Commodity Sell-off, Weak Global Data Could Lead To Uneasy Run

(RTTNews) - The major U.S. index futures are pointing to a narrowly mixed opening on Friday, with nervousness continuing amid mixed earnings news, some sore global manufacturing activity data and the extended sell-off in commodities. Breaking the recent string of weak tech earnings, Amazon reported an unexpected profit and this could boost the tech space. Meanwhile, manufacturing activity data from China painted a bleak outlook for an economy that has evolved as a global growth engine and private sector activity data from the Eurozone was also far from convincing. Against this backdrop, the markets could have an uneasy run in the final trading session of the week.

U.S. stocks extended their declines to a third straight session on Thursday, as earnings worries continued to haunt traders. The major averages showed a lack of direction till the early afternoon. Subsequently, the averages moved decisively into negative territory and declined steadily until the mid-session. Thereafter, the averages moved roughly sideways in a narrow range before closing moderately lower.

The Dow Industrials ended down 119.12 points or 0.67 percent at 17,732, the S&P 500 Index closed 12 points or 0.57 percent lower at 2,102 and the Nasdaq Composite Index ended at 5,146, down 25.36 points or 0.49 percent.

Twenty-five of the thirty Dow components closed lower and one stock ended unchanged, while the remaining four stocks gained ground. 3M Co. (MMM), Caterpillar (CAT) and American Express (AXP) retreated sharply, while Microsoft (MSFT) and Cisco Systems (CSCO) ended up over 1 percent each.

Gold stocks continued to tumble and transportation, utility and basic material also fell sharply. Meanwhile, oil service, semiconductor and computer hardware stocks saw considerable strength.

On the economic front, the Labor Department reported that jobless claims fell sharply to a more than forty-year low of 255,000 in the week ended July 18th from an unrevised reading of 281,000 for the previous week. The four-week average slipped to 278,500 from 282,500. Continuing claims calculated with a week's lag declined by 9,000 to 2.207 million in the week ended July 11th.

The Conference Board reported that its leading economic indicators index rose 0.6 percent month-over-month in June, notably more than the 0.2 percent growth expected by economists. In May, the index was up an upwardly revised 0.8 percent. The housing market and interest rate outlook contributed to much of the upside. The coincident index was up 0.2 percent.

Currency, Commodity Markets

Crude oil futures are rising $0.44 to $48.89 a barrel after sliding $0.74 to $48.45 a barrel on Thursday. An ounce of gold is currently trading $1,082.10, down $12 from the previous session's close of $1,094.10. On Thursday, gold gained $2.60.

On the currency front, the U.S. dollar is trading at 123.96 yen compared to the 123.93 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0946 compared to yesterday's $1.0984.

Asia

The major Asian markets fell across the board, weighed down by the weak lead from Wall Street overnight and disappointing Chinese manufacturing data. The Chinese, Hong Kong, South Korean and Indonesian markets fell the most.

Japanese stocks retreated, with the Nikkei 225 Index opening lower and falling steeply in early trading. After moving sideways, the index moved sharply lower yet again in the mid-session. Subsequently, the index moved sideways before ending down 139.42 points or 0.67 percent at 20,545.

Packaged food, construction, textile, paper, chemical, pharma, glass, mining, rubber, telecom, utility, tech and financial stocks all came under selling pressure.

Australia's All Ordinaries Index saw indecision till early afternoon trading before moving below the unchanged lined. After a steady retreat till late afternoon trading, the index trimmed some of its loss over the remainder of the session but still closed down 24.50 points or 0.44 percent at 5,557.

Most sectors, including consumer, financial and material stocks, moved to the downside. Meanwhile, energy, telecom and utility stocks gained ground.

China's Shanghai Composite Index ended at 4,071, down 53.01 points or 1.29 percent, and Hong Kong's Hang Seng Index closed 270.34 points or 1.06 percent lower at 25,129.

On the economic front, flash estimates released by Markit and Caixin showed that Chinese manufacturing activity contracted to a 15-month low in July. The manufacturing PMI slid to 48.2 in July from 49.4 in June, while economists expected a reading of 49.7.

The results of a separate Markit survey showed that the manufacturing PMI for Japan rose 0.3 points to 51.4 in July, beating expectations for a reading of 50.5.

Europe

After a weak start, European stocks recovered in late morning trading but have since then turned mixed, as traders digest eurozone private sector activity data and some domestic earnings.

In corporate news, Vodafone (VOD) reported better than expected first quarter service revenue growth and reiterated its full year guidance. French dairy company Danone reported a decline in its profits for the first half, weighed down by the higher costs of its Chinese operations.

