraft, a closely watched indicator of business spending, fell by 0.7 percent in December after tumbling by 1.0 percent in November.

Meanwhile, the Labor Department released a report showing first-time claims for unemployment benefits fell more than expected in the week ended February 16th.

The report said initial jobless claims dropped to 216,000, a decrease of 23,000 from the previous week's unrevised level of 239,000. Economists had expected jobless claims to dip to 229,000.

Optimism about trade talks between the U.S. and China may also help to limit any early selling pressure, with a report from Reuters saying the two sides have started to outline commitments in principle on the stickiest issues in their trade dispute.

While the U.S. and China remain far apart on demand for structural changes to China's economy, sources familiar with the negotiations told Reuters the broad outline of what could make up a deal is beginning to emerge from the talks.

A separate report from CNBC indicating Chinese authorities could be getting ready to implement more extensive stimulus measures in a bid to encourage economic growth may also help to limit any early downside by stocks.

Shortly after the start of trading, At 10 am ET, the National Association of Realtors is scheduled to release its report on existing home sales in the month of January.

Existing home sales are expected to climb by 0.8 percent in January after plunging by 6.4 percent to a three-year low in December.

The Conference Board is also due to release its report on leading economic indicators in the month of January. The leading economic index is expected to inch up by 0.1 percent.

Following the relatively lackluster performance on Tuesday, stocks continued to experience choppy trading on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line.

Eventually, the major averages ended the day modestly higher. The Dow rose 63.12 points or 0.2 percent to 25,954.44, the Nasdaq inched up 2.30 points or less than a tenth of a percent to 7,489.07 and the S&P 500 edged up 4.94 points or 0.2 percent to 2,784.70.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan's Nikkei 225 Index ticked up by 0.2 percent, while China's Shanghai Composite Index dipped by 0.3 percent.

The major European markets have also turned mixed on the day. While the U.K.'s FTSE 100 Index has slumped by 1 percent, the French CAC 40 Index is just above the unchanged line and the German DAX Index is up by 0.3 percent.

In commodities trading, crude oil futures are falling $0.26 to $56.90 a barrel after climbing $0.83 to $56.92 a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,338.50, down $9.40 compared to the previous session's close of $1,347.90. On Wednesday, gold rose $3.10.

On the currency front, the U.S. dollar is trading at 110.67 yen compared to the 110.85 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1363 compared to yesterday's $1.1338.

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