The major U.S. index futures are pointing to a higher opening on Monday, with sentiment getting a lift from the personal income and outlays report released earlier in the day. Personal income rose at a better than expected rate, while personal spending growth was a tad below what economists had expected, although it represented the third straight month of gains.
Commodities are rebounding from oversold levels and if the gains are sustained, they could lend support to the commodity space. Talks of additional stimulus spending should also remove some anxiety over the feeble nascent growth tapering off. All said and done, the direction of the day's trading largely hinges on the results of the Institute for Supply Management's purchasing managers' index.
U.S. stocks extended their losses in the week ended January 29th, as economic data remained mixed. In the process, traders ignored some promising earnings numbers and harped on the intensifying uncertainty.
Last Monday, the major U.S. averages closed modestly higher following some bargain hunting, although the optimism was trimmed by the release of a disappointing housing market report. However, underlying fears came to the fore on Tuesday, as stocks ignored some fairly encouraging economic reports and declined in late trading to close modestly lower.
The Fed's upbeat assessment relayed via the Federal Open Market Committee's post-meeting policy statement helped the major averaged end a volatile session on a positive note on Wednesday. On Thursday, selling pressure re-emerged, as traders focused on a feeble increase in durable goods orders and disappointing forecasts from technology firms and sent stocks sharply lower. Consequently, the major averages closed notably lower.
After seeing strength for much of Friday's session following the release of better-than fourth quarter GDP data, stocks declined in the afternoon. Anxiety triggered by poor state of fiscal affairs in some of the European nations made investors overlook some encouraging economic reports on the domestic front.
Consequently, the Dow Industrials ended down 1.04% and the S&P 500 Index receded 1.64%, while the Nasdaq Composite closed at its lowest level since November 27th at 2,147, down 2.63%. For the month, the Dow Industrials lost 3.46%, the S&P 500 Index receded 3.70% and the Nasdaq Composite Index ended off 5.37%.
Equities have undergone some degree of correction for the past two weeks and have pulled back between 3%-6% during the period. Danske Bank believes that there is still some way to go before risk appetite truly returns. The recent lackluster phase is mainly due to the markets already discounting healthy corporate profit growth.
Among the sector indexes, the Philadelphia Semiconductor Index lost 4.07% for the week, the NYSE Arca Airline Index slipped 6.23% and the NYSE Arca Gold Bug Index declined 7.39%. While the NYSE Arca Securities Broker/Dealer Index receded 3.05%, the NYSE Arca Oil Index and the Philadelphia Oil Service Index fell over 2% each.
Commodity, Currency Markets
Crude oil futures are rising $0.65 to $73.54 a barrel after declining yet again in the week ended January 29th. In the previous week, the commodity fell $1.65 or 2.2% to $72.89 a barrel.
Last Monday, oil rose moderately, helped by an increase in risk preference following the rebound by the equity markets. However, oil futures receded on Tuesday and fell sharply on Wednesday, dropping over $1-a-barrel amid the release of the weekly inventory report showing a build up in gasoline and distillate stockpiles, but a drop in crude oil inventories.
Oil dipped marginally on Thursday and declined moderately on Friday, ending the week notably lower. The dollar's strength following the fleeing of investors from risky assets helped exert downward pressure on most commodities during the week.
Significant downside for oil from current levels is unlikely, as the downside for oil is well protected at $70-a-barrel level. The markets seem to subscribe to the theory that oil prices below $70 are not compatible with the investment needs facing the oil sector going forward.
Gold futures are currently moving up $4.70 to $1,088.50 an ounce. In the week ended January 29th, the precious metal slid $5.90 or 0.54% to $1,083.80 an ounce.
The U.S. dollar gained ground against most currencies in the week ended January 29th due to its appeal as a safe haven in times of uncertainty and also supported by some positive U.S. economic data. The greenback rose 0.50% against the yen to 90.268 yen and rallied 1.95% against the euro to $1.3863.
The Greek debt worries were one of the reasons for the euro's weakness last week along with a general increase in risk aversion, lower oil prices and the dissent among the FOMC members over the decision to keep interest rates low for an extended period. The euro depreciation is likely to continue if the euro zone governments fail to convince markets that they have credible plans to reduce deficits.
Currently, the dollar is trading at 90.245 yen and is valued at $1.3915 versus the euro.
Asia
The major Asian markets ended on a mixed note on Monday, with the Japanese, Hong Kong and South Korean markets recording modest gains, while the Australian, Taiwanese and Chinese markets retreated sharply. A better than expected Chinese manufacturing purchasing managers' index triggered concerns over the implementation of cooling off measures by the government.
