News Column

Stocks May See Further Downside In Early Trading - US Commentary

July 8, 2014

WASHINGTON (Alliance News) - After moving mostly lower over the course of the previous session, stocks may see some further downside in early trading on Tuesday. The major index futures are currently pointing to a modestly lower open for the markets, with the Dow futures down by 24 points.

The downward momentum for the markets may partly reflect trepidation ahead of the start of earnings season, as Alcoa (AA) is scheduled to release its second quarter results after the close of trading.

While Alcoa was dropped from the list of Dow components last year, the release of quarterly results from the aluminum giant is still seen as the unofficial start of earnings season.

The consensus estimates call for Alcoa to report earnings of USD0.12 per share on revenues of USD5.66 billion. A year-ago, the company earned USD0.07 per share on revenues of USD5.85 billion.

Wells Fargo (WFC), Family Dollar (FDO), and WD-40 (WDFC) are also due to release their quarterly results later in the week, although the reporting season won't really start to pick up steam until next week.

In the afternoon, trading could be impacted by speeches by a pair of Federal Reserve officials, with traders likely to analyze the remarks for indications regarding the outlook for monetary policy.

Richmond Fed President Jeffrey Lacker is scheduled to deliver a speech on the economic outlook at 1 pm ET, while Minneapolis Fed President Narayana Kocherlakota is due to deliver a speech on monetary policy and the economy at 1:45 pm ET.

The Fed is also scheduled to release a report on consumer credit in the month of May at 3pm ET, although the data typically does not move the markets.

Among individual stocks, shares of Groupon (GRPN) are moving sharply higher in pre-market trading after B. Riley upgraded its rating on the daily-deals site to Buy from Neutral.

Semiconductor equipment maker KLA-Tencor (KLAC) could also see early strength after raising its quarterly dividend by USD0.05 to USD0.50 per share and announcing a USD1 billion stock buyback.

On the other hand, shares of The Fresh Market (TFM) may come under pressure after Goldman Sachs downgraded its rating on the organic grocer to Sell from Neutral.

While trading activity was somewhat subdued following the long holiday weekend, stocks moved mostly lower during trading on Monday. The losses on the day partly offset the strong performance that was shown by the markets last week.

The major averages ended the day firmly in negative territory but off their lows for the session. The Dow fell 44.05 points or 0.3% to 17,024.21, the Nasdaq slid 34.40 points or 0.8% to 4,451.53 and the S&P 500 dropped 7.79 points or 0.4% to 1,977.65.

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Source: Alliance News

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