The major U.S. index futures are pointing to a mixed opening on Tuesday, with the frail sentiment likely to be disturbed by mixed earnings. Citigroup (C) reported a loss for its fourth quarter, which trailed some estimates. Fears of integration pangs are likely to weigh on the shares of Kraft Foods (KFT). Commodities are extending their slide, as growth concerns are creating uncertainty about demand.
Data from across the Atlantic and Asia were bordering on the negative. Japanese consumer confidence deteriorated further, while in Germany, the Zew economic sentiment fell by much more than estimated. Sentiment on Wall Street may also be dictated by the housing report to be released during the middle of the session.
U.S. stocks reversed course in the week ended January 15th, as economic uncertainty impacted market sentiment. Last Monday, the major averages closed in a mixed fashion after showing volatility throughout the session, as traders expressed apprehension ahead of Alcoa's (AA) earnings. The Dow Industrials and the S&P 500 Index closed higher, while the Nasdaq Composite gave back some ground.
However, the major averages receded on Tuesday as Alcoa's disappointing earnings and the Chinese move to tighten lending generated selling pressure. All three of the major averages closed notably lower.
Although stocks showed a lack of direction on Wednesday, they ended higher, encouraged by evidence of strong growth in Asia and Europe and optimism over Intel's (INTC) earnings. Stocks ended another lackluster session on Thursday modestly higher. However, weighed down by mixed economic and earnings news, the major averages ended Friday's session with notable losses.
Consequently, for the week, the Dow Industrials ended down 0.08% and the S&P lost 0.78%, while the Nasdaq Composite Index receded 1.26%.
Among the sector indexes, the NYSE Arca Gold Bugs fell 5.16%, the Philadelphia Semiconductor Index receded 6.26% and the Philadelphia Oil Service Index and the S&P Retail Index declined over 2% each. The NYSE Arca Oil Index ended down 1.88%.
Despite the stellar results and positive guidance from Intel, the company's shares fell over 3% in Friday's session, apparently due to the fact that the markets have already priced in the news. Some also believe that the pullback reflects caution among investors, as most analysts believe that the company's margins may have peaked.
Along with Intel, the Philadelphia Semiconductor Index also pulled lower, dropping about 3.50%. The retreat has brought the index closer to a support around 345. If this level is violated to the downside, the index could dip as low as 338. On the other hand, if the index holds support around 345, it could make a run at its near term resistance around 356. The RSI, a momentum indicator, has declined to oversold levels, suggesting a reversal is likely.
The fourth quarter reporting season has got off to a mixed start, with Alcoa's earnings disappointing the Street, while Intel reported a solid reversal in an indication that the tech sector may lead the recovery this time around. Specifically, the performance of chip companies is considered to be a leading indicators for demand for other assembled technology products.
Commodity, Currency Markets
Crude oil futures are trading down $0.65 at $77.35 a barrel after receding $4.75 or 5.74% to $78 a barrel in the week ended January 15th. The weakness reflected a lack of conviction that the economic recovery will be smooth enough to trigger a sustainable increase in demand following the release of mixed economic data.
Crude oil declined modestly on Monday and fell sharply on Tuesday, declining by about $1.75 a barrel. Oil fell sharply again on Wednesday in reaction to a bearish weekly oil inventory report. The black gold fell modestly on Thursday and declined yet again on Friday to close on a negative note.
According to CIBC World Markets, the overstretched rally in commodities that was witnessed for most of 2009 could persist into the next quarter or two or at least prevent a sharp reversal of fortune. According to the firm, metal markets are benefiting from the tilt in global growth towards China and other emerging markets. Commodities may also benefit from stimulus-induced government infrastructure spending.
However, the firm cautions about excessive optimism on commodities, saying some of the upside reflects the weakening of the dollar. Given the prospects of the dollar stabilizing and the government infrastructure tapering off towards the end of this year, commodities may witness a soft patch later this year.
Gold futures are currently sliding $3.30 to $1,130.40 an ounce. In the previous week, the black gold fell $8.40 or 0.74% to $1130.50 an ounce.
The dollar finished the week ended January 15th mostly lower, with the greenback retreating about 2% against the yen to 90.80. On the other hand, it gained modestly against the euro, rising 0.2% to $1.4391.
Currently, the dollar is trading at 90.88 yen and is valued at $1.4294 versus the euro.
