Mixed Catalysts Could Render The Mood Cautious

(RTTNews) - The major U.S. index futures are pointing to a lower opening on Friday, with sentiment reflecting weakness as the markets grapple with the uncertainties on the economic, monetary policy and geopolitical fronts. An economic report released earlier in the day showed a bigger than expected increase in durable goods orders. Economic evidence across the Atlantic has been mixed, with German business confidence waning, while a forward looking consumer confidence index for Germany came in stronger than expected. The U.K. economy expanded in line with expectations. Earnings news has been mixed. With the economy facing several headwinds, the markets may mostly go about a consolidation move.

U.S. stocks ended a session of directionless trading narrowly mixed on Thursday, as mixed earnings and economic data, the IMF's weak global forecast and geopolitical tensions kept traders at bay. The major averages opened mixed but moved mostly higher in morning trading. The averages experienced a considerable bout of volatility in the afternoon before closing mixed.

The Dow Industrials ended down 2.83 points or 0.02 percent at 17,084 and the Nasdaq Composite closed 1.59 points or 0.04 percent lower at 4,472, while the S&P 500 Index inched up to a new record closing high by virtue of its 0.97 point or 0.05 percent advance to 1,988.

Notwithstanding the Dow's retreat, the breadth was in favor of the advancers, with 17 of the 30 Dow components advancing and one stock ending unchanged, while the remaining 12 stocks receded.

Airline, biotechnology, oil service, gold and housing stocks were among the worst performers of the session, while computer hardware, networking, and internet stocks gained ground.

The Labor Department reported that jobless claims fell to 284,000 in the week ended July 19th, hitting their lowest level in over eight years. The four-week average was down to 302,000 from 309,000, falling to the lowest since May 2007. Continuing claims calculated with a week's lag fell by 8,000 to 2.50 million in the week ended July 12th.

The Commerce Department said new home sales tumbled to a seasonally adjusted annual rate of 406,000 in June from a downwardly revised rate of 406,000 in May. Inventories measured in terms of months of supply rose to 5.8 months from 5.2 months in the previous month, with the inventory levels in June the most since October 2011. All four geographical regions saw month-over-month declines. The median price of a new home rose 5.3 percent year-over-year but fell 3.2 percent month-over-month to $273,500.

Flash estimates released by Markit showed that its U.S. manufacturing index fell 1 point to a 3-month low of 56.3.

Commodity, Currency Markets

Crude oil futures are sliding $0.47 to $101.60 a barrel after declining $1.05 to $102.07 a barrel on Thursday. Meanwhile, gold futures are climbing $4.30 to $1,295.10 an ounce. In the previous session, gold fell $13.90 to $1,290.80 an ounce.

Among currencies, the U.S. dollar is trading at 101.87 yen compared to the 101.82 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3430 compared to yesterday's $1.3464.

Asia

The major Asian markets closed on a mixed note, tracking the mixed cues from Wall Street overnight. The Japanese, Chinese, Hong Kong, Indian, New Zealand and South Korean markets closed higher, while most of the remaining major markets in the region moved to the downside.

The Japanese market took cues from a subdued yen and advanced solidly in the session following the declines in the two previous sessions. The Nikkei 225 average opened higher and moved sideways until late trading before advancing further. The index ended up 173.45 points or 1.13 percent at 15,458. Most index components advanced, with Chugai Pharma rallying close to 10 percent, leading the gains.

Australia's All Ordinaries languished below the unchanged line for the bulk of the session, although it did close off its lows. At the close of trading, the index was down 2.60 points or 0.05 percent at 5,574. Consumer, energy, healthcare, IT, material, real estate and telecom stocks moved to the downside.

Hong Kong's Hang Seng Index ended at 24.216, up 74.51 points or 0.31 percent, and China's Shanghai Composite Index closed 21.55 points or 1.02 percent higher at 2,127.

Meanwhile, inflation data released by Japan's Ministry of Internal Affairs and Communication showed that annual consumer price inflation slowed to 3.5 percent in June from 3.7 percent in May. Core consumer price inflation slowed to 3.3 percent, in line with expectations.

Core consumer price inflation for the Tokyo region, considered a leading indicator for the whole of Japan, was unchanged at 2.8 percent compared to the 2.7 percent rate expected by economists.

