Stocks Showing A Lack Of Direction In Early Trading
After
moving notably lower over the past few sessions, stocks are turning in a
lackluster performance in early trading on Wednesday. The major
averages have turned mixed but are showing only modest moves.
The major averages are currently on opposite sides of the unchanged line, with the Nasdaq posting a modest loss. While the Nasdaq is down 1.41 points or 0.1 percent at 2,861.58, the Dow is up 76.06 points or 0.6 percent at 12,693.38 and the S&P 500 is up 1.53 points or 0.1 percent at 1,339.84.
The
choppy trading on Wall Street comes as traders are digesting a mixed
batch of earnings news, with disappointing news from Apple (AAPL) partly
offset by upbeat results from blue chips such as Caterpillar (CAT) and
Boeing (BA).
After the close of trading on Tuesday, Apple
reported third quarter earnings that rose year-over-year but still came
in well below analyst estimates. The iPhone and iPad maker also provided disappointing fourth quarter guidance. Shares of Apple are down by 4.4 percent on the news.
Meanwhile, shares of Caterpillar and Boeing are
moving to the upside after both companies reported better than expected
second quarter earnings and provided upbeat guidance. Caterpillar is up
by 2.5 percent, while Boeing is up by 1.8 percent.
Ford's
(F) second quarter earnings also came in above expectations, although
the auto giant also said it now expects to lose more than $1 billion in
Europe this year, double its previous estimate.
On a busy day on the earnings front, traders are also digesting quarterly results from well known companies such as PepsiCo (PEP), Bristol-Myers (BMY), and ConocoPhillips (COP).
While
most of the major sectors are showing only modest moves, early strength
has emerged among semiconductor stocks. The Philadelphia Semiconductor Index has surged up by 2.6 percent amid strong gains by Altera (ALTR) and Broadcom (BRCM).
Gold stocks
have also shown a notable upward move, moving higher along with the
price of the precious metal. With gold for August delivery climbing
$23.20 to $1,599.40 an ounce, the NYSE Arca Gold Bugs Index is up by 1.6
percent.
On the other hand, health insurance stocks have
come under pressure in early trading, dragging the Morgan Stanley
Healthcare Payor Index down by 4 percent. WellPoint (WLP) is leading the
sector lower after reporting weaker than expected second quarter
earnings and cuttings it full year guidance.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 1.4 percent, while China's Shanghai Composite Index fell by 0.5 percent.
Meanwhile, the major European markets have moved to the upside on the day. While the U.K.'s FTSE 100 Index has edged up by 0.3 percent, the French CAC 40 Index and the German DAX Index are jumping by 1.1 percent and 1.2 percent, respectively.
In the bond market, treasuries are showing a lack of direction following recent strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.409 percent.
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TSX Up At Open Wednesday
Toronto stocks
opened higher Wednesday amid marginal buying in commodities, with the
S&P/TSX Composite Index edging up 27.99 points or 0.24 percent to
11,494.94.
The Global Gold Index rose nearly 2 percent, with Alamos Gold Inc. and Kirkland Lake Gold gaining nearly 5 percent each. Agnico-Eagle Mines, Goldcorp. and Detour Gold gathered around 2 percent each.
In the oil patch, energy company Suncor Energy Inc. rose over 1 percent despite reporting a lower second quarter net earnings.
Canadian Pacific Railway Ltd.
gathered nearly 2 percent even after recording a much lower second
quarter net income. CN Rail . edged up 0.40 percent after reporting
improved second-quarter net income.
Meanwhile, Energy producer Encana Corp.
shed over 1 percent after slipping into the red in second quarter.
Base-metals miner Teck Resources Ltd. was down over 2 percent after
reporting a plunge in second-quarter profit. Information technology
services provider CGI Group, Inc. lost 2 percent after reporting a decline in its third quarter net earnings.
The price of crude oil
was extending gains Wednesday morning as traders await cues from the
official inventories data, due out later during the session. Analysts
expect crude oil inventories to ease 250,000 barrels and gasoline stocks
to shed 750,000 barrels last week. Crude for September edged up $0.47
to $88.97 a barrel.