Japan's Nikkei 225 average showed indecision in the morning before declining in early afternoon trading. In the afternoon, some buying interest set in, helping the index recoup its losses and end up 6.98 points or 0.07% at 10,205.
Auto parts retailer Clarion, Fanuc and Yokohama Rubber were among the notable gainers. On the other hand, auto stocks ended mostly lower, with Toyota pulled down by concerns over the recall of its vehicles in the U.S. due to complaints of sticky gas pedals. Technology and resource stocks also saw weakness.
Australia's All Ordinaries, which showed indecision in the morning, declined sharply in the afternoon, closing down 52.10 points or 1.13% at 4,545. Material and energy stocks declined sharply, with mining stocks declining across the board. The four major banks also receded. On the other hand, media conglomerate News Corp. advanced.
On the economic front, house prices data released by the Australian Bureau of Statistics showed a 5.2% sequential increase in house prices in the December quarter on top of a 4.4% increase in the September quarter. However, a separate report released by the Housing Industry Association showed a 4.6% monthly decline in new home sales in December, with a 6.2% decline in detached new homes responsible for much of the slide.
Meanwhile, a report from the TD Securities and Melbourne Institute showed a 0.8% monthly increase in a gauge measuring inflation in Australia. In November, the index was up 0.3%. Separately, an Australia Industry Group and PricewaterhouseCoopers survey showed that manufacturing activity rebounded in January, with the headline index rising to 51 in January from 48.5 in December.
After spending much of the session below the unchanged line, Hong Kong's Hang Seng Index recovered in late trading to close up 121.76 points or 0.61% at 20,244. Index heavyweights HSBC Holdings and China Mobile advanced in the session, while most utility, property and financial stocks also rose.
Europe
The major European markets are trading higher on Monday after showing volatility earlier in the session. The French CAC 40 Index and the German DAX Index are moving up 0.25% and 0.30%, respectively, while the U.K.'s FTSE 100 Index is trading 0.37% higher.
Among the economic reports released, French Statistical Office INSEE reported that French domestic producer prices rose 0.2% month-over-month in December, the same rate as in November. Economists had estimated a more modest 0.1% increase. Total producer prices, including prices of exports, edged up 0.1% month-over-month, although they declined 2.4% year-over-year.
House prices in the U.K. rose 0.1% in January compared to the previous month, according to a report released by Hometrack. The increase was in line with expectations. However, annually, prices were down 0.8%.
Among the manufacturing PMIs released from the region, the index for Germany showed that manufacturing activity expanded in January. The seasonally adjusted Markit/BME manufacturing Purchasing Managers' Index or PMI rose to 53.7 in January from 52.7 in December, slightly ahead of 53.4 consensus estimate. Meanwhile, the Markit / CDAF France Manufacturing Purchasing Managers' Index stood at a seasonally adjusted 55.4 in January, up from 54.7 in December. Manufacturing output rose for the seventh straight month in January and at its fastest pace in almost nine-and-a-half years, driven by greater volumes of incoming business.
Manufacturing activity in the U.K. expanded for the eighth straight month, with the pace of output accelerating to its fastest since June 2006. The CIPS / Markit U.K. Manufacturing Purchasing Managers' Index stood at a seasonally adjusted 56.7 in January, up from 54.6 in the previous month.
U.S. Economic Reports
Some of the previous week's encouraging economic data may have lent some hopes of the recovery taking on an element of sustainability. Therefore, the unfolding week's economic calendar is likely to be closely watched by traders for confirmation that the strong fourth quarter growth is not transitory, but an indicator that conditions are slowly and steadily improving.
The Labor Department's January non-farm payrolls report, the weekly jobless claims report and the ADP private non-farm employment survey are among the economic reports that will shed some light on how the labor market is panning out. Additionally, the results of the ISM's manufacturing and non-manufacturing surveys for January, the National Association of Realtors' pending home sales index for December, monthly auto sales and chain store sales could have some impact on the markets.
Also on tap are the Bureau of Economic Analysis' personal income & outlays report for December, the construction spending report for December, the fourth quarter productivity & costs report, the factory goods orders report for December and the Federal Reserve's consumer credit report for December. The Treasury is set to make announcements regarding details of the auctions of 3-year notes, 10-year notes and 30-year bonds on Wednesday.
Economists expect the monthly non-farm payroll numbers to suggest a continuation of the stabilization trend. Some of the temporary factors such as unfavorable seasonality in retail holiday hiring and cooler than normal weather reducing construction hiring that marred the December report may have reversed, boosting January's payroll numbers. At the same time, the unemployment rate is likely to remain stuck at 10% or could even tick up slightly.