Europe

European stocks opened lower and are continuing to see weakness. Traders are digesting mixed economic readings and mostly positive earnings against the backdrop of raging geopolitical tensions.

In corporate news, Air France-KLM reported a narrower second quarter loss and backed its earnings outlook for the year. The company also said it would continue with its cost cutting measures.

Lafarge reported a small drop in its second quarter sales and EBITDA, while Danone's first half operating profit declined but the company confirmed its 2014 outlook.

BskyB announced a deal to buy 21st Century Fox's 57 percent stake in Sky Deutschland as well as Sky Italia from the same owner in a 7 billion pound deal. Vodafone's (VOD) first quarter organic service revenue rose 10.3 percent.

On the economic front, research group GfK said its forward-looking consumer sentiment index for Germany rose to 9 in August from 8.9 in July. This was the highest value registered since December 2006, when the indicator was at 9.1. The index was expected to remain unchanged at 8.9.

Meanwhile, business confidence in Germany waned, according to the results of a survey by the Ifo Institute. The business confidence index fell more than expected to 108 in July from 109.7 in June.

Advance estimates released by the U.K. Office for National Statistics showed that the U.K. economy expanded 0.8 percent quarter-over-quarter and 3.1 percent year-over-year in the second quarter, with both the sequential and year-over-year growth rates coming in line with expectations.

The European Central Bank reported that M3 money supply rose 1.5 percent year-over-year in June compared to a 1 percent increase in May. Economists expected a more modest 1.2 percent increase.

U.S. Economic Reports

After reporting an unexpected drop in new orders for U.S. manufactured durable goods in the previous month, the Commerce Department released a report showing that durable goods orders rebounded by more than expected in the month of June.

The Commerce Department said durable goods orders increased by 0.7 percent in June following a 1.0 percent decrease in May. Economists had been expecting orders to climb by about 0.5 percent.

Excluding orders for transportation equipment, durable goods orders rose by a slightly stronger 0.8 percent in June compared to a 0.1 percent drop in the previous month.

Stocks in Focus

Earnings

Amazon (AMZN) reported a second quarter loss that was wider than expected, while its revenues were in line. The company's third quarter revenue guidance was also in line.

Baidu.com's (BIDU) second quarter results topped expectations and its third quarter guidance was strong.

Xerox's (XRX) second quarter results were worse than expected.

Lattice Semiconductor (LSCC) reported better than expected second quarter results but issued weak revenue growth guidance for the third quarter.

Meanwhile, RF Micro Devices (RFMD) issued strong second quarter guidance after reporting strong first quarter results.

Netgear (NTGR) reported second quarter earnings that beat estimates, while its revenues were below the consensus estimate. The company also issued weak third quarter revenue guidance.

Altera (ALTR) reported second quarter results that exceeded estimates and forecast sequential sales growth of -2 percent to 2 percent.

Separately, KLA-Tencor's (KLAC) fourth quarter earnings trailed estimates, while its revenues were ahead of expectations. The company's fourth quarter guidance was weak.

Maxim Integrated's (MXIM) fourth quarter results and guidance were below estimates. Flextronics (FLEX) reported better than expected first quarter results but its second quarter guidance was lukewarm. Ingram Micro's (IM) second quarter earnings and revenues were above estimates and its third quarter revenue guidance was in line.

Starbucks (SBUX) reported third quarter earnings and revenues that exceeded estimates, while its full year adjusted earnings guidance was lukewarm.

Reinsurance Group of America (RGA) reported better than expected second quarter results.

Swift Transportation (SWFT) reported second quarter earnings that were in line, while its revenues were shy of estimates.

Republic Services (RSG) announced a 2 percent increase in its regular quarterly dividend to 28 cents per share after reporting better than expected second quarter results and reaffirmed its full year earnings guidance.

Other Corporate News

Rite Aid (RAD) announced the appointment of Darren Karst as its CFO, effective August 30th, succeeding Frank Vitrano. Vitrano is expected to transition to the role of the Chief Administrative Officer before retiring in September 2015.

Nabors (NBR) announced a 50 percent increase in its quarterly dividend to 6 cents per share.