The major U.S. index futures are pointing to a mixed opening on Wednesday, with sentiment mixed despite earning news surprising mostly to the upside. The overbought level of the markets may make traders extremely cautious, especially as the House vote on U.S. debt ceiling looms. If the bill to suspend the nation’s borrowing limits until mid-April becomes a law, the markets could get some reprieve. Amid the absence of any major economic catalysts, stocks could find it difficult to sustain the buying momentum and may experience some consolidation.
U.S. stocks overcame some early apprehensions before ending higher on Tuesday amid the release of some mixed earnings and a report showing an unexpected decline in existing home sales.
The major averages opened little changed but declined in early trading, hitting intra-day lows by late morning trading. Subsequently, the averages recouped their losses, climbing back above the unchanged line by the mid-session and advancing steadily before ending the day moderately higher.
The Dow Industrials ended up 62.51 points or 0.46 percent at 13,712 and the S&P 500 Index closed 6.58 points or 0.44 percent higher at 1,493, while the Nasdaq Composite ended at 3,144, up 8.47 points or 0.27 percent.
Twenty-two of the Dow components closed higher, while the remaining eight stocks declined. Alcoa (AA), Bank of America (BAC), DuPont (DD), Travelers Companies (TRV) and Unitedhealth Group (UNH) led the Dow’s advance, while JP Morgan Chase (JPM) and Boeing (BA) declined notably.
Transportation, basic material, gold and financial stocks were among the best performers of the session.
On the economic front, the National Association of Realtors reported that existing home sales fell 1 percent to a seasonally adjusted annual rate of 4.94 million units in December. November’s sales were downwardly revised to 4.99 million units from 5.04 million units. Single-family homes declined 1.4 percent, while condominium and co-op sales rose 1.7 percent. Meanwhile, inventories measured in terms of months of supply declined to a 7-1/2 year low of 4.9 months.
Currency, Commodity Markets
In the first day of trading as the front month contract, crude oil for March delivery is edging down $0.03 to $96.65 a barrel. The February contract expired at $96.24, a barrel on Tuesday, up $0.68.
Gold futures are currently rising $1 to $1,694.20 an ounce. In the previous session, gold added $6.20 to $1,693.20 an ounce.
Among currencies, the U.S. dollar is trading at 88.54 yen compared to the 88.71 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.3334 compared to yesterday’s $1.3321.
Asia
The major Asian markets closed mixed yet again, as the Bank of Japan’s decision to defer the commencement of its asset purchase program to 2014 sapped investor risk appetite, although the overnight gains on Wall Street kept some upward momentum intact. The Japanese, Hong Kong, Indonesian, South Korean and Taiwanese markets retreated, while the rest of the major markets advanced.
Japan’s Nikkei 225 average suffered a yen onslaught, as the Japanese unit climbed steadily in a post-Bank of Japan move. After languishing in the red throughout the session, the index closed down 222.94 points or 2.08 percent at 10,487. Export stocks were the worst hit.
Nisshin Steel fell close to 10 percent, leading the Nikkei’s retreat. Advantest, Tokuyama, Kobe Steel, Mitsui OSK Lines and T&D Holdings also posted notable losses.
Australia’s All Ordinaries hovered positive territory throughout the session before closing up 9.20 points or 0.19 percent at 4,812. Material, energy and financial stocks firmed up, helping to offset the weakness in the healthcare space.
Hong Kong’s Hang Seng Index closed at 23,635, down 23.89 points or 0.10 percent.
On the economic front, a report released by the Australian Bureau of Statistics showed that consumer prices in Australia rose 2.2 percent year-over-year in the fourth quarter compared to expectations for a 2.4 percent increase. Sequentially, consumer prices were up 0.2 percent, also tamer than the 0.4 percent increase expected by economists.
Europe
European stocks opened lower but have been seeing volatility since then and are currently trading mixed. The major averages in the region are currently mixed amid the release of mostly positive earnings.
In corporate news, Unilever (UL) reported full year earnings and core earnings per share in line with estimates. Meanwhile, Swiss drug giant Novartis (NVS) announced the appointment of Bayer executive Joerg Reinhardt as its non-executive Chairman, effective August 1st, replacing the incumbent Daniel Vasella. The company reported better than expected fourth quarter core earnings and revenues, while it forecast full year core operating income growth in mid-single digits.
SAP (SAP) announced preliminary fourth quarter operating profit growth of 10 percent to 1.96 billion euros. Revenues on a non-IFRS basis rose 12 percent to 5.06 billion euros, with software and software-related service revenue coming in at 4.27 billion euros. For 2013, the company expects non-IFRS software and software related service revenue to increase by 11-13 percent and an operating profit of 5.85 billion euros to 5.95 billion euros.