Asia
The major Asian markets ended Tuesday's session mixed, with the Australian and Japanese markets falling close to 1% each, while the Hong Kong market ended higher. Stronger domestic currencies and earnings fears kept sentiment subdued for much of the session.
Japan's Nikkei 225 average showed indecision until late morning trading before moving steadily lower. The index closed down 90.18 points or 0.83% at 10,765. Export stocks ended mostly lower, while airlines, retail, construction and shipping stocks also saw weakness. Pharma, resource and financial stocks showed mixed sentiment.
Japan Airlines skid over 16.5%on reports that it may soon file for bankruptcy protection. The company has since filed for bankruptcy. Peer All Nippon Airways slipped 4.21%, while Chiyoda declined 5.8%. On the other hand, auto parts maker Clarion surged up 5.77%, Hitachi advanced 2.71%, Sumitomo Osaka rose 2.01% and Sky Perfect JSAT gained 2.96%.
On the economic front, a report released by Japan's Cabinet Office said Japan's consumer confidence fell to 37.6 in December from 39.5 in November, matching the level in June 2008. The overall livelihood, the income growth and the employment indices declined from the month-ago levels, while the consumers' willingness to buy durable goods index improved modestly.
Capital Economics is of the view that the decline suggests that the boost from the announcement of additional fiscal stimulus is being offset by worries about a double-dip in the labor market and growing fears of wage and price deflation.
Australia's All Ordinaries surrendered the modest gains its posted in early trading, declining for the rest of the session to close down 46.50 points or 0.94% at 4,890. Stocks fell across the board, with IT stocks alone showing some resistance. Energy stocks fell the most, with the corresponding index slumping about 244 points.
Hong Kong's Hang Seng Index, which moved in tandem with most of the other Asian markets for much of the session, recovered in a late hour buying surge. The index closed up 217.97 points or 1.02% to 21,678, its highest level since January 4th. Property, resource, retail and China-related stocks showed notable strength, while utility stocks came under selling pressure.
Shipping group Orient Overseas International announced a deal to sell its Chinese property unit to Singapore-based CapitaLand for 2.7 billion Singapore dollars.
Europe
The major European averages are trading notably lower across the board, with the French CAC 40 Index and the German DAX Index losing 0.44% and 0.92%, respectively, while the U.K.'s FTSE 100 Index is moving down 0.72%.
In corporate news, Cadbury (CBY) finally agreed to a friendly takeover offer from Kraft Foods. The U.S. company raised its offer for the British confectioner to 840 pence per share, valuing the latter at 11.5 billion pounds. The offer provides for paying 500 per share in cash and the reminder in shares of Kraft.
On the economic report, Germany's Zew Center for European Economic Research released the results of its January survey, which showed a 3.2 point decline in the economic sentiment index to 47.2. Economists had expected a more modest drop to 50. The index measuring current the economic situation improved 4 points to 56.6.
Eurostat reported that the euro area's construction output fell 1.1% month-over-month in November compared to a 0.4% drop in October. Annually, construction output declined 8%, steeper than the 6.7% drop in the previous month.
Meanwhile, U.K. consumer price inflation rose to 2.9% year-over-year in November compared to a 1.9% rate in November, with the recent month's reading climbing to its highest level since March 2009 and also exceeding economists' estimate of 2.6%. Thus, the inflation rate climbed above the central bank's target of 2%. On a monthly basis, consumer prices rose 0.6%, bigger than the 0.3% increase expected by economists.
U.S. Economic Reports
Despite the week being abbreviated due to the public holiday on Monday on account of Martin Luther King Day, the week's calendar consists of some key market moving economic data. Among the reports scheduled to be released during the week, the Commerce Department's housing starts report for December, the results of the National Association of Homebuilders' January survey and the Philadelphia Fed's January manufacturing survey may assume prominence.
Traders may also closely watch the Conference Board's leading indicators index for December, the Labor Department's producer price index for December and the weekly jobless claims report for further cues on economic conditions. The public announcement of the upcoming Treasury auctions of 2 year, 5 year and 7 year notes, all due at 11 AM ET on Thursday, may also be of interest to traders, as the appetite for these instruments are an indicator of investor perception of the inflationary environment and growth.
Housing starts are expected to be almost flat in December and consequently, the annual change is expected to creep into positive territory. The muted expectations for housing starts are due to the unseasonably cold weather across the country. Going forward, the housing sector is likely to benefit from a government tax credit, lower home prices and record low borrowing costs.
