Stocks Turning In A Lackluster Performance In Early Trading
Stocks are
showing a lack of direction in early trading on Thursday after moving
sharply lower over the course of the previous session. The major
averages have been bouncing back and forth across the unchanged line.
The major averages have moved to the upside in the past few minutes and are currently posting modest gains. The Dow is up 23.73 points or 0.2 percent at 12,594.68, the Nasdaq is up 0.94 points or less than a tenth of a percent at 2,847.75 and the S&P 500 is up 2.93 points or 0.2 percent at 1,358.42.
The
choppy trading on Wall Street comes as traders a batch of U.S. economic
data that was largely disappointing but was likely impacted by the
disruptions caused by Hurricane Sandy.
A report from the Labor Department said
jobless claims jumped to 439,000 in the week ended November 10th, an
increase of 78,000 from the previous week's revised figure of 361,000.
Economists had expected jobless claims to climb to 376,000 from the
355,000 originally reported for the previous week.
The much
bigger than expected increase lifted jobless claims to their highest
level since coming in at 464,000 in the week ended April 30, 2010.
However,
the data was distorted by the impact of Hurricane Sandy, with several
states in the mid-Atlantic and Northeast regions reporting large
increases due to the storm.
Separate reports from the New York and Philadelphia Federal Reserves also showed contractions in regional manufacturing activity in the month of November.
A negative reaction to quarterly results from Wal-Mart
(WMT) is also weighing on investor sentiment, with the retail giant
down by 4 percent. While Wal-Mart reported third quarter earnings that
came in above analyst estimates, the company also reported sales that
came in below expectations.
While most of the major sectors are
showing only modest moves, gold stocks have shown a substantial move to
the downside in early trading, extending a recent sell-off in the
sector. The NYSE Arca Gold Bugs Index has fallen by 1.7 percent amid a notable decrease by the price of gold.
Biotechnology and housing stocks have also come under considerable selling pressure, while oil service and brokerage stocks are moving notably higher.
In overseas trading, stock markets across
the Asia-Pacific region moved mostly lower on Thursday, with Hong
Kong's Hang Seng Index tumbling by 1.6 percent. Meanwhile, Japan's Nikkei 225 Index bucked the downtrend and surged up by 1.9 percent.
The major European markets have moved to the downside on the day. While the German DAX Index has fallen by 0.9 percent, the U.K.'s FTSE 100 Index is down by 0.7 percent and the French CAC 40 Index is down by 0.4 percent.
In the bond market, treasuries are
seeing modest weakness after ending the previous session nearly flat.
Subsequently, the yield on the benchmark ten-year note, which moves
opposite of its price, is up by 1.2 basis points at 1.601 percent.
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TSX Dives At Open Thursday
Bay Street stocks opened sharply lower Thursday amid selling across a variety of sectors, with the S&P/TSX Composite Index shedding 162.46 points or 1.36 percent to 11,767.34
The Diversified Materials Index lost around 1 percent, with Inmet Mining and Teck Resources losing about 2 percent each. Meanwhile, First Quantum Minerals edged up 0.25 percent.
Among gold plays, Seabridge Gold lost over 3 percent, while Royal Gold was slipping over 1 percent.
Oil and gas industry services provider Poseidon Concepts Corp.
dived 50 percent after reporting a much lower net third quarter income
of $7.8 million or $0.10 per share compared to $14.30 million or $0.22
per share in the year ago quarter.
Linamar Corp. edged up 0.50 percent after reporting improved third-quarter net earnings
Meanwhile, energy stocks were trading higher with Nexen Inc. adding nearly 3 percent, MEG Energy and Bonavista Energy gaining over 1 percent each.
The price of crude oil was
little changed Thursday morning as traders await cues from the official
inventories data from the EIA, due out later today. Analysts expect
crude oil inventories to jump 1.50 million barrels last week. Crude for December edged up $0.22 to $86.54 a barrel.
The price of gold was
moving lower Thursday morning as the US dollar was steady versus a
basket of currencies amid inflation data. According to a release from
the World Gold Council demand for gold dipped 11 percent
year-over-year to 1,084.6 tons, worth $57.60 billion, in the third
quarter of 2012 . However on a sequential basis, demand was up 10
percent in third quarter. Gold for December shed $7.70 to $1,722.40 an ounce.
