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Sentiment Subdued as Jobless Claims Fail to Provide Clarity
The major U.S. index futures are pointing to a mixed opening on Thursday, with sentiment reflecting caution among traders after a report showed that jobless claims declined steeply in the recent reporting week. With claims reflecting some anomaly due to incomplete filing from 2 states, the decline cannot be taken at face value. The mood is likely to remain cautious, as traders look ahead to some market moving economic numbers due tomorrow.
U.S. stocks ended on a mixed note on Wednesday, as traders showed a lack of conviction despite the abatement of geopolitical and economic concerns. The major averages opened mixed, with the Dow Industrials opening higher, while the Nasdaq Composite and the S&P 500 Index opened below the unchanged line. The Dow Industrials advanced steadily till the afternoon before moving sideways and closing up 135.54 points or 0.89 percent at 15,327.
The S&P 500 Index recovered in early afternoon trading and remained above the unchanged line for the rest of the session. The index closed 5.14 points or 0.31 percent higher at 1,689. At the same time, the Nasdaq Composite languished below the unchanged line throughout the session before closing down 4.01 points or 0.11 percent at 3,725.
Twenty-six of the thirty Dow components closed higher and two stocks ended unchanged, while the remaining two stocks retreated. In the broader market, housing and oil stocks moved to the upside, while airline and utility stocks declined.
On the economic front, the Commerce Department reported that wholesale inventories edged up 0.1 percent month-over-month in July, while annually, inventories at the end of the month were up 2.2 percent. Wholesale sales also rose 0.1 percent month-over-month and climbed 5.7 percent year-over-year. The inventories to sales ratio was at 1.17 compared to 1.21 in the year-ago period.
The Dow Industrials broke above its 50-day MA currently at 15,262 and settled close to a medium term resistance. The index now may find support around its 50-day MA, 100-day MA currently at 15,156 and its 21-day MA currently at 15,013. On the upside, the index has resistance around 15,353 and 15,470.
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First-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended September 7th, according to a report released by the Labor Department on Thursday, with claims falling to their lowest level in over seven years.
The Labor Department said initial jobless claims dropped to 292,000, a decrease of 31,000 from the previous week's unrevised figure of 323,000. The decrease came as a surprise to economists, who had expected jobless claims to climb to 330,000.
With the unexpected decrease, jobless claims fell to their lowest level since hitting 291,000 in the week ended April 1, 2006. However, the Labor Department noted that the notable decrease in jobless claims came as two states failed to report all of their claims amid computer upgrades
With higher fuel prices offset by declining non-fuel prices, the Labor Department released a report showing that U.S. import prices unexpectedly came in flat in August.
The report said import prices were unchanged in August after ticking up 0.1 percent in July. Economists had been expecting import prices to rise by about 0.5 percent. Meanwhile, the Labor Department said export prices fell by 0.5 percent in August following a 0.1 percent drop in the previous month. Export prices had been expected to edge up by 0.1 percent
The Treasury is due to release the results of its auction of 30-year bonds at 1 pm ET. The Treasury will also release its monthly budget for August at 2 pm ET.
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Men’s Wearhouse reported second quarter adjusted earnings of $1.01 per share on revenues of $647.3 million, down 2.3 percent year-over-year. For the full year, the company expects full year adjusted earnings of $2.40-$2.50 per share, while it lowered its comparable store sales expectations by about 2 percent at Moores and Men’s Wearhouse.
Qualcomm announced that its board has approved a new $5 billion stock buyback program.
Kilroy Realty commenced a public offering of 4.50 million shares of its common stock.
Extreme Networks has agreed to acquire Enterasys, a privately-held, provider of wired and wireless network infrastructure and security solutions, for $180 million cash. Extreme Networks expects this acquisition to be immediately accretive, excluding transaction, integration and purchase accounting related costs.
Pandora Media named Brian McAndrews as its new chief executive officer, president and chairman, with immediate effect.
Lululemon Athletica’s second quarter results were above Wall Street view. Meanwhile, the company forecast third quarter results below analysts' expectations and also lowered its full-year forecast.
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The major European markets showed volatility in early trading, moving back and forth across the unchanged line with a downside basis. Subsequently, the averages have pulled back only to pare their losses. The averages are currently mixed as traders digest weak industrial output data from the eurozone and mixed corporate news.
In corporate news, British supermarket chain WM Morrison reported a decline in its pre-tax profits for the first half, as like-for-like sales fell. Meanwhile, clothing retailer Next reported a modest increase in its first half profits, helped by new store openings and higher directory Internet and catalogue business. Home improvement retailer Home Retail reported higher second quarter sales, boosted by demand for summer goods at its Argos stores.
On the economic front, a report released by Eurostat showed that industrial production fell 1.5 percent month-over-month in July. Economists expected a more modest 0.3 percent drop. Annually, industrial output declined 2.1 percent compared to expectations for a 0.2 percent drop.
German wholesale prices fell 1.7 percent year-over-year in August, according to a report released by the German Federal Statistical Office. The decline was the biggest since November 2009.
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The major Asian markets ended mixed, with the sentiment remaining muted amid a lack of any strong directional clues. The Japanese market retreated on the strength of the yen, which rebounded slightly.
Japan’s Nikkei 225 average languished below the unchanged line for much of the session before closing down 37.80 points or 0.26 percent at 14,387. Export stocks led the retreat, with Mitsubishi, Sharp, Alps Electric and Taiyo Yuden posting notable losses.
Meanwhile, Australia’s All Ordinaries showed indecision for much of the morning before advancing strongly in early afternoon trading. The index went about a consolidation move thereafter before closing up 7.60 points or 0.15 percent at 5,238. Most sectors advanced modestly, with the exception of financial and real estate stocks.
Hong Kong’s Hang Seng closed at 2,256, up 16.58 points or 0.07 percent and China’s Shanghai Composite Index ended up 14.34 points or 0.64 percent at 2,256, while India’s Sensex ended 1.54 percent lower.
On the economic front, central banks in South Korea and New Zealand both left their key policy rates unchanged today, with the Reserve Bank of New Zealand indicating a rate hike early next year.
Meanwhile, a government report showed that Japan’s core machinery orders came in unchanged in July from the previous month, while the Australian jobless rate rose to its highest level in four years in August, reviving the chance of a rate cut.
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| Currency and Commodities Markets | ||||||||||||
Crude oil futures are rising $0.82 to $108.38 a barrel after advancing $0.17 to $107.56 a barrel on Wednesday.
The previous session’s modest gains came amid lukewarm risk appetite and the release of the petroleum inventory report, which showed that crude oil stockpiles edged down by 0.2 million barrels to 360 million barrels in the week ended September 6th. Inventories were near the upper limit of the average range for this time of the year.
Meanwhile, gasoline stockpiles climbed by 1.7 million barrels and were in the upper half of the average range. Distillate inventories rose by 2.6 million barrels but remained near the lower limit of the average range. Refinery capacity utilization averaged 91.63 percent over the four weeks ended September 6th compared to 90.8 percent over the four weeks ended August 30th.
Gold futures, which slipped $0.20 to $1,363.80 an ounce in the previous session, are currently declining $28.90 to $1,334.90 an ounce.
Among currencies, the U.S. dollar is trading at 99.51 yen compared to the 99.89 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is trading at $1.3276 compared to yesterday’s $1.3311.
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