Producer prices are also expected to be little changed compared to the previous month, as a rise in natural gas and metal prices is believed to have offset the decline in gasoline prices. However, the sharp decline in energy prices in late 2008 is likely to impact the annual comparisons. The core producer price inflation rate is expected at 0.1%, primarily due to the low capacity utilization exerting downward pressure on inflation. The Treasury Department is due to release a report on the flows of financial instruments into and out of the U.S. for November at 9 AM ET. Economists estimate the net long-term flows to be $27.5 billion for the month.
The National Association of Home Builders is scheduled to release the results of its survey on homebuilders' confidence at 1 PM ET.
In December, builder confidence edged down, with the housing market index receding 1 point to 16, marking the lowest point since June 2009. According to the National Association of Home Builders continued weakness in the economy and job markets weighed on consumers' potential home buying plans. The current sales conditions index eased 1 point to 16 and the index measuring sales expectations slipped 2 points to 26. Meanwhile, the index gauging traffic of prospective buyers remained unchanged for a third straight month.
Earnings
First Horizon National (FHN) reported a net loss available to common shareholders of 32 cents per share compared to a loss of 24 cents per share in the year-ago period. Analysts estimated a loss of 21 cents per share. The company noted that non-performing assets declined 14% sequentially, marking the third consecutive quarterly decline.
Parker Hannifin (PH) said its second quarter sales rose 5.3% to $2.4 billion. The company reported earnings of 64 cents per share, down from 96 cents per share last year. The consensus estimates had called for earnings of 36 cents per share on revenues of $2.25 billion. The company raised its 2010 earnings per share from continuing operations guidance by 44% to $2.40-$2.80 compared to the $2.02 per share consensus estimate.
TD Ameritrade (AMTD) reported that its fourth quarter net revenues fell to $624.62 million compared to $657.93 million last year. The company's net income was 23 cents per share, lower than 26 cents per share in the year-ago period. Analysts, on average, estimated earnings of 26 cents per share on revenues of $634.05 million.
Citigroup's fourth quarter results revealed a net loss of 33 cents per share on managed revenues of $7.9 billion. In the year-ago period, the company reported a loss of $3.40 per share. Adjusted for a $6.2 billion after-tax loss associated with TARP repayment and exiting the loss-sharing agreement, the company reported a net loss of 6 cents per share.
Forest Labs (FRX) said its third quarter earnings per share were 69 cents per share and included 3 cents per share restructuring costs and 25 cents per share new product license fee. On an adjusted basis, the company reported earnings of 97 cents per share, lower than $1.03 per share in the year-ago period. Net sales rose 8.4% to $997 million. Analysts estimated earnings of 86 cents per share on revenues of $1.04 billion.
Stocks in Focus
Baidu (BIDU) may be in focus after it revealed that its chief technology officer Yinan Li has resigned from the company for personal reasons.
DuPont (DD) is likely to see some activity after it said it will vigorously pursue its anti-trust, license and patent fraud claims in a license agreement dispute. This follows a U.S. District court ruling that the Roundup Ready license agreements between the company and Monsanto (MON) contain an unwritten term that prohibits DuPont from using one of its traits with Monsanto's Roundup Ready trait. However, the judge ruled that DuPont's separate anti-trust and patent fraud claims were not impacted and therefore would proceed.
Tyco International (TYC) is likely to move in reaction to its announcement that it has agreed to acquire Brink's Home Security Holdings, which is currently operating as Broadview Security, for $42.50 per share or $2 billion in cash and stock. Tyco said it would combine Broadview with its ADT security business. Excluding transaction and integration related expenses, the company expects the deal to be accretive to its earnings before special items by about 7 cents per share in the first full year after closing. The accretive impact is expected to rise to 14 cents per share in year two. Additionally, the company expects operational synergies of $150 million.
Separately, the company, updated its guidance for 2010 first quarter earnings from continuing operations before special items, expecting the metric to come in at 63-65 cents per share compared to its earlier estimate of 48-50 cents per share. The company expects revenues of $4.25 billion for the first quarter. Analysts currently estimate earnings of 50 cents per share on revenues of $4.15 billion. The company maintained its 2010 adjusted earnings per share guidance of $2.30-$2.50 per share compared to the consensus estimate of $2.49 per share.
Associated Banc-Corp (ASBC) may also be in focus after it announced that it has closed its previously announced underwritten public offering of 44.84 million shares at $11.15 per share. The company noted that net proceeds from the offering were about $478.3 million.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.