Markets Seek To Sustain Momentum Amid In-line Data And ECB Rate Cut

(RTTNews) - The major U.S. index futures are pointing to a higher opening on Thursday, with sentiment in the domestic markets holding up amid the release of some fairly in line domestic data. Among a slew of economic data released short while ago, jobless claims rose a little more than expected and private payrolls expanded robustly, although at a slightly less than expected pace. Meanwhile, across the Atlantic, the spirit was lifted by an unexpected rate cut announced by the European Central Bank. The domestic markets may also gain some encouragement from the benevolence of the ECB, while the results of service sector survey based on a national survey could also provide cues to the markets.

U.S. stocks closed on a mixed note on Wednesday, as traders reacted to conflicting reports regarding a ceasefire in Ukraine. The major averages opened notably higher amid reports that Russian President Vladimir Putin and Ukrainian President Petro Poroshenko agreed on a permanent ceasefire. However, with Russia denying the reports and Ukraine later retracting the statement, the averages gave back their gains and dipped into negative territory in early afternoon trading.

The Nasdaq Composite, which slid below the unchanged line a little earlier than the other two major averages, languished in the red for the rest of the session and ended 25.62 points or 0.56 percent lower at 4,573. The S&P 500 Index saw some volatility in the afternoon before closing down 1.56 points or 0.08 percent at 2,001. Meanwhile, the Dow Industrials held mostly above the unchanged line, although closing well off its early highs at 17,078, up 10.72 points or 0.06 percent.

Twenty of the thirty Dow components closed higher and one stock ended unchanged, while the remaining nine stocks retreated. Merck (MRK) rose over 1 percent and was the leading gainer among the Dow components, while Home Depot (HD) fell 2.36 percent.

Airline, computer hardware and housing stocks retreated sharply, while notable strength was visible among steel stocks.

Commodity, Currency Markets

Crude oil futures are slipping $1.22 to 94.32 a barrel after rallying $2.66 to $95.54 a barrel on Wednesday. Gold futures, which rose $5.30 to $1,270.30 an ounce in the previous session, are currently receding $1.50 to $1,268.80 an ounce.

Among currencies, the U.S. dollar is trading at 104.94 yen compared to the 104.79 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.3029 compared to yesterday's $1.3150.

Asia

The major Asian markets went about in a lackluster manner on Thursday, tracking the uninspiring performance on Wall Street before closing mixed. The slew of data due from the U.S. and twin rate decisions from Europe also served to keep sentiment subdued.

A rebound by the yen amid the Bank of Japan's decision to hold monetary policy unchanged exerted downward pressure on stocks. The Nikkei 225 average languished mostly below the unchanged line before closing down 52.17 points or 0.33 percent at 15,676. Most sectors declined, with the exception of some defensive stocks.

Australia's All Ordinaries also spent the better part of the session below the flat line and finished moderately lower. The index closed down 22.50 points or 0.40 percent at 5,632. A majority of stocks came under selling pressure, although consumer staple stocks gained some ground.

Hong Kong's Hang Seng Index ended down 20.03 points or 0.08 percent at 25,298, while China's Shanghai Composite Index bucked the downtrend and closed 18.23 points or 0.80 percent higher at 2,307.

On the economic front, the Bank of Japan's Monetary Policy Board announced at the conclusion of a 2-day meeting that it is holding its overnight collateralized rate, the target for expanding its monetary base and its asset purchase program unchanged.

The central bank also retained its assessment of current economic conditions and its economic outlook, although it highlighted housing investment, exports and industrial production as the economy's Achilles' heel.

An Australian Bureau of Statistics report showed that retail sales in Australia rose 0.4 percent month-over-month in July, in line with expectations.

A separate report showed that Australia's trade deficit narrowed to A$1.359 billion in July from A$1.564 billion in the previous month.

Europe

After opening lower, European stocks turned mixed in early trading. However, with the announcement of the European Central Bank move to ease monetary policy further, stocks in the region have turned notably higher. While the Bank of England maintained status quo position with respect its monetary policy, in a surprise move, the European Central Bank lowered key rates by 0.10 percentage points each to support flailing growth in the region.

The mixed performance comes ahead of rate decisions by the European Central Bank and the Bank of England and despite the release of better than expected German factory orders data.

In corporate news, easyJet and Irish carrier Aer Lingus reported an increase in traffic and load factor for July.

On the economic front, the German Federal Statistical Office reported that factory orders in Germany rose 4.6 percent month-over-month in July following a 2.7 percent drop in June. Economists expected a more modest 1.5 percent improvement.

Meanwhile, France's INSEE reported that the jobless rate in France measured based on ILO standards edged up 0.1 percentage points sequentially to 10.2 percent in the second quarter.

U.S. Economic Reports

Although ADP released a report showing another notable increase in U.S. private sector employment in the month of August, the pace of job growth once again came in below economist estimates.

ADP said private sector employment rose by 204,000 jobs in August following a downwardly revised increase of 212,000 jobs in July. Economists had been expecting an increase of about 220,000 jobs compared to the addition of 218,000 jobs originally reported for the previous month.

