The major U.S. index futures are pointing to a higher opening on Thursday, with traders likely to throw caution to the winds in the wake of some stellar economic data points. Jobless claims for the week fell more than expected, while housing starts jumped solidly in December, confirming the fledging recovery by the housing market. That said, the financial space could see some pullback, given yesterday’s gains and the lukewarm results reported by Citigroup (C) and Bank of America (BAC).
Boeing (BA) could continue to be deflated due to additional groundings of its 787 aircraft, although positive competitive statistics vis-� -vis rival Airbus could temper the pessimism. Traders may also focus on the results of the Philadelphia Fed’s manufacturing survey due shortly after the markets open.
U.S. stocks went about Wednesday’s session on a lackluster note amid the release of some mixed corporate news and broadly positive economic data. The major averages opened lower and pared some of their losses till early afternoon trading. Thereafter, the S&P 500 Index and the Nasdaq Composite Index recovered, although they still exhibited volatility before closing higher. The Dow Industrials continued to languish in the red, ending lower, weighed down by Boeing’s aircraft safety woes.The Dow Industrials ended down 23.66 points or 0.17 percent at 13,511, while the S&P 500 Index closed 0.29 points or 0.02 percent higher at 1,473 and the Nasdaq Composite closed at 3,118, up 6.76 points or 0.22 percent.
Sixteen of the Dow components closed lower and one stock ended unchanged, while the remaining thirteen stocks declined. Boeing, AT&T (T) and Verizon (VZ) were the worst performers of the session, while Hewlett-Packard (HPQ), Bank of America (BAC) and JP Morgan Chase (JPM) rose notably.
Semiconductor stocks gained solid ground in the session.
On the economic front, the Labor Department reported that consumer prices remained unchanged compared to the previous month in December, reducing the annual rate to 1.8 percent. Food prices rose 0.2 percent, while gasoline prices eased further. Owner’s equivalent rent, making up the bulk of the housing prices, rose only slightly, while clothing prices declined. Excluding food and energy prices, core prices rose 0.1 percent compared to the previous month and were 1.6 percent higher than the year-ago period.
The Federal Reserve released a report showing a 0.3 percent month-over-month in December following a 1 percent rebound from the Hurricane Sandy impact in November. Manufacturing output was up 0.8 percent after rising 1.3 percent in the previous month. business equipment and construction supplies output rose, thanks to the housing market recovery and reconstruction activity in New York and New Jersey. Mining output climbed 0.6 percent, while utilities output fell 4.8 percent. Capacity utilization rose to a five-month high of 78.8 percent.
Homebuilder sentiment remained unchanged in January, according to the results of a homebuilder sentiment survey by the National Association of Home Builders. The index remained unchanged at 47 in January. The index measuring homebuyer traffic rose 1 point compared to a 1 point drop in the sales expectations index, while the current sales conditions index remained unchanged.
The Federal Reserve’s Beige Book showed that economic activity in the 12 Federal Reserve districts expanded since the previous Beige Book report, while the pace of growth was described as either modest or moderate. Consumer spending was termed as growing, with holiday sales rising modestly from 2011. Auto sales were reported as steady or stronger for most districts. The non-financial service sectors saw overall improvement in activity and real estate activity expanded or held steady. Agricultural activity was termed as mixed. Meanwhile, trends in wages, prices and employment conditions remained relatively unchanged.
Currency, Commodity Markets
Crude oil futures are rising $0.84 to $95.08 a barrel after rising $0.96 to $94.24 a barrel on Wednesday. The previous session’s retreat came amid the release of the inventory report, which showed that crude oil stockpiles fell by 1 million barrels to 360.3 million barrels in the week ended January 11th. Crude oil inventories were well above the upper limit of the average range for this time of the year.
