02.10.2014 15:18:22
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Sentiment Could Turn Subdued Ahead Of Friday's Jobs Data
(RTTNews) - The major U.S. index futures are pointing to a lower opening on Thursday, with sentiment reflecting apprehensions of traders despite the recent sell-off. Confounding traders further would be the jobless claims report released short while ago, which showed an unexpected decline in claims. Meanwhile, across the Atlantic, the European Central Bank opted to stay put, in line with expectations. Although bargain hunting could generate some strength, the impending release of the monthly non-farm payrolls report could serve to keep sentiment subdued.
U.S. stocks retreated sharply on Wednesday amid the release of mixed economic news and an Ebola scare. The major averages opened lower and witnessed a short retreat till the release of the results of a national manufacturing survey. After trimming some of their losses by early afternoon, the averages retreated steadily before moving sideways in late trading. The averages all ended at their lowest closing levels in over a month.
The Dow Industrials fell 238.19 points or 1.40 percent before closing at 16,805, the S&P 500 Index closed 26.13 points or 1.32 percent lower at 1,946 and the Nasdaq Composite Index ended at 4,422, down 71.30 points or 1.59 percent.
All but one of the 30 Dow components closed lower, with Boeing (BA), Johnson & Johnson (JNJ) and Intel (INTC) declining sharply.
Transportation, semiconductor, computer hardware, basic material and energy stocks came under intense selling pressure.
On the economic front, the results of a survey by the Institute for Supply Management showed that manufacturing activity expanded at a slower than expected pace in September. The manufacturing purchasing managers' index fell to 56.6 from 59 in August. Out of the 18 industries surveyed, 15 industries experienced growth. The new orders index slipped to 60 and the order backlogs index declined to 47 from 52.5. The employment index fell 3.5 points to 54.6.
ADP released its private payrolls report for September, showing an addition of 213,000 jobs. The service sector added 155,000 jobs, while the goods producing sector added 58,000 jobs. In the goods producing sector, construction jobs rose 20,000 compared to the 35,000 jobs added by the manufacturing sector.
The Commerce Department reported that construction spending fell 0.8 percent month-over-month in August, belying expectations for a 0.5 percent increase. Private construction spending declined 0.8 percent and public construction spending dipped 0.9 percent. In the private category, non-residential construction spending slumped 1.4 percent, while residential construction spending was down a more modest 0.1 percent.
Currency, Commodity Markets
Crude oil futures are sliding $1.17 to $89.56 a barrel after slipping $0.43 to $90.73 a barrel on Wednesday.
The previous session's weakness came amid the release of the weekly petroleum status report for the week ended September 26th, which showed that crude oil stockpiles fell by 1.4 million barrels to 356.6 million barrels. Nevertheless, crude oil inventories remained in the upper half of the average range. Gasoline stockpiles fell by 1.8 million barrels and were in the middle of the average range, while distillate inventories declined by 2.9 million barrels and remained near the lower limit of the average range.
Refinery capacity utilization averaged 92.5 percent over the four weeks ended September 26th compared to 93.4 percent over the four weeks ended September 19th.
Gold futures, which rose $3.90 to $1,215.50 an ounce in the previous session, are currently falling $1.80 to $1,213.70 an ounce.
Among currencies, the U.S. dollar is trading at 108.78 yen compared to the 108.89 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2641 compared to yesterday's $1.2623.
Asia
The major Asian markets that were open for trading retreated, tracking the negative close on Wall Street overnight and amid apprehension about Friday's U.S. jobs report. The Chinese and Hong Kong markets remained closed for 'National Day' holidays.
The Japanese market retreated, as the yen gained ground in the session. The Nikkei 225 average opened lower and declined steadily throughout the session before closing down 420.26 points or 2.61 percent at a 1-month low of 15,662.
All but one of the index components moved to the downside. Tokuyama, Suzuki Motor, Furukawa, Minebea and Kuboto were among the biggest decliners of the session.
