Wall Street seems to have turned pessimistic, as indicated by the U.S. index futures, which point to a negative opening on Monday. The deterioration of sentiment stems from apprehension ahead of key risk events this week and the developments in the euro zone. France has opted to unilaterally implement a financial transaction tax and the European Union leaders are meeting today in Brussels to discuss a fiscal compact and the Greek situation. Meanwhile, Italy successful auctioned bonds at benign terms.
As of 6:30 am ET, the Dow futures are receding 74 points, the S&P 500 futures slipping 8.30 points and the Nasdaq 100 futures are slipping 15.50 points.
U.S. stocks scrambled to a mixed close in the week ended January 27th after advancing for three straight weeks. The FOMC announcement of last week and some promising earnings reports helped prevent further damage amid concerns over the still unresolved nature of the Euro zone debt crisis.
Domestically, several first-tier economic reports are due in the unfolding week and these reports could provide further clarity into the economic outlook. The monthly non-farm payrolls report for January, a private sector job report by ADP, considered a precursor for the former, the results of the Institute for Supply Management's manufacturing and non-manufacturing surveys, a regional manufacturing survey, the weekly jobless claims report and the Conference Board's consumer confidence report are among the market moving reports of the week.
Traders may also focus on the S&P Case-Shiller house price index for November, the Commerce Department's construction spending and factory goods orders reports for December and announcements concerning the Treasury auctions of 3-year and 10-year notes and 30-year bonds. The fourth quarter employment cost index, the preliminary fourth quarter productivity and costs report and a couple of Fed speeches round up the economic events of the week.
The Bureau of Economic Analysis is due to release its personal income & outlays report for December at 8:30 am ET. Economists expect that personal income as well as personal spending rose 0.1 percent each from the previous month.
In corporate news, Thomas & Betts (TNB) announced a deal to be acquired by Swiss engineering giant ABB for $3.9 billion in cash. The company also announced that its fourth quarter adjusted earnings from continuing operations rose 30 percent to $1 per share on 13.4 percent sales growth to $603.6 million. For 2012, the company expects sales growth to be in the mid single digit range and operating earnings of $3.90-$4.20 per share. The fourth quarter results exceeded estimates, while the 2012 guidance was in line with estimates.
Exxon Mobil (XOM) announced an agreement that will result in the restructuring of its holdings in Japan. The company executed a deal with TonenGeneral Seikyu to sell its stake in its refining venture called ExxonMobil Yugen Kaisha for $3.9 billion. This will result in a reduction in Exxon Mobil's stake in Tonen to 22 percent from 50 percent.
Hologic (HOLX), Kilroy (KRC), Mckesson (MCK), Mindspeed Technologies (MSPD), Plum Creek Timber (PCL), Reinsurance Group of America (RGA) and Rent-A-Center (RCII) are among the companies due to report their results after the markets close.
Asia witnessed uneasy trading, with most markets in the region declining sharply. India's Sensex led the region's declines with a 2.15 percent retreat. The Chinese market, which opened after a weeklong holiday, saw its index plunge by 1.47 percent. Hong Kong's Hang Seng Index declined 1.66 percent, while Japan's Nikkei and Australia's All Ordinaries fell a more modest 0.54 percent and 0.32 percent, respectively.
The major European markets are receding, with the French CAC 40 Index dropping about 1 percent and the German DAX Index and the U.K.'s FTSE 100 Index edging down 0.6 percent and 0.8 percent, respectively.
Netherlands-based Philips reported a loss of 160 million euros for its fourth quarter, reversing from a profit of 465 million euros in the previous year, dragged down by insipid sales and charges related to its exit from a loss making television business. Most analysts had predicted a more modest loss.
On the other hand, Irish low cost carrier Ryanair revered to a profit in its third quarter and also raised its profit forecast for the full year.
On the economic front, economic sentiment in the eurozone improved for the first time since March 2011, according to the results of a survey by Eurostat. The corresponding indicator rose to 93.4 from 92.8 in December.
The U.S. dollar is gaining ground amid the increase in risk aversion, while oil and gold futures are seeing weakness.
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