The price of gold was moving higher as the euro spiked after reports quoted European Central Bank
council member Ewald Nowotny as saying that there are arguments in
favor of giving Europe's rescue fund a banking license. Gold for August
gained $25.70 to $1,601.90 an ounce.
In corporate news from Canada, integrated energy company Suncor Energy Inc.
reported that its second quarter net earnings declined to C$333 million
or C$0.21 per common share from C$562 million or C$0.36 per common
share in the previous year quarter. For the full year, the company
revised its total production outlook to 540,000- 580,000 boe/d from
previously expected range of 530,000 - 580,000 boe/d.
Energy producer Encana Corp.
slipped into the red in second quarter, reporting net loss of $1.48
billion, compared to last year's profit of $383 million. Operating
earnings, which excluded items, declined to $198 million or $0.27 per
share from last year's $352 million or $0.48 per share. Analysts were
expecting the company to report earnings of $0.19 per share.
Colombia focused oil Ecopetrol S.A.
reported second-quarter unconsolidated net income of COL$3.68 billion
or COL$89.39 per share, compared to COL$3.41 billion or COL$84.36 per
share last year.
Information technology services provider CGI Group,
Inc. reported net earnings of C$87.2 million or C$0.33 per share for
the third quarter, a decline from C$123.2 million or C$0.45 per share
earned a year ago.
Canadian Pacific Railway Ltd. reported a
much lower second quarter net income at C$103 million or C$0.60 per
share compared to C$128 million or C$0.75 per share recorded a year ago.
Analysts were expecting the company to report earnings of $0.83 per
share.
CN Rail reported improved second-quarter net
income of C$631 million or C$1.44 per share compared to C$538 million or
C$1.18 per share in the same quarter last year. Adjusted net income for
the quarter rose to $659 million, or $1.50 per share from $578 million
or $1.26 per share in the prior year quarter. Analysts were expecting
the company to report earnings of C$1.48 per share.
Food and drug retailer Loblaw Companies
posted lower second-quarter net earnings of C$159 million or C$0.56 per
share, versus C$197 million or C$0.69 per share a year before. Analysts
were expecting the company to report earnings of $0.62 per share.
Base-metals miner Teck Resources
Ltd. reported a plunge in second-quarter profit to C$268 million or
C$0.46 per share, from C$756 million or C$1.28 per share last year.
Excluding the effect of certain transactions, adjusted profit totaled
C$312 million, or C$0.53 per share, significantly lower than C$663
million or C$1.12 per share in 2011.
Egypt focused gold miner Centamin Plc said
it has temporarily halted operations at its Sukari Gold Mine in Egypt
due to illegal labor unrest from a small percentage of the Sukari
workforce.
Financial services company Accord Financial Corp.
reported a decline in second quarter profit at C$1.24 million or C$0.15
per share compared to C$1.39 million or C$0.16 per share last year.
Telecommunications company Bell Aliant Inc.
reported a lower second quarter profit of C$79 million or C$0.35 per
share compared to C$83 million or C$0.36 per share in the same period
last year.
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European Stocks Higher Despite Weak Data
European stocks
edged higher on Wednesday, as bargain hunting on hopes of further
stimulus measures from the Federal Reserve offset weak German business
confidence and U.K. GDP data. Also, sentiment improved a little bit
after European Central Bank council member Ewald Nowotny said that there
are arguments in favor of giving Europe's rescue fund a banking
license.
The Euro Stoxx 50 index of eurozone bluechip
stocks is gaining 0.73 percent, while the Stoxx Europe 50 index, which
includes some major U.K. companies, is up marginally. Around Europe,
Switzerland's SMI, the U.K.'s FTSE 100, the German DAX and France's CAC 40 are up between 0.1 percent and 0.7 percent.
Daimler
is rallying 4.2 percent after the luxury carmaker kept its full-year
earnings guidance intact, despite reporting a sharp drop in
second-quarter profits. Rival Volkswagen is up almost 2 percent.
Qiagen is climbing 4 percent in Frankfurt after the company lifted its outlook for net sales and adjusted earnings growth in 2012.