German chemicals company BASF reported a small increase in its second quarter profits and sales. The company also reaffirmed its 2015 outlook.

Air France-KLM reported a wider second quarter loss despite revenues rising slightly. The company also announced additional cost cuts and plans to trim capacity targets for the winter.

Anglo American announced plans to cut its workforce by 6,000 over the next couple of years to counter the impact of falling commodity prices. The company reported a steep drop in its first half profits. Lonmin also announced that it would eliminate 6,000 positions and close shafts.

On the economic front, Markit's preliminary survey revealed that the private sector in the eurozone expanded in July, with a composite PMI score of 53.7 in July compared to a 4-year high of 54.2 in June. Economists expected a reading of 54 for the month.

The service sector PMI slipped 0.6 points to 53.8 compared to expectations of 54.2. Additionally, the manufacturing PMI declined 0.3 points to 52.5, contrasting expectations for an unchanged reading.

U.S. Economic Reports

Markit is set to release its flash U.S. manufacturing PMI for July at 9:45 am ET. Economists expect the index to increase to 53.7 from 53.4.

The Commerce Department is due to release its new home sales data for June at 10 am ET. Economists expect new home sales to come in at a seasonally adjusted annual rate of 550,000.

New home sales rose to a seasonally adjusted annual rate of 546,000 units in May, up 2.2 percent month-over-month. The reading was better than expected and marked the highest rate since February 2008. The previous month's sales were upwardly revised to 534,000 from 517,000.

Inventories measured in terms of months of supply edged down 0.1 to 4.5 months, and the median sales price of a new home fell to $282,000 from $291,100 in April.

Stocks in Focus

Starbucks (SBUX) reported better than expected third quarter results and raised its 2015 earnings outlook. Visa's (V) third quarter results also handily beat expectations. The company also raised its adjusted earnings per share growth outlook for the full year.

AT&T (T) reported second quarter earnings that were ahead of expectations, while its revenues were shy of estimates.

Amazon (AMZN) reversed to a profit in its second quarter, belying expectations for a loss, and its net sales beat expectations. The company's third quarter sales guidance was in line.

CA Technologies' (CA) first quarter earnings exceeded estimates, while its revenues were below expectations. The company raised its full year revenue guidance but tightened its earnings guidance range.

Juniper Networks (JNPR) reported strong second quarter results and issued an upbeat earnings and revenue outlook for the third quarter.

Altera (ALTR), which has agreed to be acquired by Intel (INTC), reported below-consensus second quarter earnings, while its revenues beat estimates.

While Verisign's (VRSN) second quarter non-GAAP earnings missed estimates by a penny, its revenues exceeded estimates.

NETGEAR (NTGR) also reported below consensus earnings for its second quarter, while its revenues topped estimates. The company's third quarter revenue guidance was upbeat.

Maxim Integrated's (MXIM) fourth quarter adjusted earnings were ahead of expectations, while its revenues trailed estimates. Flextronics (FLEX) reported in line first quarter adjusted earnings but its net sales were below consensus expectations. The company's second quarter guidance was in line.

Skyworks (SWKS) reported better than expected third quarter results and issued positive earnings and revenue guidance for the fourth quarter.

Netsuite (N) reported in line-adjusted earnings for its second quarter, while its revenues exceeded expectations.

PMC-Sierra (PMCS) reported below-consensus earnings and revenues for its second quarter. In a bid to reduce spending by 14 percent, the company announced the elimination of 200 jobs.

Capital One Financial (COF) reported below-consensus earnings and revenues for its second quarter.

Reinsurance Group of America (RGA) reported second quarter operating earnings per share that trailed estimates.

Cigna Corp. (CI) is up five tenths of a percent to $155.04. Anthem, Inc. (ANTM) has agreed to acquire all outstanding shares of Cigna in a cash and stock transaction, valued at $54.2 billion on an enterprise basis. Cigna shareholders will receive $103.40 in cash and 0.5152 Anthem common shares for their each share, for total per share of $188.00 for each Cigna share. ANTM is up nearly 1 percent to $156.52.

Biogen's (BIIB) second quarter adjusted earnings per share topped Wall Street view. Revenue increased 7 percent, but was below the consensus estimate. The company also lowered its fiscal 2015 earnings and revenue guidance.

Xerox' (XRX) second quarter adjusted earnings per share matched Street view, while its revenue missed the consensus estimate. The company forecast third quarter earnings to miss analysts' estimate and sees full-year adjusted earnings per share at the lower end of its guidance range.

Republic Services (RSG) reported better than expected second quarter earnings and in line revenues. The company also raised its full year earnings guidance and announced a 7.1 percent increase in its dividend to 30 cents per share.