Australia's All Ordinaries languished below the unchanged throughout the session before closing down 36 points or 0.67 percent at 5,299.
The market witnessed across the board selling, with utility, real estate, IT, industrial, energy and consumer staple stocks leading the slide.
The Indonesian Jakarta Composite Index slumped 2.79 percent, the Singaporean Straits Times Index lost 1.03 percent and South Korea's Kospi declined 0.77 percent.
On the economic front, a report released by the Bank of Japan showed that the monetary base in Japan surged up 35.3 percent year-over-year in September. This follows a 40.5 percent increase in August.
The Australian Bureau of Statistics also released a report showing that Australia's trade deficit narrowed to A$787 million in August from A$1.08 billion in July. Imports fell 3 percent and exports were down 2 percent.
A separate report showed that the total number of building approvals issued in Australia was up a seasonally adjusted 3 percent month-over-month in August. Economists expected a more modest 1 percent increase.
Europe
European stocks opened lower and have seen further downside since then, as traders digested a major rate decision from the region. After the surprise rate cut in September, the European Central Bank opted to hold interest rates unchanged.
In corporate news, Domino's Pizza said in its interim management statement for the third quarter that the performance in the U.K. was strong and that it remains confident of a satisfactory outcome for the year.
Meanwhile, TUI said in its pre-close trading update that it is confident of achieving full year underlying operating profit growth of at least 9% on a constant currency basis compared to its previous guidance of 7% to 10%.
On the economic front, a report released by Markit Economics and the Chartered Institute of Purchasing & Supply showed that construction activity in the U.K. remained buoyant in August. The construction sector purchasing managers' index edged up to 64.2 from 64 in August.
Eurostat reported that producer prices in the euro area fell 1.4 percent year-over-year in August, faster than the 1.2 percent drop in July. Excluding energy prices, the producer price index was down 0.2 percent. On a month-over-month basis, producer prices edged down 0.1 percent, slower than the 0.2 percent drop in July.
U.S. Economic Reports
First-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended September 27th, according to a report released by the Labor Department on Thursday.
The report said initial jobless claims fell to 287,000, a decrease of 8,000 from the previous week's revised level of 295,000. The pullback came as a surprise to economists, who had expected jobless claims to climb to 297,000 from the 293,000 originally reported for the previous week.
The Commerce Department is due to release its factory orders report for August at 10 am ET. The consensus estimate calls for a 9.3 percent drop in orders for the month.
In July, factory orders jumped 10.5 percent, primarily due to a 22.6 percent surge in durable goods orders. Excluding transportation, new orders fell 0.8 percent.
Meanwhile, durable goods order, which make up the bulk of factory orders, tumbled by 18.2 percent month-over-month in August, reversing most of the 22.5 percent jump in the previous month. Excluding transportation, orders were up 0.7 percent.
The Treasury Department is set to make announcements concerning next week's auctions of 3-year and 10-year notes and 30-year bonds at 11 am ET.
New York Federal Reserve Bank President William Dudley is due to speak in New York at 12 pm ET, while Atlanta Fed President Dennis Lockhart will make opening remarks at the human capital conference in Atlanta at 1 pm ET.
Additionally, St. Louis Fed President James Bullard will take part in a conversation on the economy and monetary policy in Tupelo, Mississippi, at 8 pm ET.
Stocks in Focus
Actuant's (ATU) fourth quarter results missed estimates and its 2015 guidance was lackluster. Constellation Brands (STZ) reported second quarter results that missed estimates. The company lowered its 2015 guidance.
Meanwhile, Global Payments (GPN) reported better than expected first quarter earnings and also raised its revenue and cash earnings per share guidance for 2015. McCormick's (MKC) third quarter earnings exceeded estimates and it raised its full year profit guidance.
Dollar General (DG) announced that it has extended its tender offer to acquire all shares of Family Dollar (FDO) for $80 per share in cash to 5 p.m. ET on October 31, 2014 from the previously set expiration date of October 8, 2014.
EMC (EMC) announced the appointment of Zane Rowe as its CFO.
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