Market Analysis

The major U.S. index futures are pointing to a higher opening on Wednesday, with futures continuing to hold their gains built on the back of optimism from a positive Chinese data. ADP’s survey released earlier in the day showed that the private sector in the U.S. added slightly lesser jobs than had been anticipated and there was a downward revision to the previous month’s gains too. Traders now look ahead to the results of the Institute of Supply Management’s national manufacturing survey.

Meanwhile, earnings news both in the U.S. and across the Atlantic has been mixed. It is widely expected that social networking site Facebook may soon launch its initial public offering, which paints a positive picture of the investment environment. On the European debt crisis front, bond auctions by Germany and Portugal were encouraging. Additionally, traders continue to nurture hopes of a positive twist in the Greek tale.

After seeing strength in morning trade on Tuesday on the back of Greek deal optimism, the major averages turned in a lackluster performance for the rest of the session and closed mixed. The positive mood was spoiled by the release of some insipid domestic economic data.

The Dow Industrials languished below the unchanged line for much of the session before closing down 20.81 points or 0.16 percent at 12,633. The S&P 500 Index ended down 0.60 points or 0.05 percent at 1,312, while the Nasdaq Composite Index ended 1.90 points or 0.07 percent higher at 2,814.

Among the thirty Dow components, 14 stocks closed lower, while 16 stocks advanced. Alcoa (AA), Caterpillar (CAT), Intel (INTC), Merck (MRK) and Exxon Mobil (XOM) were among the biggest decliners, while American Express (AXP) added 2.08 percent.

On the economic front, the Conference Board’s consumer confidence index fell 3.7 points to 61.1 in January. The present situation index slipped 8.1 points to 38.4 and the expectations index edged down 0.8 points to 76.2.

Meanwhile, the S&P Case-Shiller home price index fell 0.7 percent month-over-month, declining for the third straight month. Annually, prices were down 3.7 percent.

The results of the ISM-Chicago’s manufacturing survey showed that the headline manufacturing index dipped to 60.2 in January from 62.2 in December. The new orders index fell to 63.6 from 67.1, while the order backlogs index retreated into contraction zone, dropping to 48.3. Additionally, the employment index fell 5.4 points to 59.2.

Commodity, Currency Markets

Crude oil futures are rising $0.37 to $98.85 a barrel after receding $0.30 to $98.48 a barrel on Tuesday. Gold futures, which rose $6 to $1,740.40 an ounce in the previous session, are currently rising $9.80 to $1,750.20 an ounce.

Among currencies, the U.S. dollar is trading at 76.14 yen compared to the 76.27 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.3173 compared to yesterday’s $1.3084.

Asia

The major Asian markets ended on a mixed note, as traders weighed mixed catalysts and also awaited a U.S. private sector jobs report due later in the day. Sentiment early in the session was weighed down by a few disappointing U.S. economic reports released overnight. However, as a Chinese government report showed an unexpected expansion in manufacturing activity, risk appetite picked up, although traders remained cautious throughout the session.

Japan’s Nikkei 225 average showed volatility before closing up 7.28 points or 0.08 percent at 8,810. Meanwhile, Australia’s All Ordinaries slid 34.70 points or 0.80 percent before closing at 4,291 and Hong Kong’s Hang Seng Index closed 57.12 points or 0.28 percent lower at 20,333. The Chinese Shanghai Composite Index fell 1.07 percent.

A survey by China’s Federation of Logistics and Purchasing showed that the manufacturing sector expanded at a slightly faster rate in January, with the corresponding indicator edging up 0.2 points to 50.5. Meanwhile, a survey by Markit Economics suggested that the manufacturing sector of the world’s second largest economy is still in contraction.

Europe

European stocks are advancing, with the major averages in the region up over 1 percent each. The markets were taking cues from the positive data point from China and also continued to stay optimistic about a deal between Greece and its private creditors. Some positive earnings also lent support.

In corporate news, B/E Aerospace (BEAV) reported fourth quarter adjusted net earnings of 60 cents per share, higher than 42 cents per share last year. Revenues climbed a little over 12 percent to $654.7 million. The company also reiterated its forecast for 2012.

Chipmaker Infineon (IFX) reported a decline in its first quarter profit, although the decline was less than expected.

European Union regulators blocked NYSE Euronext’s (NYX) proposed merger with Deutsche Boerse.

The final manufacturing activity indicator from the euro zone suggested that the sector contracted yet again in January, although at a slower pace.

U.S. Economic Reports
Employment in the U.S. private sector saw continued growth in the month of January, according to a report released by payroll processor ADP, although the pace of job growth saw a notable slowdown compared to December.



