News Column

Wall Street Holding Onto Optimism

May 22, 2014

WASHINGTON (Alliance News) - Trading in the US index futures suggest that Wall Street stocks may open modestly higher, as Chinese manufacturing data offered encouragement. Traders may also stayed tuned to data on the manufacturing sector and job market notwithstanding assurances of continued accommodative monetary policy environment.

As of 6:15 am ET, the Dow futures are up 22 points, the S&P 500 futures are gaining 1.40 points and the Nasdaq 100 futures are rising 4.50 points.

US stocks rebounded on Wednesday, helped by bargain hunting, which gained strength due to the dovish message relayed by the FOMC minutes.

On the economic front, the Labor Department is scheduled to release its jobless claims report for the week ended May 17th at 8:30 am ET. Economists expect claims to have increased to 310,000 from 297,000 in the previous week.

Markit is set to release flash estimate of its manufacturing index for May at 9:45 am ET. The consensus estimate calls for an increase in the index to 55.9 from 55.4 in the previous month.

The National Association of Realtors is scheduled to release its existing home sales report for April at 10 am ET. Economists expect existing home sales to come in at a seasonally adjusted annual rate of 4.69 million units compared to a 4.59 million unit rate in March.

Around the same time, the Conference Board is due to release its leading economic indicators index for April. Economists expect a 0.4% month-over-month increase in the leading economic indicators index.

In corporate news Semtech (SMTC) reported first quarter non-GAAP earnings of 46 cents per share on net revenues of USD132.9 million. For the second quarter, the company expects non-GAAP earnings of 36 to 42 cents per share on net sales of USD138 million to USD146 million. The results exceeded estimates and the guidance was positive.

Synopsys (SNPS) reported better than expected second quarter results and raised its guidance for the full year, with the revised guidance comparing favorably to estimates.

NetApp (NTAP) reported fourth quarter earnings that exceeded estimates but revenues trailed estimates. The company's first quarter earnings and revenue guidance was weak.

Activision Blizzard (ATVI) announced a public offering of 41.50 million shares of its common stock by Vivendi, with the offer in accordance with the agreements announced in mid-2013.

Williams-Sonoma (WSM) reported first quarter earnings of 48 cents per share on net revenues of USD974 million, up 9.7%. For the full year, the company expects earnings of USD3.07 to USD3.17 per share on net revenues of USD4.65 billion to USD4.73 billion. The results exceeded estimates but the guidance was lukewarm.

Aeropostale (ARO), Aruba Networks (ARUN), Brocade (BRCD), Gamestop (GME), Gap (GPS), Hewlett-Packard (HPQ), Marvell (MRVL), Nordson (NDSN), Ross Stores (ROST), Shoe Carnival (SCVL), TiVo (TIVO) and Zumiez (ZUMZ) are among the companies due to release their quarterly results after the close of trading.

The Asian markets moved mostly to the upside, as the positive close on Wall Street overnight and positive Chinese manufacturing data engendered risk appetite in markets. The Japanese market rallied as the yen weakened amid the increase in risk appetite.

Japan'sNikkei 225 average ended up 295.62 points or 2.11% at 14,338. A majority of the index components advanced in the session. Australia's All Ordinaries hovered above the unchanged line throughout the session, ending up 54.20 points or 1% at 5,458. The market witnessed broad based strength, with energy, material and healthcare stocks gaining ground in the session. Hong Kong'sHang Seng Index closed at 22,954, up 117.24 points or 0.51%, while China's Shanghai Composite Index ended down 3.67 points or 0.18% at 2,021.

On the economic front, preliminary results of the manufacturing survey by Markit and HSBC showed that manufacturing activity continued to contract, albeit at a notably slower rate. The headline manufacturing purchasing managers' index rose 1.6 points to 49.7 in May, while economists expected a smaller improvement to 48.3. The results of a survey by the Melbourne Institute showed that inflation expectations in Australia rose to 4.4% in May from 4.2% in April.

European stocks are seeing some volatility and are currently mixed, as traders digest preliminary private sector activity data from the region.

In corporate news, Mitchells & Butlers reported flat pre-tax profits for the first half even as volume of food sales increased. Daily Mail & General reported higher profits for the first half and issued in line outlook for fiscal year 2014. Private sector activity data for eurozone released by Markit Economics showed that the composite purchasing managers' index that reflects activity levels in both the manufacturing and service sectors eased to 53.9 in May from 54 in April. The reading was in line with estimates. The manufacturing index slipped 1.1 points to 52.5 and also came in below the consensus estimate of 53.5, while the service sector index rose 0.2 points to 53.5. Meanwhile, the UK Office for National Statistics confirmed its preliminary first quarter GDP growth estimate at 0.8%.

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Source: Alliance News