Sentiment Lukewarm Amid Mixed Catalysts

(RTTNews) - The major U.S. index futures are pointing to a lower opening on Wednesday, with sentiment still reflecting risk aversion despite the lackluster showing seen all of last week and into this week. Weak global economic data points, mixed earnings and oil's slump all have contributed to the recent weakness, with today being no exception. Chinese and the U.K. Service sector data were insipid. That said, a report released a short while ago showed that the private sector in the U.S. added jobs at a torrid pace. Earnings news has largely been positive. Commodities are weaker and the dollar is firmer. The markets may also wait on the results of the ISM's service sector survey.   U.S. stocks declined notably on Tuesday, as overseas weakness, oil's extended decline and lackluster domestic auto sales curtailed optimism generated by some strong blue chip earnings reports.    The major averages opened little changed but declined steadily until late afternoon trading. Although the averages trimmed some of their losses over the course of the afternoon, they ended markedly lower for the session.    The Dow Industrials ended down 90.74 points or 0.49 percent at 18,314, and the S&P 500 Index closed 13.81 points or 0.64 percent lower at 2,157. The Nasdaq Composite, which outperformed the other major averages in recent sessions, closed at 5,138, down 46.46 points or 0.90 percent.    Twenty-two of the thirty Dow components ended lower for the session and one stock was unchanged, while the remaining seven advanced. Apple (AAPL), Pfizer (PFE), Goldman Sachs (GS), Boeing (BA), Home Depot (HD) and American Express (AXP) were among the worst decliners of the session, but Exxon Mobil (XOM) rose strongly.    Among the sectors, financial, housing, retail, computer hardware, semiconductor, oil, airline and other transportation stocks came under selling pressure, while gold stocks bucked the downtrend.    On the economic front, the Commerce Department reported that personal income rose 0.2 percent month-over-month in June, shy of the 0.3 percent growth expected by economists. However, personal spending climbed 0.4 percent, more than the 0.3 percent growth expected by economists, underlining the healthy consumer spending environment. The personal savings rate edged down 0.2 points to 5.3 percent.    The inflation metrics of the report were muted. The price consumption expenditure index as well as the core index edged up 0.1 percent each. Annually, the PCEI was up 0.9 percent, unchanged from the previous month, and the core PCEI, the Fed's preferred inflation gauge, rose 1.6 percent.    Monthly auto sales came in at a robust seasonally adjusted annual rate of 17.9 million units compared to expectations for 17.3 million units.     Currency, Commodity Markets    Crude oil futures for September delivery are rising $0.28 to $39.79 a barrel after declining $0.55 to $39.51 a barrel in the previous session. Meanwhile, an ounce of gold for December delivery is currently trading at $1,371.90, down $0.70 from the previous session's close of $1,372.60. On Tuesday, gold rose $13.    On the currency front, the U.S. dollar is trading at 101.11 yen compared to the 100.89 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1195 compared to yesterday's $1.1224.    Asia    The major Asian markets fell across the board, declining for the second straight session, weighed down by the lackluster lead from Wall Street overnight and a weak Chinese service sector reading. However, the Chinese market bucked the downtrend with a modest gain.    The Japanese market fell steeply as the yen firmed up to the upper-100 level against the dollar. The Nikkei 225 Index opened notably lower and moved sideways in the morning. After seeing further downside in the afternoon, the index ended down 308.34 points or 1.88 percent at a 1-month low of 16,083.    The market witnessed across-the-board selling, with export, financial and retail stocks leading the slide. On the other hand, there was stock-specific strength, as Yamaha and Uny Group gained ground.    Australia's All Ordinaries Index languished below the unchanged line throughout the session before ending 70.70 points or 1.26 percent lower at 5,551, its lowest level since July 19th. Financial stocks led the retreat on a day the selling was broad based.    As Hong Kong market re-opened after yesterday's typhoon-induced closure, the Hang Seng Index fell 390.02 points or 1.76 percent before ending at 21,739. Meanwhile, China's Shanghai Composite Index ended up 7.18 points or 0.24 percent at 2,979.    On the economic front, Markit's survey of service sector activity in China showed that the sector saw a deceleration in activity in July. The Caixin service sector PMI fell to 51.7 from an 11-month high of 52.7. However, with the manufacturing PMI reading released earlier this week showing an expansion, the composite output index accelerated to a nearly 2-year high of 51.9.    Nikkei/Markit's survey of Japanese service sector activity showed the sector moving into expansion territory in July. A survey by the Australian Industry Group showed that activity level in the service sector in Australia accelerated in July.    The minutes of the Bank of Japan's June meeting showed that there was dissent as the policymakers discussed further stimulus. This has raised doubts if the bank will consider further easing measures on top what was announced in July.    Europe    European stocks are lower for the third straight session amid the release of another slew of mixed earnings and private sector activity data from the eurozone and the U.K.    In major corporate news, Rio Tinto (RIO) reported a steep drop in its first half earnings and sounded out caution concerning the global growth outlook. HSBC's (HBC) first half profits also fell steeply. Continental AG forecast a decline in car demand in the second half.     On the other hand, French banks Societe Generale and Credit Agricole reported solid second quarter profits. ING also reported strong profit growth.    In economic news, final data released by Markit showed that the eurozone composite PMI edged up 0.1 points to 53.2 in July, while it was initially estimated to have fallen to 52.9. The service sector PMI rose 0.1 points to 52.9, above the flash estimate of 52.7.    U.K. service sector activity contracted for the first time in 3-1/2 years in July, with the corresponding PMI declining to 47.4 from 52.3, in line with the flash estimate.    Eurostat reported that retail sales in June were unchanged in June compared to the previous month, in line with expectations. The year-over-year growth remained unchanged at 1.6 percent, softer than the 1.8 percent growth expected by economists.    A report released by the British Retail Consortium showed that shop prices in the U.K. fell 1.6 percent year-over-year in July following a 2 percent drop in June.     U.S. Economic Reports    Ahead of the release of the Labor Department's more closely watched monthly jobs report on Friday, payroll processor ADP released a report showing that U.S. private sector employment rose by more than expected in the month of July.

