RTTNews - U.S. stocks are set for a lower opening Thursday morning after a smart rally in the past three sessions as traders turn their attention to the failure of discussions between lender CIT and the Treasury Department. Also on the radar would be the results from search engine Google (GOOG), International Business Machines (IBM) and JP Morgan (JPM).
JP Morgan reported net income of $2.7 billion or $0.28 per share for the second quarter. Analysts expected the company to report earnings of $0.04 per share for the quarter.
As of 6.15 am ET, the Dow Futures were down 14 points, the S&P Futures were down 2.70 points, and the Nasdaq 100 futures were down 4.50 points.
Wednesday, stocks ended sharply higher, led by positive results from chipmaker Intel (INTC) and restaurant operator Yum! Brands (YUM) raising hopes of revival in consumer spending. A smaller-than-expected drop in industrial output and the minutes of the June FOMC meeting helped sustain the tempo of the rally throughout the session. The minutes of the June FOMC meeting showed that the GDP estimates were revised to show a smaller than expected decrease in 2009 and a bigger than expected increase in 2010. At the same time, the Fed said it expects the unemployment rate to come in higher than previously estimated based on the incoming employment data.
Earlier, a Labor Department report revealed that consumer prices saw a 0.7% increase in June compared to the previous month. Economists had projected an advance of about 0.6%. Compared to the same period last year, consumer prices were down 1.4 percent, the largest year-over-year decline since 1950. In a report, the New York Fed said that conditions for New York manufacturers were roughly flat in July, with the index of activity in the sector rising to a level close to zero.
A separate report from the Federal Reserve indicated a continued decrease in industrial production in the month of June, although the rate of decline slowed by more than economists had been anticipating. With the slowdown, industrial production fell at its slowest pace since the 1.3 percent jump that was seen in October of 2008.
The major gainers in the session included the resource stocks, especially the steel and gold stocks, technology, airline, housing and banking stocks were among the major gainers. The laggards were mainly the trucking stocks after JB Hunt Transport Services (JBHT), reported a sharp decline in second-quarter profit after the markets closed for trading on Tuesday.
The Dow closed up by 256.72 points or 3.1% at 8,616, the Nasdaq climbed 63.17 points or 3.5% to 1,863, and the S&P 500 rose 26.84 points or 3% to 933.
JP Morgan is scheduled to release its results before the markets open, while Google and IBM are due to report after the closing bell.
Traders are also likely to express anxiety over the failure of the discussions between the lender CIT Group and the Treasury Department and its probable impact on the small and mid-sized businesses in the country. According to reports, CIT Group is likely to file for bankruptcy protection on Friday.
The economic calendar of the day is also fairly busy, with a slew of key market moving numbers such as the weekly jobless claims, the results of the Philadelphia Fed's manufacturing survey and the National Association of Homebuilders' housing market index due to be released over the course of the day. These reports are likely to shed light on the key vehicles of growth, namely housing, manufacturing and consumer spending, which in turn is a function of conditions in the job market.
The problems in the housing sector continue unabated. Releasing its Midyear 2009 U.S. Foreclosure Market Report, RealtyTrac, the online marketplace for foreclosure properties, said that U.S. foreclosure activity increased 11% sequentially in the second quarter and was up 20% from the year-ago period.
In corporate news, Financial services provider American International Group Inc. (AIG) said that it will accelerate efforts to position American Life Insurance Co. or Alico as an independent company, and seek an initial public offering and public listing in New York, depending on market conditions and subject to regulatory approval.
After the markets closed Wednesday, Programmable chipmaker Xilinx Inc. (XLNX) said its first quarter profit plunged 56% from last year, hurt by sales decline in all geographies and end markets. Looking ahead, the company said it expects second quarter 2010 sales to be up 2% to 6% sequentially.
Food and beverage can maker Crown Holdings, Inc. (CCK) said that its second quarter profit rose from last year, helped by improved gross margins, better cost control and lower interest expenses.
Specialized transportation and logistics service provider Landstar System Inc. (LSTR) reported a decline in profit for the second-quarter, as revenues declined negatively impacted by the severe recession in the domestic and global economies. Both earnings and revenues came in short of analysts' consensus estimate.
Light sweet crude oil for August delivery is currently trading at $60.85 down $0.69 from the close at its previous close in New York at $61.54 in the previous session. Earlier, the prices briefly rose above the $62 a barrel mark. The dollar is strengthening against the Euro euro and the pound Pound, while weakening against the Japanese Yen amid concerns about the possible bankruptcy filing by CIT Group.
The markets across Europe are showing a mixed trend after three days of gains awaiting results from JP Morgan, IBM and Google. The CAC-40 Index is up 0.28%, and the DAX Index is rising 0.21%, while the FTSE Index in the U.K is down 0.25%.
In the economic news around Asia-pacific region, the National Bureau of Statistics in China revealed that the country's gross domestic product grew at a faster pace in the second quarter after rising at the slowest pace on record in the first quarter. The Bureau said that the GDP grew 7.9% year-on-year in the second quarter, faster than the 6.1% growth in the first quarter, and above economists' expectations of 7.8% growth. In the first half of the year, the yearly growth was 7.1%.
The Asian markets ended mostly higher. However, most of the markets were ended off their highs, as traders preferred to take profit and move to the sidelines ahead of earnings from JP Morgan, IBM and Google in the U.S.
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