The ISM's manufacturing index is likely to remain above the cut off '50' mark for the sixth straight month. The regional surveys, namely the Empire State, Philadelphia Fed and the ISM-Chicago manufacturing survey results were all upbeat. Manufacturing activity is receiving support from increasing foreign sales and efforts by both domestic and foreign manufacturer's to boost productivity. Personal income and spending both continued to show modest growth in the month of December, according to a report released by the Commerce Department, with the personal income growth outpacing the increase in personal spending.
The report showed that personal income increased by 0.4% in December following an upwardly revised 0.5% increase in November. Economists had expected income to increase by 0.3%compared to the 0.4% growth originally reported for the previous month.
Additionally, the Commerce Department said that personal spending edged up by 0.2% in December after an upwardly revised 0.7% increase in the previous month. While the increase in spending was slightly below economist estimates of 0.3% growth, the November growth was upwardly revised from the previously reported 0.5% growth. The results of the manufacturing survey of the Institute for Supply Management, 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 55.2 for January.
Conditions in the sector improved in December. The manufacturing index rose to 55.9 in December from 53.6 in November, climbing to its highest level since April 2006. Economists had expected a more modest improvement. While the new orders index surged up 5 points to 65.5, the order backlogs index declined 2 points. The production index rose 2 points to 61.8. Inventories were still lean, as the inventories index rose 2 points but remain below the cut-off mark of '50' at 43.4. The employment index was above the '50' mark for the second straight month, advancing 1.2 points to 52.
The Commerce Department's construction spending report to be released at 10 AM ET is expected to show a 0.5% decline in spending for December.
The construction spending report for November showed a 0.6% month-over-month decline in spending. Private construction spending fell 0.7% compared to a more modest 0.4% slippage in public construction spending. In the private category, non-residential construction spending remained unchanged, while multi-family home construction spending declined 4.1%, offsetting a 1.3% increase in single-family home construction spending.
Earnings
Humana (HUM) reported that its fourth quarter earnings rose to $1.48 per share from $1.03 per share last year. Revenues rose 2% to $7.63 billion. Analysts estimated earnings of $1.48 per share on revenues of $7.78 billion. The company now expects fiscal year 2010 earnings of $5.10-$5.35 per share, higher than its earlier estimate of $5.05-$5.25 per share. Analysts estimate earnings of $5.40 per share.
Hewitt Associates (HEW) said its first quarter net revenues remained almost unchanged at $770.1 million. On an adjusted basis, the company reported underlying net income of 71 cents per share. The consensus estimates had called for earnings of 74 cents per share on revenues of $763.04 million. For the full year, the company estimates net revenue growth in the low to mid-single digit and earnings per share of $2.85-$2.95, while analysts estimate earnings of $2.93 per share.
Exxon Mobil (XOM) reported fourth quarter earnings of $1.27 per share, while analysts estimated earnings of $1.19 per share.
Gannett (GCI) said its fourth quarter adjusted of 72 cents per share, lower than 85 cents per share in the year-ago period. Net operating revenues fell 14.4% to $1.49 billion. Analysts estimated earnings of 64 cents per share on revenues of $1.46 billion.
Stocks in Focus
Amazon (AMZN) could be in focus after it announced that it may have to accept e-book publisher Macmillan's terms of switching to an agency model and charging $12.99 to $14.99 for e-book versions of bestsellers. Earlier, expressing its discontent, Amazon had temporarily ceased the sale of Macmillan titles.
SCBT Financial (SCBT) is likely to react to its announcement that it has entered into a purchase and assumption loss sharing agreement with the FDIC to assume all the deposits and certain other liabilities and purchase certain assets of Georgia-based Community Bank & Trust.
GlaxoSmithKline (GSK) may see some activity after it announced that the U.S. FDA has granted accelerated approval for a new combination regiment using TYKERB as a first-line all-oral treatment for women with metastatic breast cancer. TYKERB is currently used in combination with letrozole for the treatment of post-menopausal women with hormone receptor metastatic breast cancer. Separately, the company said the FDA has approved Lamictal extended release tablets as once-a-day add on therapy for epilepsy in patients 13 years and older with primary generalized tonic-clonic seizures.
Adaptec (ADPT) may also be in focus after it reported that its third quarter net revenues fell to $16.9 million from $28.2 million last year. The company reported a non-GAAP loss from continuing operations of 1 cent per share compared to break-even results in the year-ago quarter. Analysts estimated a loss of 4 cents per share on revenues of $17.61 million.
Urban Outfitters (URBN) is expected to gain ground after Standard & Poor's announced that the company would replace Affiliated Computer Services (ACS) in the S&P 500 Index. Affiliated's place in the S&P MidCap 400 Index will be taken by Intrepid Potash (IPI).
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.