Market Analysis

The major U.S. index futures are pointing to higher opening on Wednesday, with positive sentiment generated by China’s support to debt-strapped European nations lending support. Additionally, GDP report released from core eurozone nations were encouraging. Domestically, the results of a regional manufacturing survey released short while ago showed a bigger than expected expansion in manufacturing activity. Trading direction may also hinge on a few more first-tier data scheduled to be released over the course of the session and any potential developments on the Greek debt front.

U.S. stocks spent much of Tuesday’s session below the unchanged line before closing nearly flat. The weakness seen for most of the day came amid the release of a lukewarm headline retail sales number and the ongoing anxieties about the situation in Greece.

The major averages opened lower and moved roughly sideways below the unchanged line. The Dow Industrials and the Nasdaq Composite sneaked above the unchanged line in the final few minutes of trading and closed marginally higher. The former ended up 4.24 points or 0.03 percent at 12,878 and the latter added 0.44 points or 0.02 percent before closing up 2,932. Meanwhile, the S&P 500 Index closed at 1,351, down 1.27 points or 0.09 percent.

The breadth among the Dow components was even, with 15 stocks closing higher, while the remaining fifteen stocks ended in negative territory. Boeing (BA) and Hewlett-Packard (HPQ) were the biggest gainers of the session, while Bank of America (BAC) slid 3.27 percent. Alcoa (AA), JP Morgan Chase (JPM) and DuPont (DD) also receded sharply.

Housing, financial, biotechnology and gold stocks saw weakness on the day, while strength was visible among trucking, computer hardware and health insurance stocks.

On the economic front, a Commerce Department report showed that U.S. retail sales rose by a less than expected 0.4 percent month-over-month in January. Excluding autos, sales were up 0.7 percent. Auto sales fell 1.1 percent despite solid monthly sales reported by the automakers, with the drop apparently reflecting lower prices. Core retail sales measured as sales excluding autos, gasoline and building materials, which are used in GDP calculations, were up a solid 0.7 percent.

The Commerce Department also released a report showing a 0.4 percent month-over-month increase in business inventories for December. Economists had expected a 0.5 percent increase for the month. Meanwhile, business sales rose 0.7 percent, resulting in an inventories-to-sales ratio of 1.26 in December compared to 1.28 in the year-ago period.

Commodity, Currency Focus

Crude oil futures are rising $0.65 to $101.39 a barrel after moving down $0.17 to $100.74 a barrel on Tuesday. An ounce of gold is currently fetching $1,734.10 an ounce, up $16.40 from the previous session’s close of $1,717.70 an ounce. In the previous session, the precious metal fell $7.20.

Among currencies, the U.S. dollar is trading at 78.37 yen compared to the 78.44 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.3091 compared to yesterday’s $1.3134.

Asia

The major Asian markets advanced strongly, as a Chinese central bank officials’ speech on the nation’s confidence that the eurozone debt wounds will heal and that China will continue to invest in eurozone assets lent support to stocks.

Japan’s Nikkei 225 average opened higher and moved sideways until late morning trading before climbing steadily and ending up 230.47 points or 2.55 percent at 9,283, its highest closing level since August 5th, 2011.

Australia’s All Ordinaries tacked on 8.50 points or 0.20 percent before closing a volatile session at 4,327

A report released by the Westpac showed that consumer confidence rose 4.2 percent in February, benefiting from two interest rate cuts announced by the Reserve Bank of Australia.

Hong Kong’s Hang Seng Index surged up 447.40 points or 2.14 percent to 21,365.

Europe

European stocks are also advancing strongly amid expectations that Greece will soon get a bailout package. The expectations strengthened after reports said that Greek conservative party leader Antonis Samaras, who is likely to become Greece's next prime minister after April elections, will deliver a letter of commitment to the country's international lenders this morning to implement tough austerity measures.

Meanwhile, the Eurogroup has cancelled a meeting scheduled for later today to discuss the Greek bailout.

Among the GDP reports released by the eurozone region, Germany reported a decline in its fourth quarter GDP, marking the first contraction since the first quarter of 2009. Meanwhile, French statistical office Insee reported that the French economy expanded 0.2 percent in the fourth quarter compared with economists' expectation for a 0.2 percent contraction.

A report released by the U.K. Office for National Statistical Office showed that the U.K.’s unemployment rate for the three months ended December rose to a 16-year high of 8.4 percent, while the claimant count rose to a 2-year high in January.

U.S. Economic Reports

Manufacturing activity in New York State continued to expand in the month of February, according to a report released by the Federal Reserve Bank of New York, with the index of activity in the sector rising to its highest level in more than a year.



The New York Fed said its general business conditions index rose to 19.5 in February from 13.5 in January, with a positive reading indicating an increase in regional manufacturing activity. Economists had expected the index to edge up to a reading of 14.8. With the bigger than expected increase, the index rose to its highest level since coming in at a reading of 20.3 in June of 2010.

