News Column

Wall Street Mood Subdued Ahead Of Data Onslaught

July 28, 2014

WASHINGTON (Alliance News) - Early indications suggest that Wall Street stocks may open slightly lower on Monday, as uncertainty is writ over the face of the global markets against the backdrop of simmering geopolitical tensions and a shaky economic recovery. Global cues are mixed, with Asian stocks closing mixed, while the European markets have recovered from a lackluster start, thanks to some positive domestic corporate news. The mood in the domestic markets could also hinge on economic data on pending home sales and the service sector. Given the key economic events scheduled for the week, the markets may prefer to stay cautious.

At 6:15 am ET, the Dow futures are slipping 15 points, the S&P 500 futures are receding 2 points and the Nasdaq 100 futures are moving down 3 points.

US stocks closed mixed in the week ended July 25, as mixed earnings and geopolitical concerns continued to haunt traders.

On the economic front, the unfolding week's calendar is heavily loaded with several market moving economic reports scheduled for the week. Notable among these are the FOMC meeting, the Labor Department's non-farm payrolls report for July, ADP's private sector payrolls report, also for July, the National Association of Realtors' pending home sales report for June, advance second quarter GDP estimates, the results of consumer confidence surveys by the Conference Board and the Reuters and the University of Michigan combine and the results of the Institute for Supply Management's manufacturing survey for July.

Traders may also focus on Markit's flash US manufacturing and non-manufacturing indexes for July, the S&P/Case-Shiller house price index for May, the weekly jobless claims report, the results of MNI's manufacturing survey for the Chicago region and the Commerce Department's personal income and spending report for June. The results of the Dallas Federal Reserve's manufacturing survey for July, the Labor Department's employment cost index for the second quarter, the Commerce Department's construction spending report for June and the results of the Treasury auctions of 2-year, 5-year and 7-year notes round up the economic events of the week.

Markit is set to release the preliminary results of its service sector index for July at 9:45 am ET. Economists expect the index to edge down to 60 in July from 61.2 in June. The National Association of Realtors is due to release its pending home sales for June at 10 am ET. The consensus estimate calls for a 0.3% month-over-month increase in the index following a 6.1% jump in the previous month.

In corporate news, (SOHU) reported an adjusted second quarter loss that was narrower than expected, while its revenues missed estimates. The guidance was mixed Meanwhile, Changyou's (CYOU) second quarter earnings beat expectations but its revenues were below estimates.

Amkor (AMKR), Crane (CR), CTS Corp. (CTS), General Growth Properties (GGP), Healthsouth (HLS), JJ Snack Foods (JJSF), Microstrategy (MSTR), Owens & Minor (OMI), PartnerRe (PRE), Plum Creek (PCL) and XL Group (XL) are among the companies due to release their quarterly results after the close of trading.

SkyWest (SKYW) said it expects financial results for the second quarter to be lower than it previously anticipated due to changes to its tax provisions, certain valuation incentives and reduced revenues from missed incentives under its flying contracts with its major partners. The company said it expects a loss of between 23 to 278 cents per share for the quarter.

The Asian markets closed on a mixed note, with the Chinese, Hong Kong, Japanese and South Korean markets advancing, while the Australian, New Zealand, Taiwanese, and Indian markets retreated. The Malaysian, Singaporean and Indonesian markets remained closed for public holidays. While the negative performance by Wall Street stocks last Friday impacted sentiment, traders derived some encouragement from positive industrial profit data released by China.

Japan'sNikkei 225 average opened lower and remained below the unchanged line till late morning trading. Subsequently, the average recovered and moved above the unchanged line and hovered in positive territory for the rest of the session. The index closed 71.53 points or 0.46% higher at 15,529.

China's Shanghai Composite Index rallied 51.33 points or 2.41% before closing at 2,178, its highest levels since December 13, 2013, and Hong Kong's Hang Seng ended 212.62 points or 0.88% higher at 24,429.

Meanwhile, Australia's All Ordinaries languished below the unchanged line for much of the session before closing up 4.30 points or 0.08% at 5,570. Consumer staple, telecom and financial stocks came under selling pressure, while material and IT stocks gained ground.

On the economic front, profits of Chinese industrial firms increased at an accelerated pace in June, a report from the National Bureau of Statistics showed. Industrial profit rose 17.9% year-over-year in June, following the 9% increase in May.

European stocks opened higher but have since then gave back most of their gains and are currently trading mixed amid the release of domestic corporate news. The domestic economic calendar is literally empty and traders looked ahead to a couple of key economic readings across the Atlantic.

In corporate news, Ryanair reported strong first quarter results and raised its earnings guidance for the full year. TNT Express also reported higher profits for its second quarter, thanks to the company's restructuring initiatives. UK'sReckitt Benckiser said it plans to spin-off its pharma business in an IPO after reporting an increase in its pre-tax profit for the first half.

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Source: Alliance News

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