News Column

Wall Street Momentum Falters Amid Caution

June 25, 2014

WASHINGTON (Alliance News) - The mood on Wall Street continues to be cautious notwithstanding the losses posted in the past two sessions. The major US index futures point to a mostly negative open by Wall Street stocks on Wednesday. Global cues are negative, with Asian stocks closing lower, while the European markets are also seeing losses. With crude oil prices continue to climb as the Iraqi insurgents continue to make headway, the underlying mood is one of caution even as the markets prepare to receive some earnings report and data on durable goods orders, final first quarter GDP and service sector activity.

At 6:15 am ET, the Dow futures are slipping 7 points and the Nasdaq Composite futures are declining 2.25 points, while the S&P 500 futures are virtually unchanged.

US stocks declined for the second straight session on Tuesday despite the release of strong domestic data. Elevated crude oil prices in the wake of geopolitical concerns surrounding the unrest in Iraq provided a reason for traders to liquidate holdings in the overbought markets.

On the economic front the Commerce Department is scheduled to release its durable goods orders report for May at 8:30 am ET. Economists expect a 0.4% month-over-month increase in durable goods orders. Excluding transportation, orders may have risen 0.3%. Also at 8:30 am ET, the Commerce Department is due to release its final fourth quarter GDP report. The consensus estimate calls for a downward revision to the preliminary estimate to 1.8%.

Markit is scheduled to release flash estimates of its non-manufacturing purchasing managers' index for June at 9:45 am ET. The Energy Information Administration will release its petroleum status report for the week ended June 20th at 10:30 am ET. The Treasury is due to release the results of its auction of 5-year notes at 1 pm ET.

In corporate news, Apogee (APOG) reported first quarter earnings of 21 cents per share on revenues of USD210.9 million, up 18%. The earnings trailed expectations, while the revenues were ahead of expectations. The company also raised its 2015 earnings per share guidance to USD1.40-USD1.50 from USD1.35-USD1.50, while it continues to expect revenues to grow 15-20%. The guidance was in line.

In conjunction with its investor day, PAREXEL (PRXL) reconfirmed its fourth quarter and full year guidance. The company expects fourth quarter earnings of 59-63 cents per share on revenues of USD507 million to USD513 million. For the full year, the company expects non-GAAP earnings of USD2.11-USD2.15 per share on revenues of USD1.936 billion to USD1.942 billion. The company initiated 2015 guidance, expecting earnings of USD2.51-USD2.75 per share on revenues of USD2.120 billion to USD2.150 billion. The guidance was in line.

Valmont Industries (VMI) lowered its 2014 earnings guidance to USD9.35-USD9.65 per share from USD10-USD10.50 per share, citing challenging environment in its North American utility structures business and the continued weakness in the Australian economy. The guidance trailed expectations.

Lockheed Martin Corp. (LMT) won a USD1.86 billion fixed-price contract from the US Air Force to produce two Space Based Infrared System or SBIRS, missile defense early warning satellites.

The major Asian markets closed lower, hurt by the negative close on Wall Street overnight and the brewing geopolitical tensions in Ukraine and Iraq, which has pushed up oil prices.

The Japanese market retreated, as the yen firmed up amid the risk aversion. The Nikkei 225 average opened lower and languished below the unchanged line throughout the session. The index closed 109.63 points or 0.71% lower at 15,267. Most export stocks advanced, with transportation and heavy machinery markets providing support.

Australia's All Ordinaries also spent the entire session below the unchanged line before closing down 28.30 points or 0.52% at 5,387. Most sector stocks retreated, with the exception of telecom and IT stocks.

Hong Kong'sHang Seng Index ended at 22,867, down 13.94 points or 0.06%, and China's Shanghai Composite lost 8.43 points or 0.41% before closing at 2,026.

On the economic front, a report released by the Bank of Korea showed that consumer sentiment in Korea improved slightly. The consumer confidence index rose 2 points to 197 in June.

European stocks opened lower and have been seeing weakness since then, with the three major averages in the region currently moderately lower. The markets chose to ignore positive German consumer sentiment data released earlier in the day.

In corporate news, UK'sBunzl Group overall trading is consistent with expectations for the six months ending June 30. The company also expects positive underlying revenue growth and improved operating margins. Stagecoach reported higher profit for its fiscal year 2014 and also stated that its current trading is in line with expectations. The company also raised its dividend.

On the economic front, the results of a survey by market research group GfK showed that consumer confidence is set to improve in July. The forward-looking consumer confidence index based on the survey is expected to improve to 8.9 in July from 8.6 for June.

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Source: Alliance News

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