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The major U.S. index futures are pointing to a mixed opening on Thursday, with sentiment reflecting relief at some positive economic data. Earlier in the day, positive Chinese non-manufacturing data led to a fairly positive performance by Asian stocks. With the release of the U.S. jobless claims report, which showed a smaller than expected increase in jobless claims, sentiment in Europe has improved. Nevertheless, the budgetary uncertainty and the looming debt ceiling risk could keep the underlying mood cautious.
U.S. stocks retreated on Wednesday amid anxiety about the government shutdown, which entered its second day. The major averages opened notably lower and declined further in early trading, as traders digested soft ADP private sector job numbers and the prolonged government shutdown. Although the averages pared some of their losses over the course of the morning, they moved sideways mostly below the unchanged line for the rest of the session.
The Dow Industrials ended down 58.56 points or 0.39 percent at 15,133, while the Nasdaq Composite fell 2.96 points or 0.08 percent before closing at 3,815 and the S&P 500 Index closed 1.13 points or 0.07 percent lower at 1,694.
Seventeen of the thirty Dow components closed lower, while the remaining thirteen stocks advanced. American Express and Coca-Cola were among the biggest decliners of the session. At the same time, JP Morgan Chase and Microsoft advanced notably.
Airline and brokerage stocks declined the most.
On the economic front, ADP reported that 166,000 jobs were added by the private sector in September. The previous month’s job gains were downwardly revised to 159,000 from 176,000. The service sector added 147,000 jobs compared to the 19,000 jobs added by the goods producing sector, with the construction sector contributing to 16,000 of the jobs added by the goods producing sector. The job growth in the manufacturing sector was anemic at 1,000.
The Dow Industrials bounced off a support around 15,039 and yet closed lower on Wednesday. If the negative sentiment lingers, given fresh fears concerning the debt ceiling along with budgetary concerns, the index could retest this support level. Further downward, the index also has support around the 14,957 level. On the upside, key resistances are around the index’s 100-day MA currently at 15,233, 50-day MA currently at 15,264 and 21-day MA currently at 15,280 as well as the 15,338, 15,408, 15,497 and15,612 levels.
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First-time claims for U.S. unemployment benefits showed a modest increase in the week ended September 28th, according to a report released by the Labor Department. The report said initial jobless claims inched up to 308,000, an increase of 1,000 from the previous week's revised figure of 307,000.
Economists had been expecting initial jobless claims to climb to 315,000 from the 305,000 originally reported for the previous week.
At 10 am ET, the results of the Institute for Supply Management will release the results of its non-manufacturing sector survey for September. Economists expect the headline non-manufacturing index to slip to 57 in the month.
The sector experienced a quickening in the pace of its expansion in August. The non-manufacturing index based on the survey rose 2.6 points to 58.6, marking the highest reading since December 2005. The new orders index rose 2.8 points to 60.5 and the order backlogs index climbed 4 points to 50.5. The employment index also improved, rising to 57 from 53.2, marking the highest reading since February. Out of the eighteen industries surveyed, 16 saw growth.
San Francisco Federal Reserve Bank President John Williams is scheduled to speak in San Diego at 10:30 am ET. Dallas Federal Reserve Bank President Richard Fisher will participate in a discussion with John Taylor on the effect of uncertainty on growth in Dallas at 12:30 Pm ET. Federal Reserve Governor Jerome Powell is due to speak to the St. Louis Fed's Community Banking Research Conference at 12:45 pm ET. Fisher will speak again on the economy in Little Rock, Arkansas at 3:30 pm ET.
The Treasury is scheduled to make announcements concerning next week’s auction of 3-year and 10-year notes and 30-year bonds at 11 am ET.
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| Stocks in Focus | ||||||||||||
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Texas Industries reported first quarter net income of 1 cents per share compared to a loss of 8 cents per share last year. Net sales rose to $233.08 million from $175.52 million in the year-ago period. The earnings were in line, while the revenues slightly shy of estimates.
Applied Micro Circuits announced the appointment of Douglas Ahrens as its CFO, effective October 17th, 2013.
Sterling Financial said that it has completed its acquisition of Commerce National Bank for $42.9 million.
Forest Labs announced that the company and Royalty Pharma have jointly filed an additional lawsuit in a U.S. district court against First Time US Generics for infringement of certain patents related to Forest’s SAVELLA product.