Reflecting moderate increases in the value of both imports and exports, the Commerce Department released a report showing that the U.S. trade deficit unexpectedly came in slightly narrower in the month of July.

The Commerce Department said the trade deficit narrowed to $40.5 billion in July from a revised $40.8 billion in June. Economists had expected the deficit to widen to $42.3 billion from the $41.5 billion originally reported for the previous month.

First-time claims for U.S. unemployment benefits rose by slightly more than expected in the week ended August 30th, according to a report released by the Labor Department.

The report said initial jobless claims edged up to 302,000, an increase of 4,000 from the previous week's unrevised level of 298,000. Jobless claims had been expected to tick up to 300,000.

In a separate report, the Labor Department said productivity increased by 2.3 percent in the second quarter compared to the preliminary estimate of 2.5 percent growth. The increase still reflects a notable rebound from the 4.5 percent drop seen in the first quarter. The report also said unit labor costs edged down by a revised 0.1 percent in the second quarter versus the 0.6 percent increase originally reported.

Markit is scheduled to release revised estimates of its service sector purchasing managers' index for the U.S. at 9:45 am ET. The consensus estimate calls for a downward revision to 58.5 in August from the mid-month reading of 60.8.

The Institute for Supply Management is due to release the results of its service sector survey for August at 10 am ET. Economists expect the non-manufacturing purchasing managers' index to decline to 57.5 in August from 58.7 in July.

The service sector index rose to a 9-1/2 year high of 58.7 in July from 56 in June. Of the 18 industries surveyed, 16 reported growth. The business activity index surged up 4.9 points to 62.4, the new orders index rose by 2.7 points to 64.9 and the order backlogs index was unchanged at 53. The employment index rose 2.2 points to 56.

The Energy Information Administration is due to release the weekly petroleum status report for the week ended August 29th at 10:30 am ET.

Crude oil stockpiles fell by 2.1 million barrels to 360.50 million barrels in the week ended August 22nd. With the decline, inventories were in the upper half of the average range for this time of the year.

Gasoline stockpiles fell by 1 million barrels and remained in the middle of the average range. Meanwhile, distillate inventories increased by 1.3 million barrels but were below the lower limit of the average range.

Refinery capacity utilization averaged 92.7 percent over the four weeks ended August 22nd compared to 92.7 percent over the four weeks ended August 15th.

The Treasury Department is scheduled to announce the details of next week's auctions of 3-year and 10-year notes and 30-year bonds at 11 am ET.

Among a host of Fed speeches scheduled for the day, Cleveland Federal Reserve Bank President Loretta Mester is due to speak on the economic outlook, monetary policy and communications in Pittsburgh at 12:30 pm ET.

Additionally, Fed Governor Jerome Powell will speak to the New York University Money Marketeers at 6:15 pm ET, Dallas Fed President Richard Fisher is scheduled to speak in Dallas at 8:15 pm ET, and Minneapolis Fed President Narayana Kocherlakota is due to address a town hall forum in Helena, Montana at 9 pm ET.

Stocks in Focus

PVH (PVH) reported better than expected second quarter earnings, while its revenues were slightly shy of estimates. While the company's third quarter guidance was lackluster, the company's full-year guidance was positive.

H&R Block (HRB) reported an adjusted loss from continuing operations for its first quarter that was in line with estimates, and its revenues exceeded estimates.

Christopher & Banks (CBK) reported better than expected second quarter results and issued upbeat revenue guidance for the third quarter.

Among retailers, Costco (COST) reported a 7 percent increase in its comparable store sales for August. L-Brands' (L) reported a 5 percent increase in same store sales.

Logitech (LOGI) announced that it will restate its previously issued financial statements for fiscal years 2011 and 2012 and the first quarter of 2012 due to an accounting misstatement for inventory valuation reserves for its discontinued Revue product. The company said the restatement will not have any material impact on its fiscal year 2013 or 2014 results and have no impact on the cash balances reported for any of these years.

TD Ameritrade (AMTD) announced that its president and CEO Fred Tomczyk intends to sell up to 200,000 shares or about 8 percent of his total holdings in the company.

Rite Aid (RAD) reported a 3.9 percent year-over-year increase in its same store sales for August. Walgreen's (WAG) comparable store sales were up 3.6 percent.

STMicroelectronics (STM) and Tessera Technologies (TSRA) announced that they have reached a settlement of all outstanding litigation between them. However, the companies did not disclose the terms of the settlement agreement.

ABM Industries (ABM) reported better than expected third quarter results and raised its guidance for the full year 2014.

Hershey (HSY) announced that its CFO David Tacka is planning to retire from the company at the end of the year following a 40-year stint with the company. The company also said it has engaged a firm to conduct a search for his successor.

TIBCO (TIBX) announced that its board has unanimously initiated a review of various strategic and financial alternatives, including standalone plans, on August 16, 2014.

Teledyne (TDY) announced a deal to buy Bolt Technology (BOLT) for $22 per share in cash.

bebe Stores (BEBE), Cooper Companies (COO), Finisar (FNSR), Quiksilver (ZQK) and Zumiez (ZUMZ) are among the companies due to release their quarterly results after the close of trading.