ADP said private sector employment increased by 179,000 jobs in July after climbing by an upwardly revised 176,000 jobs in June. Economists had expected employment to grow by about 170,000 jobs compared to the addition of 172,000 jobs originally reported for the previous month.   Markit's final U.S. service sector PMI will be released at 9:45 am ET. In June, the index was at 51.4.    At 10 am ET, the Institute for Supply Management is scheduled to release the results of its national service sector survey for July. The consensus estimate calls for a slight dip in the index to 56 from 56.5 in June.    The service sector PMI climbed to 56.5 in June from 52.9 in May. Economists expected a more modest improvement to 53.3. The new orders index rose 5.7 points to 59.9, with the new export orders index rising 4 points to 53. The business activity index was up 4.4 points at 59.5. The employment index moved into expansion territory, rising 3 points to 52.7. On the other hand, the order backlogs index eased 2.5 points to 47.5. Fifteen of the non-manufacturing industries reported growth.   The Energy Information Administration is due to release its weekly petroleum status report for the week ended July 29th at 10:30 am ET.    Crude oil stockpiles increased by 1.7 million barrels to 521.10 million barrels in the week ended July 22nd. Stockpiles were at historically high levels for this time of year.  

Gasoline inventories increased by 0.5 million barrels and were well above the upper limit of the average range. Meanwhile, distillate inventories decreased by 0.8 million barrels but were above the upper limit of the average range for this time of the year. 

Refinery capacity utilization averaged 92.6 percent over the four weeks ended July 22nd compared to 92.7 percent for the four weeks ended July 15th. 

Stocks in Focus 

Time Warner (TWX) reported better than expected second quarter adjusted earnings per share but its revenues missed estimates. The company raised its full year adjusted earnings per share and announced the purchase of a 10 percent stake in Hulu.   AIG (AIG) reported better than expected second quarter adjusted earnings and its board authorized a new $3 billion stock buyback program.    Electronic Arts (EA) reported an unexpected profit on an adjusted basis for its first quarter and its adjusted revenues were also solid. However, the company's second quarter revenue guidance was weak, with the company indicating that it would no longer adjust deferred revenues.    Fitbit (FIT) reported above-consensus second quarter results and issued in line guidance for its third quarter and the full year.    Avis Budget (CAR) issued upbeat full year revenue guidance despite reporting below par second quarter results.    Big 5 Sports (BGFV) reported forecast-beating second quarter adjusted earnings and revenues.    Devon Energy (DVN) reported better than expected second quarter results despite production dipping 5 percent.    Hanesbrands (HBI) reported second quarter adjusted earnings and revenues that trailed estimates. However, the company's full year guidance was in line.    Owens & Minor (OMI) reported better than expected second quarter results but its full year adjusted earnings per share guidance was lackluster.     Papa John's (PZZA) reported second quarter results that topped expectations and issued in line full year adjusted earnings per share guidance.    21st Century Fox (FOXA), Allstate (ALL), Boyd Gaming (BOYD), Career Education (CECO), Exelixis (EXEL), First Solar (FSLR), IAMGOLD (IAG), Jack In The Box (JACK), Lincoln National (LNC), Marathon Oil (MRO), MetLife (MET), Prudential (PRU), Tesla Motors (TSLA), Transocean (RIG), Waste Connections (WCN) and Western Union (WU) are among the companies due to release their quarterly results after the close of trading.