ADP said employment in the non-farm private business sector rose by 170,000 jobs in January following a revised increase of 292,000 jobs in December. Economists had expected employment to increase by about 172,000 jobs compared to the addition of 325,000 jobs originally reported for the previous month.

The Institute for Supply Management’s manufacturing survey, which are based on data compiled from purchasing and supply executives nationwide, are due out at 10 am ET. Economists expect the index to show a reading of 54.5 for January.



The manufacturing purchasing managers’ index rose to 53.9 in December from 52.7 in November. The index was at the highest level since June. The new orders index rose 1 point to 57.6 and the order backlogs index climbed 3 points to 48, while the production index was up 3.3 points to 59.9. The employment index also increased by 3.3 points to 55.1.

The Commerce Department's construction spending report to be released at 10 am ET is expected to show a 0.5 percent increase in spending in December.



Construction spending increased by 1.2 percent in November, although the previous month’s 0.8 percent growth was downwardly revised to a 0.2 percent drop. Private sector construction sending rose 1 percent compared to a steeper 1.7 percent increase in public sector construction spending.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended January 27th at 10:30 AM ET.



Crude oil stockpiles rose by 3.6 million barrels to 334.8 million barrels in the week ended January 20th, remaining in the upper limit of the average range.

Gasoline stockpiles edged down by 0.4 million barrels yet remained in the upper limit of the average range. Distillate inventories declined by 2.5 million barrels and were in the middle of the average range. Refinery capacity utilization averaged 84.1 percent over the four-weeks ended January 20th compared to 84.6 percent over the previous four weeks.

Stocks in Focus

Earnings

Amazon (AMZN) said its fourth quarter earnings exceeded estimates despite declining from the year-ago period. Net sales rose 35 percent but trailed estimates. The company forecast first quarter sales that will at best meet estimates.

Arthur J. Gallagher (AJG) reported fourth quarter adjusted earnings from continuing operations of 35 cents per share, ahead of the 33 cents per share consensus estimate.

Boston Properties (BXP) reported fourth quarter funds from operations and revenues that came in ahead of estimates. However, the company’s funds from operations guidance was slightly soft.

Manitowoc’s (MTW) fourth quarter earnings and revenues were ahead of estimates.

Jack Henry & Associates (JKHY) said its second quarter earnings rose 2 cents to 44 cents per share and said its revenues climbed 5 percent to $255.9 million. The earnings exceeded estimates, while the revenues were shy of estimates.

Unisys (UIS) reported fourth quarter non-GAAP earnings of $2.08 per share on revenues of $985 million. The earnings were ahead of estimates, while the revenues trailed expectations.

Seagate (STX) reported second quarter non-GAAP earnings of $1.32 per share on revenues of $3.2 billion. The results were better than expected.

JDA Software’s (JDAS) fourth quarter adjusted earnings and revenues were above estimates. The company also revealed that it has received information from the SEC about a probe regarding its revenue recognition and other accounting and financial reporting matters for certain past fiscal years.

Aetna (AET), Arrow Electronics (ARW), Audiocodes (AUDC), Corinthian Colleges (COCO), Entergis (ENTG), Franklin Resources (BEN), NASDAQ (NDAQ), Northrop Grumman (NOC), Thermo Fisher (TMO), Tupperware (TUP) and Whirlpool (WHR) are among the notable companies due to release their results before the markets close.

Prominent companies scheduled to release their quarterly results after the close include 99 Cents Only (NDN), Allstate (ALL), Amdocs (DOX), Ameriprise Financial (AMP), AvlonBay (AVB), BMC Software (BMC), Cabot (CBT), Chipotle Mexican Grill (CMG), Electronic Arts (ERTS), Hain Celestial (HAIN), JDS Uniphase (JDSU), Las Vegas Sands (LVS), MDU Resources (MDU), NetLogic (NETL), Openwave (OPWV), Qualcomm (QCOM) and Vulcan Materials (VMC).

Other Corporate News

Broadcom (BRCM) announced an 11 percent increase in its quarterly dividend to 10 cents per share. Separately, the company reported fourth quarter non-GAAP earnings of 68 cents per share on revenues of $1.82 billion. The results came in ahead of estimates.

Disney (DIS) announced that it would acquire a controlling interest in UTV, an Indian media and entertainment company.

Medical Properties Trust (MPW) announced a public offering of its common stock. Separately, the company announced a series of transactions with Ernest Health that will add 16 existing post acute care hospitals to its investment portfolio for $300 million.