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Wall Street On Back Foot Ahead Of Retail Sales Data

Wall Street

After withstanding the pressure to pullback for much of last week, Wall Street sentiment appears to remain shaky on Monday. The index futures point to a lower opening, as traders await a slew of market moving reports. Domestic data has largely been positive and this explains the strength in the dollar. Consequently, commodities denominated in the dollar have seen downside pressure. Lukewarm economic data released from China earlier in the day has also served to trim risk appetite. Against this backdrop, the U.S. retail sales report could render a decisive direction to the markets.

As of 6:15 am ET, the Dow futures are slipping 53 points, while the S&P 500 futures are declining 7.10 points and the Nasdaq 100 futures are moving down 14.50 points.

U.S. stocks rose for the third straight week in the week ended May 10th, as the markets showed exemplary resilience despite the absence of many meaningful economic catalysts. Earnings largely remained supportive of the upside.

On the economic front, consumer, manufacturing, pricing and housing readings are all due in the unfolding week, as traders seek more clarity on the economic outlook after last week’s lull. The retail sales report for April, the results of the manufacturing surveys by the New York Federal Reserve and the Philadelphia Federal Reserve for May, the Federal Reserve’s industrial production report for April, the National Association of Home Builders’ housing market index for May and the Commerce Department’s housing starts report for April are among the closely watched reports of the unfolding week.

Traders may also focus on the jobless claims report, some Fed speeches, the results of the preliminary consumer sentiment survey for May by Reuters and the University of Michigan and the Labor Department’s producer and consumer price inflation reports for April. The Commerce Department’s business inventories report for March, the Labor Department’s import and export price index for April and the Conference Board’s leading economic indicators index for April round up the economic events of the week.

The Commerce Department is due to release its retail sales report for April at 8:30 am ET. Economists expect retail sales drop of 0.3 percent month-over-month, while sales, excluding autos, may have edged down 0.1 percent.

At 10 am ET, the Commerce Department will release its business inventories report for April. The consensus expectations call for a 0.3 percent increase in business inventories compared to a 0.1 percent increase in March.

In corporate news, Dillards (DDS) and Take-two Interactive (TTWO) are among the companies due to release their quarterly results.

The Asian markets closed on a mixed note, as lukewarm Chinese data triggered worries concerning the growth in the world’s second largest economy and the global economy at large. Meanwhile, the Japanese market continued to be the beneficiary of a weaker yen.

Japan’s Nikkei 225 average closed up 174.67 points or 1.20 percent at a fresh 5-year high of 14,782. Export stocks gained ground, while resource, real estate, retail, bank and utility stocks came under selling pressure. Kuboto, Mitsubishi Materials, NSK, Meidensha, Sharp and NTN were among the best performers of the session.

Australia’s All Ordinaries ended 3.70 points or 0.07 percent higher at 5,195. Consumer staple and healthcare stocks rallied strongly and financial stocks also found modest buying interest, while material and energy stocks came under selling pressure.

 

Hong Kong’s Hang Seng Index closed at 22,990, down 331.41 points or 1.42 percent. China’s Shanghai Composite Index ended 4.91 points or 0.22 percent lower at 2,242.

On the economic front, data released by the Chinese National Bureau of Statistics showed that the economic recovery in China remains fragile. Industrial output rose 9.3 percent year-over-year in April, slightly weaker than the 9.4 percent increase forecast by economists. Retail sales climbed 12.8 percent, in line with expectations. Meanwhile, fixed asset investment rose 20.6 percent in the January to April period, softer than the 21 percent growth forecast by economists.

A report released by the Australian Bureau of Statistics showed that home loan approval in Australia rose to the highest level in four years in March. The number of owner-occupied dwelling finance commitments climbed 5.2 percent year-over-year in March following a 2.1 percent increase in February.

The results of a survey by the National Australia Bank showed that its business confidence index for Australia declined by 4 points to -2 in April. Business conditions remained fairly stable at depressed levels, as the corresponding indicator rising 1 point to -6.

After seeing volatility in early trading, European stocks have pulled back amid the selling pressure generated by profit taking. Traders also remained wary ahead of the U.S. retail sales data.

In corporate news, U.K. Lloyds said its Chairman Win Bischoff will retire before May 2014. Glencore Xstrata said its copper production rose 18 percent in the first quarter.

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