News Column

Wall Street Mood Turns Cautious After Fed Cheer

June 19, 2014

WASHINGTON (Alliance News) - Trading in the US index futures suggests that Wall Street stocks may attempt to hold onto the momentum amid nervousness now that the Fed decision ceases to be a catalyst. Asian stocks ended mixed, although some markets did catch onto the Fed frenzy and rallied through the session. The European markets are also moving to the upside. The domestic markets could also react to some earnings announcements and economic data on jobless claims and the manufacturing sector.

At 6:15 am ET, the Dow futures are adding 5 points, the S&P 500 futures are moving up 0.50 points and the Nasdaq 100 futures are advancing 4.25 points.

US stocks embarked on a rally on Wednesday in reaction to the FOMC announcement, with the S&P 500 Index closing at a fresh closing high.

On the economic front, the Labor Department is scheduled to release its jobless claims report for the week ended June 14th at 8:30 am ET. Economists expect claims to have declined to 313,000 from 317,000 in the previous week.

The Philadelphia Federal Reserve is due to release the results of its manufacturing survey at 10 am ET. The consensus estimate calls for the diffusion index of business activity for the region to drop to 13 in June from 15.4 in May. Around the same time, the Conference Board will release its leading economic indicators index for May. Economists expect the leading economic indicators index to rise 0.6% month-over-month in May following a 0.4% increase in April.

In corporate news, Red Hat (RHT) reported first quarter non-GAAP earnings of 34 cents per share, up from 32 cents per share last year, on revenues of USD424 million, up 17% year-over-year. The results were ahead of estimates.

Jabil Circuit (JBL) reported a third quarter loss of 6 cents per share on a core basis compared to core earnings of 47 cents per share in the year-ago period. Net revenues fell to USD3.8 billion from the year-ago quarter's USD4.2 billion. The results exceeded estimates. For the fourth quarter, the company expects bottom line results on a core basis of a loss of 10 cents to a profit of 10 cents per share on net revenues of USD3.7 billion to USD3.9 billion. The bottom line guidance trailed estimates, while its revenue guidance was in line. The company reaffirmed its 2015 core earnings per share guidance, which was in line.

CLARCOR (CLC) reported second quarter adjusted earnings of 76 cents per share and its net sales rose 34% to USD386.6 million. For 2014, the company expects non-GAAP earnings of USD2.85-USD2.95 per share on sales of USD1.49 billion to USD1.54 billion. The guidance was positive.

AutoZone (AZO) announced that its board has authorized the repurchase of an additional USD750 million if its common stock.

The major Asian markets closed on a mixed note, with most markets benefiting from the positive sentiment generated by the FOMC announcement, while local catalysts impacted performance of some markets.

The Japanese market rallied on the Fed statement even as the yen remained flat. The Nikkei 225 average opened higher and advanced strongly in early trading. Thereafter, the average moved roughly sideways, ending the day up 245.36 points or 1.62% at a 5-month high of 15,361. A majority of stocks moved higher, with Nippon Sheet Glass leading the gains with roughly a 17% advance.

Australia's All Ordinaries opened higher and advanced steadily until late afternoon trading. Subsequently, the index moved sideways before closing up 82.50 points or 1.54% at 5,446. The market witnessed broad based strength, with material, energy, financial and industrial stocks leading the gains.

Hong Kong'sHang Seng Index ended 24.93 points or 0.11% lower at 23,157 and China's Shanghai Composite Index slumped 31.78 points or 1.55% before closing at 2,024, with diversion of funds to IPO markets affecting liquidity in the equity markets.

On the economic front, revised estimates released by Japan'sCabinet Office showed a downward revision in the leading economic indicators index for Japan to 106.5 in April from the preliminary estimate of 106.6. This was also weaker than the 107.4 recorded for March.

Japan'sMinistry of Economy, Trade and Industry reported that its all industry activity for Japan fell 4.3% month-over-month in April following a 1.5% increase in March. All four sectors experienced a contraction.

European stocks opened higher and have been moving roughly sideways since then, taking comfort from the US Fed's promise of continued stimulatory monetary policy environment.

In corporate news, Rolls-Royce announced a 1 billion pound stock buyback program and also confirmed its group guidance for 2014 and 2015. French cosmetics giant L'Oreal announced a deal to buy Los Angeles-based NYX Cosmetics. However, the company did not announce the terms of the deal.

On the economic front, a report released by the UK Office for National Statistics showed that UK retail sales rose a less than expected 3.9% year-over-year, while on a monthly basis retail sales dropped 0.5%, in line with expectations.

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Source: Alliance News

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