Standard & Poor’s announced that American Assets Trust (AAT) will replace Sourcefire in the S&P SmallCap 600 Index after the close of trading on October 7th. Sourcefire is being acquired by Cisco Systems.
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| European Market | ||||||||||||
After opening higher, European stocks have turned mixed. The French market is trading lower and the German market is holding above the unchanged line, although amid some volatility. At the same, the U.K. market is seen moving roughly sideways with modest gains.
In corporate news, Ryanair was fined 8 million euros for violating French labor laws by employing Marseille-based crew under Irish contracts. Separately, Ryanair said that the traffic for the month of September rose 3 percent from the year-ago period to 8.10 million passengers. Load factor for the month rose to 85 percent from 84 percent in the same period last year.
EasyJet reported that the number of passengers it carried in September rose 4.8 percent and load factor improved 1.2 percentage points to 89.7 percent. The company raised the low end of its pre-tax profit forecast for the fiscal year ended September 2013 to 470 million pounds from 450 million pounds while maintaining the high end at 480 million pounds.
On the economic front, final estimates released by Markit Economics showed that euro area private sector activity expanded at a slightly faster pace than had been initially estimated. The composite purchasing managers’ index rose to 52.2 in September from 51.5 in August, coming in higher than the flash estimate of 52.1. The service sector purchasing managers’ index rose 1.5 points to 52.2, an upward revision from the flash estimate of 52.1.
BP noted that a U.S. federal appeals court ruled in its favor regarding payment of inflated claims related to the 2010 Gulf of Mexico oil spill case.
The results of a survey conducted jointly by Markit Economics and the CIPS showed that U.K. service sector activity grew at a slower pace in September. The purchasing managers’ index edged down 0.2 points to 60.5.
A report released by Lloyds’ Halifax division showed that U.K. house prices rose 0.3 percent month-over-month in September, the same pace of igrowth as in August. On a year-over-year basis, house prices were 6.2 percent higher.
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| Asian Markets | ||||||||||||
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Most Asian markets advanced, encouraged by data on the Chinese non-manufacturing sector. In the process, the markets ignored the negative lead from Wall Street overnight and the impact a protracted shutdown can have on the U.S. economy. Meanwhile, the Japanese and Singaporean markets ended modestly lower and the Chinese and South Korean markets were closed for public holidays.
Australia’s All Ordinaries showed nervousness in early trading but advanced steadily until the mid-session. Thereafter, the average gave back some of its gains and yet closed up 17.10 points or 0.33 percent at 5,232. Most sectors advanced, with the exception of industrial and energy stocks.
Hong Kong’s Hang Seng Index closed at 23,214, up 229.92 points or 1 percent.
Meanwhile, Japan’s Nikkei 225 average showed volatility throughout the session and remained mostly below the unchanged line before closing down 13.24 points or 0.09 percent at 14,157.
Tokyo Electric Power fell close to 5 percent and led the decliners among the index components after reports of leakage of radioactive water out of its Fukushima plant. Resource, real estate, retail and export stocks also came under selling pressure. On the other hand, financial and utility stocks advanced.
On the economic front, the results of a survey by the China Federation of Logistics and Purchasing, or CFLP, and the National Bureau of Statistics revealed that their index measuring performance of the non-manufacturing sector, which includes services and construction industries, rose to a six-month high of 55.4 in September from 53.9 in August.
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| Currency and Commodities Markets | ||||||||||||
Crude oil futures are slipping $0.33 to $103.77 a barrel after advancing $2.06 to $104.10 a barrel on Wednesday.
The previous session’s gains came amid the release of the petroleum status report, which showed that crude oil stockpiles rose by 5.5 million barrels in the week ended September 27th to 363.7 million barrels. Inventories moved towards the upper range for this time of the year.
Gasoline stockpiles increased by 3.5 million barrels and were at the top of the average range. On the other hand, distillate inventories fell by 1.7 million barrels and remained near the lower limit of the average range. Refinery capacity utilization averaged 91.1 percent over the four weeks ended September 27th compared to 91.7 percent over the four weeks ended September 20th.
Gold futures, which climbed $34.60 to $1,320.70 an ounce in the previous session, are currently declining $14.40 to $1,306.30 an ounce.
Among currencies, the U.S. dollar is trading at 97.60 yen compared to the 97.35 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.3604 compared to yesterday’s $1.3579.
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