WASHINGTON (Alliance News) - The major US index futures are pointing to a lower opening on Friday, with sentiment reflecting caution as economic data has turned out to be inconclusive catalysts. Notwithstanding the smaller than expected job additions revealed by the non-farm payrolls report earlier in the day, average job gains thus far this year have been robust and the jobless rate has also declined notably. Another report showed increases in personal income and spending in line with expectations. The markets may also focus on the results of separate consumer sentiment and manufacturing surveys.
US stocks experienced a sell-off on Thursday on the back of geopolitical concerns, as Argentina defaulted on its debt and companies began warning on a hit to their business due to the conflict in Ukraine. The major averages opened lower and declined steadily until the mid-session. After moving sideways till late afternoon trading, the averages took another leg down before closing sharply lower.
The Dow Industrials ended down 317.06 points or 1.88% at 16,563, its lowest closing level since May 22. The S&P 500 Index closed 39.40 points or 2% lower at a 1-1/2 month low of 1,931, and the Nasdaq Composite ended at 4,370, down 93.13 points or 2.09%.
All thirty of the Dow components closed lower, with American Express (AXP), Exxon Mobil (XOM), Nike (NKE), Verizon (VZ), Caterpillar (CAT) and Chevron (CVX) leading the slide.
On the economic front, the Labor Department reported that jobless claims rose by 23,000 to 302,000 in the week ended July 26th. At the same time, the four-week average fell to 297,000, dropping below the 300,000 mark for the first time since 2006. Continuing claims calculated with a week's lag rose by 31,000 to 2.539 million in the week ended July 19th.
The results of MNI Indicators' survey of Chicago-area business activity showed that the Chicago business barometer fell 10 points to 52.6 in July, hitting the lowest level since July 2013. The new orders, backlog orders, inventories and production indexes all declined, while the employment index improved.
Commodity, Currency Markets
Crude oil futures are sliding USD0.39 to USD97.78 a barrel after plunging USD2.10 to a 4-month low of USD98.17 a barrel on Thursday. Meanwhile, gold futures are climbing USD4.50 to USD1,287.30 an ounce. In the previous session, gold fell USD14.10 to USD1,282.80 an ounce.
Among currencies, the US dollar is trading at 102.84 yen compared to the 102.80 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at USD1.3405 compared to yesterday's USD1.3390.
The Asian markets fell across the board, hit by the extremely negative lead from Wall Street overnight and nervousness ahead of the release of some key economic data from the US later in the day. However, strong manufacturing data released from China helped to quell some of the anxieties.
The Japanese market suffered from the broader global market weakness and the resultant strength of the yen in response to the rise in risk aversion. The Nikkei 225 average languished below the unchanged line throughout the session before closing down 97.66 points or 0.63% at 15,523. A majority of stocks declined, led by NTN, OKUMA, Yahoo Japan, Shiseido, Nippon Sheet Glass and Asahi Glass.
Australia's All Ordinaries ended 75.50 points or 1.34% lower at 5,548. The market witnessed broad based weakness.
Hong Kong'sHang Seng Index ended at 24,532, down 224.42 points or 0.91%, and China's Shanghai Composite Index ended down 16.26 points or 0.74% at 2,185.
On the economic front, revised estimates released by HSBC and Markit Economics showed that the Chinese manufacturing purchasing managers' index rose to 51.7 in July, up from the flash estimate of 52 and the June reading of 50.7. The results of a survey by the government also confirmed the buoyant performance by the sector.
Meanwhile, the Australian Industry Group reported that its index of manufacturing activity for Australia moved above the no change mark of '50' for the first time in nine months.
A separate report released by the Australian Bureau of Statistics showed that producer prices in Australia rose 2.3% year-over-year in the second quarter following a 2.5% increase in the first quarter.
European stocks opened lower and have seen further downside since then, as traders digest some domestic corporate news and stay guarded ahead of the US non-farm payrolls reports.
In corporate news, insurer AXA reported higher first half profits, thanks to a strong performance by its life & savings business and cost control. Societe Generale reported better than expected second quarter results.
