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Greek Concerns Continue To Hamper Market Mood

The major U.S. index futures are pointing to a sharply lower opening on Tuesday, with sentiment likely to be weighed down by the fears that Greece is on the brink of default. The fears strengthened due to a lack of unanimity among euro group officials in finalizing the second round of financing for Greece. Risk aversion is still ruling the roost and risk assets are retreating. The upcoming economic data of the week is also likely to introduce some caution among traders.

U.S. stocks succumbed to Greek worries on Monday despite a domestic manufacturing reading coming in better than expected. The major averages opened lower and saw some see-sawing trend in early trading, as a the Institute for Supply Management reported faster than expected expansion in manufacturing activity. However, negativity prevailed, sapping investor sentiment and sending the averages steadily lower over the rest of the session.

The Dow Industrials ended down 258.08 points or 2.36 percent at 10,655, a fresh 1-year low, and the Nasdaq Composite Index closed at 2,336, down 79.57 points or 3.29 percent, while the S&P 500 Index fell 32.19 points or 2.85 percent before closing at 1,099.

All thirty of the Dow components closed lower, with Alcoa (AA), Bank of America (BAC), JP Morgan Chase (JPM) and Caterpillar (CAT) among the worst decliners.

On the economic front, the Institute for Supply Management's manufacturing survey showed that manufacturing activity expanded at a faster than expected pace in September. The manufacturing index rose 1 point to 51.6, marking the first increase in 3 months and the highest reading in 3 months. Twelve of the eighteen industries reported growth. The new orders index remained unchanged at 49.6, while the production index moved back into expansion territory, rising 2.6 points to 51.2. The employment index improved to 53.8 from 51.8 in July.

A report released by the Commerce Department showed that construction spending rose 1.4 percent month-over-month in August. Spending on private construction rose 0.4 percent, helped by a 0.7 increase in residential construction spending, while public construction spending jumped 3.1 percent.

Commodity, Currency Markets

Crude oil futures are receding $2.17 to $75.44 a barrel after declining $1.59 to $77.61 a barrel in the previous session. Gold futures are currently moving $6.10 to $1,651.60 an ounce. In the previous session, the precious metal advanced $35.40 to $1,657.70 an ounce.

Among currencies, the U.S. dollar is trading at 76.76 yen compared to the 76.75 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.3201 compared to yesterday's $1.3176.


The major Asian markets ended sharply lower, with South Korea's Kospi, Singapore's Straits Times Index and Hong Kong's Hang Seng Index ending down over 3 percent each. With the euro group officials showing no resolve to finalize the disbursal of credit to debt-ridden Greece and negative tidings emerging on European financial institutions with exposure to Greek sovereign debt, traders are averse to taking up fresh positions.

French bank Dexia said that it might have to restructure its operations in response to a run on shares.

Japan's Nikkei 225 average opened lower and languished below the unchanged line throughout the session before closing down 89.36 points or 1.05 percent at 8,456. A majority of the stocks, with the exception of defensive stocks, retreated in the session.

Australia's All Ordinaries ended down 25.10 points or 0.63 percent at 3,936, while Hong Kong's Hang Seng Index receded 571.88 points or 3.40 percent at 16,250.

Following the conclusion of its monetary policy meeting, the Reserve Bank of Australia today indicated that it may lower the benchmark cash rate in the near-term, as an improved outlook for inflation provided scope for monetary policy to lend support to demand. While leaving the cash rate unchanged at 4.75 percent, the central bank said that the path for inflation may now be more consistent with the 2-3 percent target in 2012 and 2013.


The major European markets are moving sharply lower, with the French CAC 40 Index and the German DAX Index receding 2.56 percent and 3.54 percent, respectively, while the U.K.'s FTSE 100 Index is moving down 2.95 percent.

U.S. Economic News

Federal Reserve Chairman Ben Bernanke is due to speak before a bipartisan congressional panel on the U.S. economy.

The Commerce Department is due to release its report on factory goods orders for August at 10 am ET. Economists estimate a 0.3 percent drop in orders for factory goods.

In July, factory goods order rose 2.4 percent month-over-month, propelled by a 14.8 percent jump in transportation equipment orders. Shipments of factory goods rose 1.6 percent and unfilled orders edged up 0.8 percent, while inventories were up 0.5 percent.

Meanwhile, August statistics showed that orders for durable goods, which make up the bulk of factory goods, unexpectedly fell 0.1 percent month-over-month. Excluding transportation, orders edged down 0.1 percent. Non-defense capital goods orders, excluding aircraft orders, rose 1.1 percent in August following July's drop. However, shipments of this category of the good, which are used for GDP calculations, slipped 0.2 percent after rising 2.1 percent in July.

Stocks in Focus

LKQ Corp. (LKQX) may be in focus after it said it has acquired Euro Car Parts for 225 million pounds, plus a potential payments of up to 55 million pounds if Euro Car Parts meets certain growth targets in 2012 and 2013. LKQ said it expects the deal to generate revenues of $120 million to $125 million in the fourth quarter of 2011.

McGraw-Hill (MHP) is likely to react to its announcement that it has agreed to sell its nine-station Broadcasting Group to E.W. Scripps Company (SSP) to $212 million in cash.

Laboratory Corp. of America (LH) could see some activity after it announced the nationwide availability of a new FDA-approved companion diagnostic for lung cancer patients.

Hewlett-Packard (HPQ) may move in reaction to its announcement that it has acquired control of Autonomy, as about 213.42 million Autonomy shareholders have accepted HP's previously announced offer to acquire the company at a price of 25.50 pounds per share.

Global Payments (GPN) and Yum Brands (YUM) are among the companies due to report their quarterly results after the close of trading.

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