Rolls-Royce
Holdings Plc is down 1.7 percent in London. The engine maker said it
received orders worth over £70 million from several customers to supply
large thrusters for offshore drilling vessels.
ARM
Holdings is up over 6 percent after its second-quarter profit beat
expectations. Shares of ArcelorMittal are up 2 percent even as the steel
giant reported a sharp drop in profit for the second quarter, as
revenues were hurt by lower steel shipment volumes.
British American Tobacco Plc is moving down 0.7 percent after it reported a slight increase in first-half net profit amid stagnant volumes.
In
economic releases, Germany's business confidence declined more than
expected in July, the latest survey results from Ifo Institute showed.
The Ifo business climate index fell to 103.3 in July from a revised
105.2 in June.
Separately, the preliminary estimate from the Office for National Statistics
showed that the U.K. economy contracted at a faster than expected pace
in the second quarter. The gross domestic product was down 0.7 percent
sequentially, marking the biggest fall since the first quarter of 2009.
The decline follows
a 0.3 percent fall in the first quarter and 0.4 percent decrease in the
fourth quarter of 2011. Economists expected a decline of 0.2 percent.
GDP dropped 0.8 percent from the same period of last year, bigger than
the 0.3 percent fall expected by economists.
Elsewhere, Asian markets ended
broadly lower, as rising Spanish borrowing costs and growing fears that
Greece may need further restructuring curbed appetite for risk. Tech
shares bore the brunt of the selling after Apple's quarterly sales and
profit growth missed estimates.
Commodities such as crude
and copper are edging higher, in line with a rebounding euro, while the
Dow futures are up 36 points ahead of some key economic data due this
week, including new home sales today and reports on weekly jobless
claims, durable-goods orders and pending-home sales due out tomorrow.
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Asian Stocks Drop On Eurozone Debt Worries
Asian stocks
fell broadly on Wednesday, as worsening European debt crisis and
lingering worries over slowing Chinese growth kept investors on the
edge. With Spanish borrowing costs hitting a fresh historic high
yesterday, Spanish and German finance ministers sought to contain
Spanish bailout fears, saying that high borrowing costs do not reflect
the country's economic strengths.
Officials representing the
so-called "troika" of Greek creditors - the IMF, European Central Bank
and European Commission - are in Athens to assess how far the
debt-stricken nation has strayed from bailout terms. In this backdrop,
reports quoted EU officials as saying that Greece may need further debt
restructuring to meet its obligations.
Tokyo stocks fell
for the fourth straight session, with the Nikkei average sliding to a
seven-week closing low, as Apple's disappointing earnings report dragged
down iPhone component manufacturers such as Toshiba and Sharp, which
fell 7.3 percent and 10 percent, respectively.
Shares of Ibiden plunged
6.5 percent, while other tech shares like Nikon and Tokyo Electron lost
4-6 percent. However, Softbank soared 4 percent on a brokerage upgrade.
The Nikkei index fell 1.44 percent, while the broader Topix index
finished 1.56 percent lower.
In economic news, trade data
released just before the market open revealed that Japan posted a
merchandise trade surplus of 61.7 billion yen in June, bouncing into the
black for just the second time in nine months as exports to Europe and
China contracted.
China's Shanghai Composite index slid half a percent and Hong Kong's Hang Seng
index edged down 0.14 percent as reports that Greece may need up to 50
billion euros in additional aid fanned concerns of contagion spreading
from the euro-area's financial turmoil.
Australian shares
recouped early losses, as benign inflation data domestically and
continuing hopes that the Federal Reserve may announce new steps to
boost U.S. growth spurred bargain hunting at lower levels. The benchmark
S&P/ASX 200 fell more than a percent in early trading before paring losses to end down 0.23 percent at 4,124.
Big miner BHP Billiton
edged down 0.3 percent after first-hand accounts of a Corporate
Confidence Index suggested that investor confidence in Chief Executive
Kloppers' leadership has declined steadily throughout his five-year
tenure. Rio Tinto fell 1.5 percent, but smaller rival Fortescue rose 1.7
percent. Atlas Iron tumbled 3.7 percent after releasing its shipments
data for the June quarter.
