Wall Street Locked In Lackluster Phase

(RTTNews) - The major U.S. index futures are pointing to a lower opening on Wednesday, with risk aversion firmly grasping the markets. As the safe haven dollar rises, commodities are all lower, although oil is staging a modest recovery and yet is trading below the $40-a-barrel mark. After Asian stocks followed Wall Street lower amid the release of lackluster Chinese service sector reading, the European markets are in the red, hurt once again by mixed earnings and cautious guidance.

U.K.'s travails in the aftermath of its decision to exit the European Union is reflected in the service sector activity data for July, which indicated the first contraction in well over 3 years. The domestic markets could also stay focused on ADP's private payroll numbers for July and the ISM's U.S. non-manufacturing PMI data along with earnings, spearheaded by Time Warner (TWX).

As of 6:15 am ET, the Dow futures are slipping 32 points, the S&P 500 futures are moving down 4.25 points and the Nasdaq 100 futures are receding 9.50 points.

U.S. stocks declined notably on Tuesday, as overseas weakness, oil's extended weakness and lackluster domestic auto sales curtailed the optimism generated by some strong blue chip earnings reports.

On the economic front, ADP is set to release its private payrolls report for July at 8:15 am ET. Economists expect the sector to have added 165,000 jobs following an addition of 172,000 jobs in June.

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 Energy Information Administration is due to release its weekly petroleum status report for the week ended July 29th at 10:30 am ET.

In major corporate news, 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 is 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.

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.

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 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 upper 100 level against the dollar. The Nikkei 225 average ended down 308.34 points or 1.88 percent at a 1-month low of 16,083. Australia's All Ordinaries languished below the unchanged line throughout the session, ending 70.70 points or 1.26 percent lower at 5,551, its lowest level since July 19th

The Hong Kong market, which re-opened after yesterday's typhoon-induced closure, fell notably, with the Hang Seng Index losing 390.02 points or 1.76 percent before ending at 21,739. However, 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 expansion, the composite output index accelerated to near a 2-year high of 51.9.

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.

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.

On the economic front, 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 a 52.9, above the flash estimate of 52.7.

The 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 was unchanged in June compared to the previous month, in line with expectations. The year-over-year increase remained unchanged at 1.6 percent, but softer than the 1.8 percent growth expected by economists.