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

The Federal Reserve's industrial production report is due out at 9:15 am ET. Economists estimate 0.7 percent growth in industrial production for January.



U.S. industrial output rose at a slightly slower than expected pace of 0.4 percent month-over-month in December, with manufacturing output advancing by a solid 0.9 percent. The previous two months' readings were downwardly revised. Mining output was up 0.3 percent, while utilities output fell 2.7 percent.

Capacity utilization rose 0.3 points to 78.1 percent. Business equipment production climbed 0.7 percent and the production of industrial equipment was up 1.5 percent.

Dallas Federal Reserve Bank President Richard Fisher is scheduled to speak to the Texas Manufacturers Summit 2012 and then to the media at 9:15 am ET.

The National Association of Home Builders is scheduled to release the results of its February survey on homebuilders' confidence at 10 am ET. The consensus estimates call an increase in the index to 26.



In January, the homebuilder sentiment index rose to 25 from 21. With the increase, the index reached its highest level since June 2007. The present conditions index rose 3 points to 25 and the sales expectations index also increased by a similar magnitude to 29, while the index measuring prospective buyer traffic was up 3 points to 21.

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



Crude oil stockpiles edged up by 0.3 million barrels to 339.2 million barrels in the week ended February 3rd, with inventories remaining in the upper limit of the average range.

Gasoline inventories rose by 1.6 million barrels and remained in the upper limit of the average range. Distillate inventories also climbed, rising by 1.2 million barrels, and were in the middle of the average range. Refinery capacity utilization averaged 82.6 percent over the four-weeks ended February 3rd compared to 83.3 percent over the previous four weeks.

The Federal Reserve is due to release the minutes of its January 24th-25th meeting at 2 pm ET.

Following the conclusion of the 2-day monetary policy meeting, the Federal Reserve said it expects economic conditions over the medium term to warrant exceptionally low levels for the federal funds rate at least through late 2014 compared to its earlier view of keeping interest rates unchanged till the middle of 2013.

Much of the remainder of the statement was maintained unchanged, with the central bank reiterating its commitment towards implementing its already announced bond buying program.

The central bank also lowered its near term growth and unemployment rate forecast, while raising its inflation forecast its forecast for 2013. In a landmark event, the central bank also unveiled the interest rate forecast of the FOMC members, with most members expecting normalization to begin by the end of 2014. They also see the possibility of QE3 later in 2012.

Stocks in Focus

Kellogg (K) entered into an agreement to acquire Procter & Gamble Co.'s (PG) Pringles business for $2.695 billion in cash.

Comcast (CMCSA) reported higher fourth quarter profits and revenues. The company also increased its dividend and also announced a new $6.5 billion stock buyback program.

Dean Foods (DF) reported better than expected fourth quarter adjusted earnings, while its first quarter adjusted earnings guidance was in line with estimates.

Dolby (DLB) has sued ArcSoft, one of its licensees, for having failed to meet its contractual obligations with respect to sales and distribution of software containing Dolby’s proprietary technology.

Hartford (HIG) may be in focus after Paulson & Co., which holds 8.4 percent stake in the company, filed a 13D with the SEC so that the company can begin to engage in discussions with its shareholders relating to a spin-off of its property and casualty insurance business.

Valmont (VMI) reported better than expected fourth quarter results. For 2012, the company expects sales growth of 10 percent and earnings per share of $7.30-$7.60. The guidance was above estimates.

Foot Locker (FL) announced a 9 percent increase in its quarterly dividend to 18 cents per share. The company also announced a $400 million stock buyback program.

Weight Watchers (WTW) said it has launched a modified Dutch auction tender offer of up to $720 million of its shares at a price not less than $72 per share and not greater than $83 per share.

The company also entered into an agreement with its majority shareholder Artal to buy some of the latter’s stake so that Artal’s stake remains largely unchanged after the tender offer. Separately, the company reported fourth quarter earnings in line with estimates, while revenues missed expectations.

Stericycle (SRCL) said its board has unanimously elected Charles Alutto, the company’s president, as its CEO, effective January 1st, 2013.

MetLife’s (MET) fourth quarter operating earnings came in ahead of estimates.

Questar (STR) said its president and CEO Doug Garn is stepping down and Vinny Smith, its executive chairman, has been named as its new CEO. Separately, the company reported fourth quarter net income from continuing operations of 34 cents per share on revenues of $354.8 million. The earnings exceeded estimates, while the revenues were shy of estimates. The company reaffirmed its 2012 earnings guidance of $1.15-$1.19 per share, below the consensus estimates.

PolyOne (POL) said its board has approved a 25 percent in its quarterly dividend to 5 cents per share.

Companies scheduled to report their quarterly results after the markets close include Agilent (A), Avis Budget (CAR), Blue Nile (NILE), CBS (CBS), Georgia Gulf (GGC), Kinross (KGC), NetApp (NTAP), Netease.com (NTES), Nvidia (NVDA), RealNetworks (RNWK) and Vulcan Materials (VMC).