In corporate news from Canada, automotive products company Linamar Corp.
reported improved third-quarter net earnings of C$33.7 million or
C$0.52 per share compared to C$21.5 million or C$0.33 per share in the
same quarter last year. Adjusted net earnings were C$33.7 million or
C$0.52 per share, up from C$25.1 million or C$0.39 per share. Analysts
expected the company to report earnings of C$0.50 per share for the
quarter.
Audio entertainment and broadcasting company Canadian Satellite Radio Holdings Inc. reported fourth-quarter profit of C$6.12 million, up from C$3.5 million a year ago.
Automotive products maker Wescast Industries Inc.
reported that its third-quarter net loss widened to C$3.96 million or
C$0.30 per share, from C$0.7 million or C$0.05 per share in the same
quarter last year.
In economic news Statistics Canada said
manufacturing sales advanced 0.4 percent to $49.8 billion in September,
mainly on higher production in the aerospace product and parts industry
and increased sales of primary metals. Excluding the aerospace
industry, total manufacturing sales decreased 0.7 percent. The increases
were partly offset by a decline in the motor vehicle assembly industry.
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European Markets Fall On Economic Worries
The European markets
are in negative territory on Thursday, as weak economic growth in the
region and worries about the U.S. fiscal cliff dampened investor
sentiment. Asian markets ended broadly lower, after the leadership
transition in China.
The euro area entered a recession in the
third quarter, flash estimates published by Eurostat revealed. Gross
domestic product slid 0.1 percent from a quarter ago, when it dropped
0.2 percent. The rate of decline matched economists' expectations.
The German gross domestic product
grew 0.2 percent quarter-on-quarter in the third quarter, the Federal
Statistical Office said Thursday. Nonetheless, this was weaker than the
0.3 percent expansion in the second quarter. Economists had forecast 0.1
percent GDP growth.
The French GDP also expanded 0.2
percent sequentially in the third quarter, according to figures
published by statistical office Insee. However, the GDP estimate for the
second quarter was revised down to show a 0.1 percent contraction in
the economy instead of a stagnation reported previously.
Moody's Investors Service
on Wednesday said it would revisit the U.K.'s AAA government debt
rating and the current 'negative' outlook next year in the face of
gloomier economic prospects and rising risks from euro area crisis.
Obama
once again called for a balanced approach to dealing with the U.S.
budget deficit. "But what I'm not going to do is to extend Bush tax cuts
for the wealthiest 2 percent that we can't afford and, according to
economists, will have the least positive impact on our economy," he
said.
The Euro Stoxx 50 index of eurozone bluechip stocks is losing 0.19 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is falling 0.46 percent.
The German DAX is dropping 0.5 percent and the French CAC 40 is losing 0.1 percent. The UK's FTSE 100 is falling 0.3 percent and Switzerland's SMI is declining 0.8 percent.
In Frankfurt, Infineon Technologies is falling 2.2 percent. K+S is losing 2.1 percent. Bayer is falling 1.6 percent, and Basf is sliding around 1 percent. RWE is retreating 1.3 percent. S&P Equity cut the stock to "Hold" from "Buy."
Deutsche bank is advancing 1.1 percent while Commerzbank is in negative territory. Kepler raised EON to "Hold" from "Reduce." The stock is moderately higher.
Merck
lifted its revenue and adjusted EBITDA outlook for 2012, after
reporting about 12 percent growth in total revenues in the third
quarter. Meanwhile, the company posted a lower profit for the period,
impacted by one-time costs, including impairments. The shares are flat.
In Paris, Alcatel Lucent is declining 2.4 percent and STMicroelectronics is falling 1.2 percent. Sanofi, EADS, PPR, Unibail Rodamco and Essilor International are notably lower. EDF is down 0.3 percent. HSBC reduced its rating on the stock to "Neutral" from "Overweight.''.
Credit Agricole is up 0.7 percent while BNP Paribas and Societe Generale are modestly higher. Vivendi is gaining 2.3 percent and Bouygues is advancing 1.7 percent.
In London, John Wood Group is dropping 5.5 percent. Insurer Resolution is falling 3.6 percent. International Consolidated Airlines is retreating 2.7 percent.
Antofagasta reported a 16 percent increase in revenue for nine months. The stock is falling 2.1 percent. Kazakhmys and Xstrata are notably higher.
Lloyds Banking is declining 1.7 percent. Royal Bank of Scotland is advancing 1.6 percent and Barclays is gaining 1.1 percent.