ArceloMittal (MT) reported second quarter earnings that missed estimates and lowered its outlook for the full year, citing softer iron ore prices.
On the economic front, revised estimates released by Markit Economics showed that its manufacturing index for the eurozone was downwardly revised to 51.8 in July from the flash estimate of 51.9 but was unchanged from the June reading.
Meanwhile, manufacturing activity in the UK expanded at a slower than expected rate in July, according to a survey by Markit and the Chartered Institute for Purchasing & Supply. The manufacturing purchasing managers' index fell 1.8 points to 55.4, while economists expected a reading of 57.2.
US Economic Reports
Automakers are scheduled to release their monthly sales data for July. Economists expect auto sales to come in at a seasonally adjusted annual rate of 16.7 million units compared to a 17 million rate in June.
After reporting a sharp jump in US employment in the previous month, the Labor Department released a report showing that employment rose by less than expected in the month of July. The report said non-farm payroll employment increased by 209,000 jobs in July after jumping by an upwardly revised 298,000 in June.
Economists had been expecting employment to climb by about 233,000 jobs compared to the increase of 288,000 jobs originally reported for the previous month. Despite the continued job growth, the unemployment rate unexpectedly edged up to 6.2% in July from a nearly six-year low of 6.1% in June. Personal income and spending in the US both increased in line with economist estimates in the month of June, according to a report released by the Commerce Department. The report said personal income increased by 0.4% in June, matching the increase seen in the previous month as well as economist estimates.
Additionally, the Commerce Department said personal spending rose by 0.4% in June following an upwardly revised 0.3% increase in May. Economists had been expecting spending to increase by about 0.4% compared to the 0.2% uptick originally reported for the previous month.
Markit is scheduled to release its final manufacturing purchasing managers' index for July at 9:45 am ET. Economists expect the reading to be downwardly revised to 56 from the flash estimate of 56.3.
Reuters and the University of Michigan are scheduled to release their final consumer sentiment index for July at 9:55 am ET. The consensus estimate calls for an upward revision to 81.5 from the preliminary estimate of 81.3.
The Institute for Supply Management is scheduled to release the results of its national manufacturing survey for July at 10 am ET. The manufacturing purchasing managers' index is expected to come in at 56 in the month.
Manufacturing conditions remained little changed in June. Of the 18 industries surveyed, 15 industries showed expansion. The manufacturing purchasing managers' index eased to 55.3 in June from 55.4 in May. The new orders index rose 2 points to 58.9, reaching the highest level since December 2013, while the order backlogs index slipped 4.5 points to 48, the lowest reading since January. The production index was down 1 point.
Also at 10 am ET, the Commerce Department will release its construction spending report for June. Economists expect a 0.5% month-over-month increase in construction spending.
Construction spending edged up 0.1% month-over-month in May. April's spending was upwardly revised to show a 0.8% increase. Spending on non-residential construction rose 1.1%, while residential construction spending was down 1.4%.
Stocks in Focus
Public Storage (PSA) reported better than expected second quarter results. Expedia's (EXPE) second quarter results also exceeded estimates. LinkedIn (LNKD) also reported above consensus results for its second quarter.
Microchip Technology (MCHP) reported first quarter earnings and revenues that beat estimates. Live Nation Entertainment (LYV) reported a higher second quarter profit, while its revenues were ahead of estimates.
YRC Worldwide (YRCW) reported a second quarter loss that was wider than expectations, while its revenues were ahead of expectations. Hanover Insurance (THG) reported second quarter operating income that was ahead of expectations. Boyd Gamings's (BYD) second quarter results trailed expectations.
SunPower (SPWR) reported second quarter earnings that were ahead of expectations, while its revenues missed estimates. The company issued in line guidance for 2014. PMC-Sierra (PMCS) reported better than expected second quarter results.
Western Union's (WU) second quarter earnings came in line, while its revenues missed estimates. The company raised the low end of its full year earnings per share guidance, which compares favorably to estimates.
Flour (FLR) reported better than expected second quarter earnings, while its revenues trailed expectations. The company maintained its earnings guidance for 2014.