Wall Street Hounded by Multiple Concerns
There seems to be no respite for Wall Street on Friday, as the futures point to a notably lower opening. Notwithstanding positive Chinese manufacturing data, Asian stocks succumbed to a sell-off on Wall Street overnight. The not-so-inspiring domestic earnings and lukewarm economic data amid the macroeconomic gloom, accentuated by the crisis in Ukraine and its ramifications for the global economy, are not helping sentiment in Europe, as the averages in the region are also trading lower. The U.S. markets could also take cues from several first-tier data due for the day, including non-farm payrolls, auto sales, personal income and spending and manufacturing and service sector readings.
At 6:15 am ET, the Dow futures are slipping 109 points, the S&P 500 futures are receding 13.25 points and the Nasdaq 100 futures are moving down 28.25 points.
U.S. stocks experienced a sell-off on Thursday on the back of geopolitical concerns, as Argentina defaulted on its debt and companies began warning on hit to their business due to the conflict between Russia and Ukraine.
On the economic front, automakers are scheduled to release their monthly sales data for July. Economists expect auto sales to come in at a seasonally adjusted annual rate of 16.7 million units compared to a 17 million rate in June.
The Labor Department is due to release its monthly non-farm payrolls report for July at 8:30 am ET. The consensus estimate calls for an addition of 233,000 jobs after non-farm payrolls expanded by 288,000 in the previous month. Around the same time, the Commerce Department will release its personal income and spending report for June. Economists expect a 0.4 percent month-over-month increase in both personal income and spending.
Markit is scheduled to release its final manufacturing purchasing managers’ index for November at 9:45 am ET. Economists expect the reading to be downwardly revised to 56 from the flash estimate of 56.3. Reuters and the University of Michigan are scheduled to release their final consumer sentiment index for July at 9:55 am ET. The consensus estimate calls for an upward revision to 81.5 from the preliminary estimate of 81.3.
The Institute for Supply Management is scheduled to release the results of its national manufacturing survey for July at 10 am ET. The manufacturing purchasing managers’ index is expected to come in at 56 in the month. Also at 10 am ET, the Commerce Department will release its construction spending report for June. Economists expect a 0.5 percent month-over-month increase in construction spending.
In corporate news, Public Storage (PSA) reported better than expected second quarter results. Expedia’s (EXPE) second quarter results also exceeded estimates. LinkedIn (LNKD) also reported above consensus results for its second quarter.
Microchip Technology (MCHP) reported first quarter earnings and revenues that beat estimates. Live Nation Entertainment (LYV) reported higher second quarter profit, while its revenues were ahead of estimates.
YRC Worldwide (YRCW) reported second quarter loss that was wider than expectations, while its revenues were ahead of expectations. Hanover Insurance (THG) reported second quarter operating income that was ahead of expectations. Boyd Gamings’ (BYD) second quarter results trailed expectations.
The Asian markets fell across the board, hit by the extremely negative lead from Wall Street overnight and nervousness ahead of the release of some key economic data from the U.S. later in the day. However, strong manufacturing data released from China served to quell some of the anxieties.
The Japanese market suffered from the broader global market weakness and the resultant strength of the yen in response to the rise in risk aversion. The Nikkei 225 average ended down 97.66 points or 0.63 percent at 15,523. Australia’s All Ordinaries ended 75.50 points or 1.34 percent lower at 5,548. The market witnessed broad based weakness, with stocks cutting across sectors showing weakness. Hong Kong’s Hang Seng Index ended at 24,532, down 224.42 points or 0.91 percent, and China’s Shanghai Composite Index ended down 16.26 points or 0.74 percent at 2,185.
On the economic front, revised estimates released by HSBC and Markit Economics showed that the manufacturing purchasing managers’ index calculated based on the survey rose to 51.7 in July, up from the flash estimate of 52 and the June reading of 50.7. Meanwhile, the results of a survey by the government also confirmed the buoyant performance by the sector.
European stocks opened lower and have seen further downside since then, as traders digested some domestic corporate news and chose to stay guarded ahead of the U.S. non-farm payrolls reports.
In corporate news, Insurer AXA reported higher first half profits, thanks to good performance by its life & savings business and cost control. Societe Generale reported better than expected second quarter results. ArceloMittal (MT) reported second quarter earnings missed estimates and lowered its outlook for the full year, citing softer iron ore prices.
On the economic front, revised estimates released by Markit Economics showed that its manufacturing index for the eurozone was downwardly revised to 51.8 in July from the flash estimate of 51.9. In June, but was unchanged from the June reading. Meanwhile, manufacturing activity in the U.K. expanded at a slower than expected rate in July, according to a survey by Markit and the Chartered Institute for Purchasing & Supply. The manufacturing purchasing managers’ index fell 1.8 points to 55.4, while economists expected a reading of 57.2.
by RTT Staff Writer