Dutch
supermarket chain Koninklijke Ahold NV reported lower profit for the
third quarter, weighed down by a hefty charge related to its Swedish
unit. The company also remained cautious in its outlook. The stock is
down 0.8 percent in Amsterdam.
SBM Offshore is declining 9.2 percent in Amsterdam after updating its full year turnover forecast. Zurich Insurance is declining 3.3 percent after reporting a plunge in quarterly profit. Gategroup also is falling 4.7 percent in Zurich.
Hennes and Mauritz is
declining 3.6 percent in Stockholm. The Swedish apparel retailer said
its total sales in October, including Value Added Tax, in local
currencies increased 4 percent from last year, while sales in comparable
units were down 5 percent.
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Asian Stocks Fall On US Budget Worries
Asian stocks
fell broadly on Thursday, weighed down by looming U.S. fiscal crisis
and renewed uncertainty over Europe. Investors are worried about the
threat to the U.S. economy and the potential ramifications for global
growth unless the White House and Congress reach a budget deal.
President Barack Obama will
begin budget negotiations with congressional leaders Friday, with a
plan to raise $1.6 trillion in additional tax revenue from the wealthy
as he seeks a balanced approach to deal with the budget deficit. Obama
reiterated during his first press conference since securing his
re-election on Wednesday that higher taxes on wealthier Americans should
be part of an agreement to address the looming fiscal cliff.
Japanese
shares rallied on a weaker yen, bolstered by expectations of aggressive
monetary easing by the Bank of Japan after Japan's embattled prime
minister moved to dissolve parliament and called a snap election next
month. The Nikkei average climbed 1.9 percent to 8,830, marking the sharpest percentage gain for the benchmark index since October 18, while the broader Topix
index jumped 2.1 percent. Expectations for a change of government as
well as central-bank easing sent the yen lower, lifting export-related
stocks like Canon and Toyota up about 5 percent each.
General contractor Obayashi and steel maker JFE Holdings
soared 6-7 percent on expectations the main opposition Liberal
Democratic Party will usher in more expansive spending policies if it
returns to power. Mitsui Fudosan, Japan's biggest developer by sales,
advanced 4.2 percent and brokerage Nomura Holdings soared 5.6 percent on
hopes of BOJ easing. Power generator Kansai Electric Power jumped 8.1
percent on hopes for eased restrictions on nuclear energy.
In earnings news, Dai-ichi Life Insurance
soared 7.2 percent after reporting a sharp jump in its April-September
profit, while online game operator Gree ended down 3.6 percent after
reporting a profit drop due to an increase in spending. Sony shares
plunged 8.9 percent on equity dilution worries after the firm said it
would raise 150 billion yen in convertible bonds for strategic
investment and the repayment of loans.
China's Shanghai
Composite index fell 1.2 percent to a seven-week low after two prominent
reformers, Li Yuanchao, the head of the Party's Organization
Department, and Wang Yang, the Party chief of Guangdong province, failed
to make it to the powerful Politburo's Standing Committee. Coal miners and metal producers
led the declines on demand concerns amid speculation that Beijing may
not push ahead with more aggressive political and economic reforms in
the coming years. Hong Kong's Hang Seng index lost 1.6 percent following
steep losses on Wall Street overnight.
Australian shares
fell to a two-month low, dragged down by miners and banks on concerns
about possible tax hikes and spending cuts in the U.S. and violence in
the Middle East after Israel launched a major offensive against
Palestinian militants in Gaza. Investors fear that the global
economy will slip back into recession if Congress fails to agree on
overall deficit reduction package by the end of the year. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index fell about 0.9 percent each.
Global miners BHP Billiton and Rio Tinto fell about 1.2 percent each, while smaller rival Fortescue lost a percent and gold miner Newcrest tumbled 4.5 percent. Among the major banks, NAB edged down marginally, while ANZ, Commonwealth and Westpac fell
between 0.6 percent and 0.9 percent. Qantas Airways jumped over 4
percent after announcing it would spend up to A$100 million on a share
buyback and repay $650 million in debt ahead of schedule.
Myer
Holdings soared 6.5 percent to a six-month high after the nation's
largest department store chain posted a slight increase in total sales
during the first quarter. Asciano rallied 3.6 percent as the rail
freight and ports operator said it was on track to deliver on its
ambitious financial targets.