Gasoline stockpiles rose by 1.9 million barrels and were also well above the upper limit of the average range. Distillate inventories climbed 1.7 million barrels and were near the lower limit of the average range. Refinery capacity utilization averaged 89.4 percent over the four weeks ended January 11th compared to 90.3 percent over the four weeks ended January 4th.
Gold futures, which fell $0.07 to $1,683.20 an ounce in the previous session, are currently slipping $8.90 to $1,673.70 an ounce.
Among currencies, the U.S. dollar is trading at 89.43 yen compared to the 88.38 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is trading at $1.3342 compared to yesterday’s $1.3288.
Asia
The Asian markets closed on a mixed note, with the Japanese, Australian, Indian and New Zealand markets closing higher, while most other major markets in the region retreated.
After managing to hold above the unchanged line for much of the session, Japan’s Nikkei declined in the afternoon and languished in the red before recovering in late trading and closing up merely 9.20 points or 0.09 percent at 10,610. The uncertain sentiment reflected the volatility in the trading in the yen.
Australia’s All Ordinaries closed up 14.70 points or 0.31 percent at 4,780. Hong Kong’s Hang Seng Index closed at 23,340, down 17.23 points or 0.07 percent. Meanwhile, China’s Shanghai Composite Index fell over 1 percent ahead of the release of fourth quarter GDP report.
Europe
After seeing volatility in the morning, European stocks have turned uniformly higher following the release of U.S. data. The early volatility came amid the release of mixed corporate news and apprehension concerning the U.S. and Chinese data.
Semiconductor equipment maker ASML (ASML) reported fourth quarter adjusted earnings of 73 euros per share on sales of 1.02 million euros, down 15.7 percent year-over-year. The company sees flat sales for 2013, while it also said it will propose to its board a 15 percent increase in its dividend to 53 euros per share for 2012.
U.K.’s Home Retail raised its earnings expectations for the full year after reporting a 2.7 percent increase in like-for-like sales at Argos for the 18-week period ended January 5th. Like-for-like sales at Homebase fell 3.9 percent. Consumer electronics retailer Dixon’s reported a 7 percent increase in comparable store sales for the 12-week period ended January 5th.French retailer Carrefour reported a 0.8 percent increase in its fourth quarter revenue on a pro forma basis to 22.9 billion euros. The company also said it expects recurrent operating profit of around 2.07 billion euros. Dutch retailer Ahold said its fourth quarter sales rose 7.5 percent year-over-year to 7.8 billion euros.
Brewer Remy Cointreau reported sales of 964.4 million euros for the nine month, up 17.5 percent year-over-year. The company also confirmed its full year guidance for significantly higher earnings.
U.S. Economic Reports
New residential construction in the U.S. increased by far more than expected in the month of December, the Commerce Department revealed in a report. The Commerce Department said housing starts jumped 12.1 percent to a seasonally adjusted annual rate of 954,000 in December from the revised November estimate of 851,000.
Economists had expected housing starts to climb to an annual rate of 887,000 from the 861,000 originally reported for the previous month. Building permits, an indicator of future housing demand, edged up by a much more modest 0.3 percent to an annual rate of 903,000.
First-time claims for U.S. unemployment benefits fell by much more than anticipated in the week ended January 12th, according to a report released by the Labor Department. The report showed that initial jobless claims fell to 335,000, a decrease of 37,000 from the previous week’s revised figure of 372,000.
Economists had been expecting jobless claims to show a much more modest decrease to 368,000 from the 371,000 originally reported for the previous week.
The Philadelphia Federal Reserve will release the results of its regional manufacturing survey at 10 am ET. The manufacturing index based on the survey is expected to come in at 6 in January compared to 8.1 in December.
Activity in the region unexpectedly expanded in December. The manufacturing index rose to 8.1 in December from -10.7 in November. The order backlogs index rose to 2.3 from -4.6 and the new orders index jumped 15.2 points to 10.6. The employment indexes also turned positive, with the employment index rising to 3.6 from -6.8, while the average workweek index improved to 4.2 from -6.2. The 6-month outlook index also rose to 30.9 from 20 in November.