Germany’s Siemens (SI) reported that its first quarter profits fell to 1.2 billion euros from 1.27 billion euros last year, while revenues rose 2 percent to 18.13 billion euros. Orders fell to 19.14 billion euros.
The minutes of the January monetary policy meeting of the Bank of England showed that the central bank voted 8-1 to maintain the asset purchase program unchanged at 375 billion pounds, while it unanimously opted to hold interest rates.
The U.K. Office for National Statistics reported that the U.K. jobless claims fell 12,100 in December compared to expectations for a 1,000 increase. The unemployment rate based on the ILO standards for the three months ended November came in at 7.7 percent, the lowest since early 2009.
U.S. Economic Reports
The Federal House Finance Agency is scheduled to release the results of its house price survey for November at 9 am ET. Economists estimate a 0.7 percent month-over-month increase in house prices following a 0.5 percent increase in October. Annually, the index was up 5.6 percent.
Stocks in Focus
United technology (UTX) reported fourth quarter earnings from continuing operations of $1.04 per share, a penny higher than estimates. Sales of $16.44 billion were slightly shy of estimates. The guidance was in line with estimates.
Google (GOOG) reported fourth quarter adjusted earnings of $10.65 per share compared to the $10.52 per share consensus estimate. Revenues, excluding traffic acquisition costs, rose to $11.32 billion, shy of the $12.36 billion market expectation.
IBM (IBM) reported fourth quarter operating income of $5.39 per share, up 14 percent, on revenues of $29.3 billion, down 1 percent. For 2013, the company expects operating earnings per share of at least $16.70 per share. The results as well as the guidance were above estimates.
McDonald’s (MCD) reported fourth quarter earnings and revenues that beat estimates.
Transportation companies CSX (CSX) and Norfolk Southern (NSC) reported declines in their fourth quarter revenues and earnings, although the metrics came in above estimates.
RF Micro Devices (RFMD) reported better than expected third quarter results and issued positive guidance.
Cree (CREE) reported second quarter adjusted earnings of 32 cents per share, exceeding the 30 cents per share consensus estimate. Revenues rose 14 percent to $346.29 million. The results exceeded estimates, while the company also issued above-consensus guidance for the third quarter.
CA Technologies (CA) reported third quarter non-GAAP earnings per share from continuing operations of 63 cents per share, down 3 percent. Revenues fell 5 percent to $1.20 billion. The results exceeded estimates, while the guidance for the full year surrounded the consensus estimate.
Texas Instruments (TXN) reported fourth quarter non-GAAP earnings of 36 cents per share on revenues of $2.98 billion, down 13 percent. For the first quarter, the company expects earnings of 24-32 per share on revenues of $2.69 billion to $2.91 billion. The results exceeded estimates, while the guidance was lackluster.
AMD (AMD) reported a fourth quarter non-GAAP operating loss of 14 cents per share on revenues of $1.16 billion, down 32 percent year-over-year. Nevertheless, the results were ahead of estimates. The company said it expects a 9 percent, plus or minus 3 percent, sequential drop in first quarter revenues.
Ethan Allen (ETH) reported better than expected fourth quarter results. International Game Technology (IGT) also reported fourth quarter results that beat estimates, while its full year guidance surrounded the consensus estimate.
Allergan (AGN) said it has agreed to acquire 100 percent of the shares of MAP Pharma (MAPP) for $25 per share through a cash tender offer followed by a second stage merger. The company expects the deal to be dilutive to its 2013 earnings per share by 7 cents and turning accretive by the second half of 2014. The company also said excluding the transaction, it expects its 2013 earnings per share to fall within its mid-teens growth aspiration.
Logitech (LOGI) said it would take a non-cash, non-tax deductible goodwill impairment charge of $211 million in its third quarter of fiscal year 2013 related to its video conferencing reporting unit.
Avery Dennison (AVY) said Marks & Spencer has expanded its 9-year RFID supply partnership with the company.
Rollins (ROL) announced that its board has approved a 12.5 percent increase in its quarterly dividend to $0.09 per share. Wells Fargo (WFC) announced a 14 percent increase in its dividend to 25 cents per share.
KB Home (KBH) said net orders for the quarter-to-date period through January 18th rose 54 percent year-over-year to 740 new homes.
Altera (ALTR), Amgen (AMGN), Apple (AAPL), Burger King (BKW), F5 Networks (FFIV), Jacobs (JEC), Lam Research (LRCX), Logitech (LOGI), LSI Logic (LSI), Netflix (NFLX), Noble Corp. (NE), Polycom (PLCM), RLI Corp. (RLI), SanDisk (SNDK), Stryker (SYK), Swift Transportation (SWFT), United Rentals (URI), Varian Medical (VAR) and Western Digital (WDC) are among the companies due to report their results after the close of trading.
by RTT Staff Writer
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