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The major U.S. index futures are pointing to a slightly higher opening on Wednesday, with sentiment reflecting hopes that the lawmakers will act before the October 17th deadline to raise the debt ceiling to avoid a default. Traders are acting on hopes that there is unlikely to be anymore delay, given the deleterious effect a default can have on the economy and the country's image as the world's leading economy.
Earnings news of the day has been mixed. The lone piece of market moving economic data of the day, namely the housing market index that measures confidence among homebuilders may not have much of an influence on the markets, given its preoccupation over a deal to end the budgetary and debt ceiling impasse.
The lack of a debt deal led to weakness on Wall Street on Tuesday, with the major averages all ending notably lower. The major averages opened lower after the release of mixed earnings and a soft regional manufacturing reading. The averages languished mostly below the unchanged line before ending lower.
The Dow Industrials ended down 133.25 points or 0.87 percent at 15,168 and the S&P 500 Index closed 12.08 points or 0.71 percent lower at 1,698, while the NASDAQ composite closed at 3,794, down 21.26 points or 0.56 percent.
Twenty-eight of the thirty Dow components closed lower, while the remaining two stocks ended modestly higher. Home Depot , IBM, 3M co. and Procter & Gamble were among the biggest decliners of the session.
Biotechnology, retail, housing, semiconductor, computer hardware and banking stocks declined sharply in the session, while Gold stocks rallied.
On the economic front, the results of the New York Federal Reserve's manufacturing survey showed that its manufacturing index fell to 1.52 in October from 6.29 in September, dropping to the lowest level since May. Economists had expected the index to edge up to 7. The components were mixed. The new orders index rose five points to 7.8, while the shipments index fell three points to 13.1.
The order backlogs index was little changed. The employment indexes were mixed, with the number of employees index dropping 4 points to a 3-month low of 3.61, while the average workweek index inched up to 3.6. The 6-month outlook index was nearly flat.
On Tuesday, The Dow Industrials fell through key supports around its 21-day MA currently at 15,227, 50-day MA currently at 15,171 and 100-day MA currently at 15,212. With just a day to go before a default, traders are likely to be very tense. Downside support lies around 15,125, 15,050 and 14,981. On the upside, the index is likely to face resistances around its key MAs and the 15,250, 15,310, 15,389, 15,454 and 15,547 levels.
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The National Association of Home Builders is scheduled to release its housing market index for October at 10 am ET. Economists expect the index to remain unchanged at 58.
In September, the housing market index measuring builder confidence was unchanged at 58, remaining at the highest level in nearly eight years. The index measuring current sales conditions was unchanged at 62 and the index measuring prospective buyer traffic rose 1 point to 47, while the sales expectations index fell 3 points to 65.
The Federal Reserve is due to release its Beige Book report at 2 pm ET. Dallas Federal Reserve Bank President Richard Fisher is scheduled to participate in a debate on breaking up big banks in New York at 6:45 pm ET.
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Intel reported third quarter earnings of 58 cents per share, flat with last year, while revenues rose to $13.48 billion to $13.46 billion. The results were ahead of expectations. For the fourth quarter, the company expects revenues of $13.7 billion, plus or minus $500 million, while analysts estimate revenues of $14.02 billion.
Yahoo! reported third quarter non-GAAP earnings of 39 cents per share, up from 34 cents per share last year. Revenues, excluding traffic acquisition costs, fell 1 percent to $1.089 billion. The results exceeded estimates. Separately, the company said it entered into an amendment to the share repurchase and preference sale agreement with Alibaba that reduces the number of shares of Alibaba that Yahoo is required to sell in connection with the IPO of Alibaba to 208 million from 261.5 million.
St. Jude reported better than expected third quarter results and lifted its outlook for the full year.
PepsiCo. reported better than expected third quarter results, although its revenues were shy of estimates. The company reaffirmed its guidance for the full year.
CSX Corp. reported third quarter net earnings of 46 cents per share, higher than 44 cents per share in the year-ago period. Revenues came in at $3 billion. For 2013, the company now expects earnings to be up slightly from 2012 levels. The results were ahead of estimates.