In the financial sector, ANZ slid half a percent and Westpac declined 0.8 percent, while Commonwealth and NAB rose 0.2 percent and 0.7 percent, respectively. Macquarie Group fell 1.8 percent despite forecasting an improved result for the 2013 financial year.
Seoul
shares fell to a seven-month low after Bank of Korea Governor Kim
Choong-soo said that the economy will likely grow at a slower pace than
thought due to worsening global economic conditions. South Korean
consumer confidence dropped to a five-month low in July, while inflation
expectations eased to the lowest level in 19 months, as the economic
outlook became bleaker due to the eurozone debt crisis and China's
slowing growth, according to the central bank. The benchmark Kospi index ended down 25 points or 1.37 percent at 1,769.
Shares of LG Electronics
fell 2.1 percent after the company said its mobile phone business swung
to a loss in the second quarter. Samsung Electronics slid a percent and
LG Display plunged 4.8 percent after Apple's latest quarterly results
missed expectations.
New Zealand shares edged down marginally,
joining a global slide on persisting concerns over the situation in
Greece and Spain. The benchmark NZX edged down about 2 points or
0.05 percent to 3,459, extending declines for a second day. Among the
prominent decliners, Xero, the cloud accounting platform provider,
slumped 5.5 percent ahead of its annual shareholder meeting on Thursday,
while gold miner Oceanagold slid 0.8 percent before its half-year results due tomorrow.
Australian food ingredients manufacturer Goodman Fielder lost 3.2 percent, SkyCity Entertainment,
the casino and hotel operator, fell 2 percent and Fletcher Building,
the nation's largest construction company, eased 0.7 percent. Healthcare
group Wakefield Health soared 19 percent after major
shareholders Royston Hospital Trust Board and Medusa launched a partial
takeover offer for the company at $6 a share.
Elsewhere, India's benchmark Sensex was last trading 0.4 percent, Singapore's Straits Times index slipped 0.3 percent and the Taiwan Weighted average ended down 0.4 percent, while Indonesia's Jakarta Composite index and Malaysia's KLSE Composite were up about 0.2 percent each.
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Crude Edges Up Ahead Of Inventories Report
The price of crude oil
was extending gains Wednesday morning as traders await cues from the
official inventories data, due out later during the session.
Light Sweet Crude Oil (WTI)
futures for September delivery, edged up $0.27 to $88.77 a barrel.
Yesterday, oil settled marginally higher as demand concerns eased with
data out of China showing a minor recovery in the nation's manufacturing
sector. Nevertheless, investor concerns over the euro zone sovereign
debt crisis remained and continued to be a drag on prices.
Tuesday
after the trading hours, the API said U.S. crude oil inventories rose
1.30 million barrels and gasoline stocks moved up 2.3 million barrels in
the weekended July 20
This morning, the U.S. dollar was leveling off from its 2-year high versus the euro, while moving up near a two-week high against sterling. The buck was lingering near a two-month low versus the yen and trading flat against the Swiss franc.
In
economic news, Germany's business confidence declined more than
expected in July, reports said citing the latest survey results from Ifo
Institute. The Ifo business climate index fell to 103.3 in July from a revised 105.2 in June. Economists expected the index to fall to 104.5.
Meanwhile, the U.K. economy
contracted at a faster than expected pace in the second quarter, the
preliminary estimate from the Office for National Statistics showed The
gross domestic product was down 0.7 percent sequentially, marking the
biggest fall since the first quarter of 2009. The decline follows a 0.3
percent fall in the first quarter and 0.4 percent decrease in the fourth
quarter of 2011. Economists expected a decline of 0.2 percent.
Traders will look to the report on new home sales from the U.S. Commerce Department,
due out shortly after the markets open. The consensus estimate calls
for new homes sales of 370,000 after sales rose 7.6 percent to 369,000
in May.
Today during trading hours, the EIA will release
its U.S. crude oil inventories report for the weekended July 20.
Analysts expect crude oil inventories to ease 250,000 barrels and
gasoline stocks to shed 750,000 barrels last week.
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