WALL STREET STAYS DEFENSIVE AS TRADERS SEEK CLARITY ON FED RATES

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WASHINGTON (Alliance News) – Trading in the US index futures suggests that Wall Street stocks may open Thursday’s session modestly lower, as traders stay guarded, given the nervousness over the trajectory of the Fed rate. Commodities are mostly higher and the dollar is weak. After Asian stocks closed lower, the European markets are seeing marked weakness, as an unexpected drop in German business sentiment weighing on the already fragile nerves of traders. The domestic markets may also keep an eye on a few retail earnings scheduled for the day and economic data on jobless claims and durable goods orders.

As of 6:15 am ET, the Dow futures are slipping 26 points, the S&P 500 futures are receding 2.75 points and the Nasdaq 100 futures are moving down 7.25 points.

US stocks retreated on Wednesday, as oil fell steeply and amid nervousness concerning the Fed Chair Janet Yellen’s speech scheduled for Friday.

On the economic front, the Labor Department is set to release its jobless claims report for the week ended August 20th at 8:30 am ET. Economists expect claims to have increased to 265,000 from 262,000 in the previous week.

At 8:30 am ET, the Commerce Department is scheduled to release its durable goods orders report for July. The consensus estimate calls or a 3.7% month-over-month jump in orders following a 4% decline in June.

The Kansas City Federal Reserve is due to release its regional manufacturing index form August at 11 am ET. In July, the index was at -6.

The Treasury will release the results of its auction of 7-year notes at 1 pm ET.

In major corporate news, HP (HPQ) reported better than expected third quarter results but its fourth quarter and full year earnings per share guidance is weak.

PVH (PVH) reported above-consensus second quarter earnings per share and issued positive guidance for the third quarter and the full year.

Williams-Sonoma (WSM) reported in line second quarter earnings per share but its revenues trailed estimates. The company also lowered its full year earnings and revenue guidance.

Guess? (GES) reported better than expected second quarter adjusted earnings, although its revenues were below estimates. The company’s third quarter guidance is weak.

Autodesk (ADSK), Brocade (BRCD) and GameStop (GME) are among the companies due to release their quarterly results after the close of trading.

The major Asian markets ended mixed, with the uninspiring lead from Wall Street overnight, muted performance by commodities and Yellen’s Jackson Hole address due on Friday all playing out in the minds of traders.

The Japanese market succumbed to the yen’s strength in the Asian session. The Nikkei 225 average ended down 41.35 points or 0.25% at 16,556. Australia’s All Ordinaries languished below the unchanged line throughout the session, ending near the lows of the session. The index was down 22.20 points or 0.39% at 5,631 at the close of trading.

China’s Shanghai Composite Index lost 17.55 points or 0.57% before ending at 3,068, while Hong Kong’s Hang Seng Index ended at 22,827, up 6.09 points or 0.03%.

On the economic front, data released by the Bank of Japan showed that corporate service price index rose 0.4% year-over-year in July, ahead of the 0.1% increase expected by economists. In June, the index was up 0.2%. On a monthly basis, prices rose 0.4%.

The major European markets are trading lower by early afternoon trading, although they have come off their early lows. Risk off mood prevails as traders await Yellen’s speech.

After opening lower, European stocks saw further downside in reaction to a weak German business sentiment reading. However, with commodities recovering, the averages in the region have trimmed their losses.

Healthcare and auto stocks are leading the declines in Frankfurt. Merck KgaA, Fresenius, Fresenius Medical Care, BMW, Volkswagen, Daimler and Continental are all down steeply. In Paris, auto, technology and resource stocks are retreating. The UK Market is also seeing a sell-off in the resource space.

On the economic front, the results of a survey by the IfO showed that sentiment among German businesses slipped unexpectedly in August. The business sentiment index fell to 106.2 in August from 108.3 in July, while economists expected an increase in the index to 108.5. The current conditions and expectations indexes also fell.

The results of a survey by statistical office INSEE showed that French manufacturing confidence weakened unexpectedly in August.  The manufacturing sentiment index dropped to 101 in August from 103 in July. Economists had forecast the indicator to remain unchanged at 103.

Copyright RTT News/dpa-AFX

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