Linear Technology reported first quarter adjusted earnings of 52 cents per share, up from 51 cents per share a year-ago quarter. Revenues were up 2 percent to $340.4 million. The results were better than expected. Citing seasonal weakness in the last month of the quarter due to the holiday period and the anticipated impact from the current budget stalemate, the company forecasts flat to 4 percent sequential drop in second quarter revenues.
Bank of America's third quarter results exceeded estimates, while its revenues were below estimates.
Wal-Mart said it expects capital spending of about $11.8 billion to $12.8 billion for 2015, down $200 million from the current fiscal year. The company expects sales of $475 million to $480 million for the current fiscal year, while analysts estimate sales of $480.67 billion. The company estimates net sales growth of 3-5 percent for 2015.
American Express , East West Bancorp , eBay , IBM , Noble Corp. , Sallie Mae, RLI Corp. SanDisk , United Rentals and Xilinx are among the companies due to release their quarterly results after the close of trading.
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European stocks opened lower and are continuing to see weakness amid the release of mixed corporate news and apprehensions concerning the U.S. debt ceiling.
In corporate news, chip equipment maker ASML reported that its third quarter earnings declined to 193.1 million euros compared to 274.7 million euros last year. However, the earnings were above estimates by most analysts. Sales were up 7.3 percent to 1.32 billion euros. The company confirmed its full year sales guidance of 5.2 billion euros.
French dairy company Danone lowered its full year forecast after reporting a small increase in its third quarter sales. French ad firm Publicis, which has agreed to merge with Omnicom, reported a slowdown in its third quarter revenue growth but forecast a faster rate of organic sales growth. Luxury retailer LVMH reported third quarter sales that missed estimates.
On the economic front, car registrations in Europe recovered in September, according to data released by the ACEA. Sales rose 5.4 percent year-over-year to 1.15 million units in September.
A report released by the U.K. Office for National Statistics showed that claimant count in the U.K. fell by 41,700 in September compared to expectations for a drop of 25,000. The unemployment rate calculated based on ILO standards for the three months ended August came in line with expectations at 7.7 percent.
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The major Asian markets closed on a mixed note, with the underlying sentiment being cautious as traders watched the developments in Washington. The Japanese, New Zealand, Malaysian, Singaporean and Australian markets ended higher, while the Hong Kong, Chinese, South Korean and Taiwanese markets retreated.
Japan's Nikkei 225 average moved back and forth across in a broad range throughout the session before ending up 25.60 points or 0.18 percent at 14,467. Technology, insurance, real estate, resource and banking stocks gained ground in the session, while utility, retail, telecom and auto stocks declined.
After opening little changed, Australia's All Ordinaries declined sharply in early trading. The index snapped its losses in the morning, moving back above the unchanged line in early afternoon trading. Thereafter, the average nervously moved around the unchanged line before closing up 5.20 points or 0.10 percent at 5,264. Material stocks showed some strength, helping to offset weakness in the energy and financial spaces.
Hong Kong's Hang Seng Index closed at 23,228, down 108.19 points or 0.46 percent, and China's Shanghai Composite Index closed 40.34 points or 1.81 percent lower at 2,193.
On the economic front, a report released by Westpac and the Melbourne Institute showed that their leading index for Australia edged down 0.1 percent month-over-month in August. The annualized growth rate of the index was 3.2 percent, above its long-term trend of 2.9 percent.
South Korea's jobless rate eased to 2.7 percent in September from 3 percent in August, according to a report released by Statistics Korea.
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Crude oil futures are slipping $0.14 to $101.07 a barrel after falling $1.20 to $101.21 a barrel on Tuesday. An ounce of Gold is currently-trading at $1,280.70, up $7.50 from the previous session's close of $1,273.20. On Tuesday, Gold added $3.40.
Among currencies, the U.S. dollar is trading at 98.40 yen compared to the 98. 15 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.3561 compared to yesterday's $1.3524.
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