Atlanta Federal Reserve Bank President Dennis Lockhart is scheduled to be interviewed at a business forum in New York at 12:05 pm ET.
Stocks in Focus
Earnings
Bank of America reported better than expected fourth quarter earnings but below-consensus revenues, while Citi’s fourth quarter earnings rose year-over-year, although revenues were shy of estimates.
H.B. Fuller (FUL) reported fourth quarter adjusted earnings per share from continuing operations of 64 cents per share compared to 45 cents per share last year, while net revenues rose 27.8 percent to $513.3 million. The earnings exceeded estimates, while the revenues were below consensus expectations. For 2013, the company expects adjusted earnings of $2.55-$2.65 per share and reported revenue growth of more than 10 percent. The earnings guidance surrounded the consensus estimate.
CLARCOR (CLC) reported fourth quarter adjusted earnings of 72 cents per share compared to 68 cents per share last year, while net sales declined 5 percent to $292.9 million. The earnings beat estimates, while the sales trailed expectations. Sales adjusted for one-extra week in 2011 was 3 percent higher. For 2013, the company expects 2.5-4 percent sales growth and earnings of $2.45-$2.60 per share, below the consensus estimate of $2.62 per share.
Sallie Mae (SLM) reported fourth quarter core earnings of 55 cents per share compared to 51 cents per share last year. The earnings exceeded estimates. Meanwhile, the company issued below-consensus core earnings guidance for 2013.
eBay (EBAY) reported fourth quarter adjusted earnings of 70 cents per share, ahead of the 69 cents per share consensus estimate. Net revenues of $3.99 billion also pipped analyst expectations. While the company’s first quarter guidance was below estimates, the full year expectations surrounded the consensus estimates.
Capital One (COF), Intel (INTC) and Xilinx (XLNX) are among the companies due to release their quarterly results after the close of trading.
Negative Pre-announcements
Columbia Sportswear (COLM) lowered its fourth quarter net sales guidance to $499 million to $503 million, representing a 5 percent drop compared to the 1.5 percent growth estimated initially. The company attributed the softness to mild winter weather in North America, general consumer caution and reduced retail traffic in key markets.
Williams Sonoma (WSM) reported net revenues of $1.014 billion for the nine-week holiday period, up 4.8 percent from last year. Comparable brand revenues rose 4.4 percent. The company also reaffirmed its financial guidance for the fourth quarter and the full year.
Nautilus (NLS) announced preliminary fourth quarter results, expecting earnings per share from continuing g operations of 21-23 cents per share on sales of $65 million. The guidance was above estimates.
PVH Corp. (PVH) reaffirmed its revenues and earnings per share guidance ranges for the fourth quarter and full year ahead of its management presentation at the ICR Xchange Conference.
Positive Pre-announcements
Others
CBS Corp. (CBS) announced strategic initiatives for its CBS Outdoor, including converting the Americas segment into a REIT, and divestiture of its Europe and Asia business.
Finish Line (FINL) announced an increase in its quarterly cash dividend to 7 cents per share from 6 cents per share. Kinder Morgan (KMI0 announced a 19 percent increase in its quarterly dividend to 37 cents per share. ONEOK (OKE) also said its board approved a 9 percent in its dividend to 36 cents per share.
K-Swiss (KSWS) announced a definitive agreement to be acquired by E.Land World for $4.75 per share in cash or $170 million in total. The merger is expected to close in the second quarter of 2013.
Boeing could continue to face that heat after several nations decided to ground its 787 Dreamliners. The EU Aviation Authority also ordered grounding of the plane after the U.S. Federal Aviation Administration issued an emergency airworthiness directive, requiring 787 operators to temporarily cease operations.
Thor (THO) announced the appointment of Dominic Romeo as CFO, effective February 4th, 2013.
by RTT Staff Writer
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