Seoul shares fell sharply to a three-month low on investor anxiety over U.S. budget negotiations and European fiscal woes. The benchmark Kospi average
lost 1.2 percent amid persisting selling by foreign funds for a sixth
consecutive session. Large-cap stocks retreated, with Samsung
Electronics and Hyundai Motor falling about 2 percent each, while telecom stocks KT and SK Telecom posted modest gains on defensive buying.
New Zealand shares edged lower, tracking weak overseas cues after overnight data showed U.S. retail sales dropped for the first time in three months. The benchmark NZX-50 index slipped 0.1 percent. Gold miner OceanaGold tumbled 4.4 percent, industrial chemicals and resins maker Nuplex lost 2.1 percent and utility Contact Energy fell 1.5 percent.
Kiwi Income Property Trust retreated 1.7 percent after it reported a 16 percent decline in pre-tax operating earnings for the first half. Xero slumped 4.7 percent on fund raising reports. Diligent Board Member Services rallied 2.8 percent and Ryman Healthcare rose 1.2 percent after posting better than expected earnings results, jeweler Michael Hill added 1.6 percent and Fletcher Building, the nation's largest construction company, advanced 1.2 percent.
Elsewhere, India's benchmark Sensex was down 0.9 percent, Singapore's Straits Times index was losing 1.1 percent and the Taiwan Weighted average edged down 0.2 percent, while Indonesia's Jakarta Composite index was up 0.4 percent.
On Wall Street, stocks fell
sharply overnight, extending a recent downtrend since last week's
elections, as investors fretted about U.S. budget negotiations,
widespread protests against austerity measures in Europe and a flare-up
of violence in the Middle East. Further denting sentiment, data showed
that U.S. retail sales fell in October for the first time in three
months following an upwardly revised 1.3 percent increase in September.
The Dow and the tech-heavy Nasdaq fell 1.5 percent and 1.3 percent, respectively, to end at their lowest closing levels in over four months, while the S&P 500 lost 1.4 percent to hit a three-month low.
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Crude Flat Ahead Of Official Inventories Data
The price of crude oil was little changed Thursday morning as traders await cues from the official inventories data from the EIA, due out later today.
Light Sweet Crude Oil
(WTI) futures for December delivery, edged up $0.02 to $86.34 a barrel.
Yesterday, oil settled higher amid supply concerns with trouble brewing
in the Middle East after an Israeli airstrike killed the military chief
of Hamas in Gaza. Hamas has since vowed to avenge the death, while
Israel indicated continued focus on similar targets.
Wednesday after the market hours, the API said US crude oil inventories rose 1.35 million barrels, while gasoline stocks shed 103,000 barrels in the weekended November 09.
This morning, the U.S. dollar was
leveling off from its 2-month high versus the euro and the Swiss franc,
while steady around 2-month high against sterling. The buck advanced to
a fresh 7-month high versus the yen.
In economic news, the euro area
entered a recession in the third quarter, flash estimates published by
Eurostat revealed. Gross domestic product slid 0.1 percent from a
quarter ago, when it dropped 0.2 percent. The rate of decline matched
economists' expectations.
A separate release by Eurostat revealed
inflation in the euro area weakened in October as estimated earlier.
The harmonized index of consumer prices (HICP), measured under the EU
methodology, increased 2.5 percent year-on-year in October, in line with
the preliminary estimates. In September, the rate of inflation was 2.6
percent.
Meanwhile, the German economy expanded for the
third straight quarter and at a faster than expected pace, preliminary
data from the Federal Statistical Office showed. The gross domestic
product gained 0.2 percent sequentially in the third quarter, but
slightly slower than the 0.3 percent rise in the second quarter.
Economists had forecast a 0.1 percent expansion.
Traders
will look to the October inflation data from the U.S. Labor Department,
due out at 8.30 a.m ET. Economists expect the headline index to have
risen by 0.1 percent and the core reading by 0.2 percent.
Separately,
the Department is due to release its jobless claims report for the week
ended November 10. Economists expect claims to increase to 376,000 from
355,000 in the previous week.
Additionally, the results of the New York Federal Reserve's
empire state manufacturing survey is slated to be released at 8:30 am
ET. The headline general business conditions index for November is
expected to come in at -5 compared to -6.2 in October.
Today during trading hours, the EIA will
release its US crude oil inventories data for the weekended November
09. Analysts expect crude oil inventories to jump 1.50 million barrels
last week.
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