The major U.S. index futures are pointing to a lower opening on Friday, with sentiment still relaying uncertainty after the key averages advanced notably in the previous session. Traders may dread to take up huge positions, given the overbought levels of the markets and the mixed corporate earnings reports. Although GE (GE) reported better than expected results, Intel’s (INTC) revenue miss could trigger anxiety concerning tech spending. A consumer sentiment survey due after the markets open may give some direction to the markets. At the best, markets could see some consolidation going into weekend.
U.S. stocks relished some solid economic data from the housing and job markets and advanced on Thursday. The major averages opened higher after separate reports revealed that jobless claims fell more than expected and housing starts rose strongly. Despite the release of a report showing a dip by the Philadelphia region’s manufacturing activity into contraction territory, the averages continued to advance till late afternoon trading before moving sideways for the rest of the session and closing moderately higher.
The Dow Industrials ended up 84.79 points or 0.63 percent at 13,596, its highest closing level since October 5th, 2012, and the S&P 500 Index closed 8.31 points or 0.56 percent higher at 1,481, its highest closing level since December 26th, 2007. The Nasdaq Composite Index ended at 3,136, up 18.46 points or 0.59 percent.
Twenty-four of the thirty Dow components closed higher, with Intel (INTC), Verizon (VZ), Unitedhealth (UNH), Boeing (BA), Disney (DIS) and Home Depot (HD) leading the gains. On the other hand, Bank of America (BA) fell 4.24 percent following its fourth quarter revenue miss.
Housing and semiconductor stocks were the best performers of the session.
On the economic front, the Commerce Department reported that housing starts jumped 12.1 percent month-over-month to a seasonally adjusted annual rate of 954,000 in December, the highest level since June 2008. However, the previous month’s reading was downwardly revised by 10,000 to a rate of 851,000. Building permits rose to a seasonally adjusted annual rate of 903,000 from 900,000 in the previous month.
Jobless claims fell 37,000 to 355,000 in the week ended January 12th, with the four-week average also declining to 359,300 from 366,000 in the previous week. At the same time, continuing claims rose 87,000 to 3.21 million in the week ended January 5th.
Meanwhile, the Philadelphia Federal Reserve reported that its manufacturing activity index fell to -5.8 in January from 4.6 in January. The new orders index fell to -4.3 from 4.9 and the shipments index dipped 14 points to 0.4. Additionally, the employment index slipped 5 points to -5.2
Currency, Commodity Markets
Crude oil futures are edging down $0.10 to $95.39 a barrel after surging up $1.25 to $95.49 a barrel on Friday. Gold futures are currently adding $1.40 to $1,692.20 an ounce. In the previous session, gold added $7.60 to $1,690.80 an ounce.
Among currencies, the U.S. dollar is trading at 89.85 yen compared to the 89.88 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3324 compared to yesterday’s $1.3376.
Asia
Most Asian markets advanced, capitalizing on the positive close on Wall Street overnight, although the New Zealand and Malaysian markets bucked the uptrend. Chinese data also came in better than expected, increasing the optimism concerning global growth.
Japan’s Nikkei 225 average opened notably higher and moved sideways till the mid-session. Subsequently, the index moved steadily higher, closing up 303.66 points or 2.86 percent at 10,913, its highest closing level since April 28th, 2010. Most stocks, with the exception of consumer staple stocks, closed higher for the day.
The market witnessed broad based strength, with Kawasaki Kisen, Sony, Mazda Motor and Sumco recording double-digit gains. Sony announced its decision to sell its U.S. headquarters building at 550 Madison Avenue in the New York City for $1.1 billion. The Japanese yen continued to probe new lows ahead of next week’s monetary policy meeting, propping up export stocks.
Australia’s All Ordinaries hovered in positive territory throughout the session before closing up 15 points or 0.31 percent at 4,795.
Hong Kong’s Hang Seng Index closed at 23,602, up 262.02 points or 1.12 percent.
China released a slew of economic data that reflected the underlying strength of the domestic economic recovery. The Chinese year-over-year GDP growth picked up to 7.9 percent in the fourth quarter, faster than the 7.8 percent growth expected by economists and the 7.4 percent growth in the third quarter. Still, the economy expanded 7.8 percent for all of 2012, the weakest pace of expansion since 1999.
Chinese etail sales rose a better than expected 15.2 percent in December, while industrial output rose 10.3 percent year-over-year in December compared to the 10.2 percent increase expected by economists.
Urban fixed asset investment for the 12 month ended December was up 20.6 percent, roughly in line with estimates.
Europe
After opening higher, European stocks have pared back some of their gains and are currently showing mixed sentiment.
In major corporate news from the region, Bovis Homes said in its trading update that it delivered significant profit growth in 2012 and has invested strongly in consented land.
Glencore said it has agreed to further extend the long stop date for its merger with Xstrata to March 15, 2013 after extending it by a month to January 31, 2013 earlier. The company said the extension is due to the ongoing regulatory processes in South Africa and China.
French carmaker Renault reported a 6.3 percent decline in its group sales for 2013.
U.S. Economic Reports
Reuters and the University of Michigan are due to release the results of their preliminary consumer sentiment survey for January. Economists expect the index to increase to 75 from 72.9 in December.
Stocks in Focus
Intel (INTC) reported fourth quarter non-GAAP earnings of 51 cents per share, down from 67 cents per share last year, while revenues fell 3 percent to $13.5 billion. The earnings exceeded estimates, while revenues were below par. For the first quarter, the company expects revenues of $12.7 million, plus or minus $500 million, while for the full year the company expects revenues to increase by a low single-digit percentage.
General Electric (GE) reported fourth quarter operating earnings of 44 cents per share, higher than 39 cents per share in the year-ago period. Revenues rose 4 percent to $39.33 billion. The results exceeded estimates.
Schlumberger (SLB) reported better than expected fourth quarter results. Sun Trust Bank (STI) reported better than expected fourth quarter earnings, while revenues missed estimates.
Capital One Financial (COF) reported fourth quarter income from continuing operations of $1.42 per share compared to 89 cents per share last year. Total net revenues rose to $5.62 billion from $4.05 billion last year. The results trailed expectations.
American Express (AXP) reported fourth quarter adjusted net income of $1.09 per share, in line with estimates. Revenues, net of interest expense, rose 5 percent to $8.14 billion, also meeting estimates.
Xilinx (XLNX) reported third quarter earnings of 38 cents per share compared to 47 cents per share last year. Sales were nearly flat at $509.8 million. The earnings beat estimates, while the revenues were shy of estimates. For 2013, the company expects 2-6 percent sequential growth, trailing the consensus estimate.
PVH (PVH) said it has licensed American Essentials and its parent company McGregor Industries to market and distribute men’s, women’s and children’s hosiery and legwear under the IZOD brand. The initial term of the contract runs through 2017 and provides for a three-year renewal at PVH’s option.
Vornado (VNO) announced an increase in its quarterly dividend to 73 cents per share, indicating an annual rate of $2.92 per share compared to its earlier annual rate of $2.76 per share. Schlumberger (SLB) said its board approved a 13.6 percent increase in its quarterly dividend. Williams’ (WMB) board approved a 4.2 percent increase in its dividend to $0.33875 per share.
Pall (PLL) said its board has increased its stock repurchase authorization by $250 million.
E*TRADE (ETFC) announced the appointment of Pail Idzik as its CEO, effective January 22nd, 2013. The interim CEO Frank Petrilli, who has served as interim CEO since August 2012, will continue as Chairman.
by RTT Staff Writer
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