RTTNews - U.S. stocks are set for a higher opening Wednesday morning, with futures moving higher in reaction to positive earnings from chip maker Intel (INTC) and programmable chip maker Altera (ALTR). An improving demand environment in the tech sector is a pointer towards a recovery in the making, although recovery claims can only be taken with a pinch of salt, given the still weak consumer, housing and jobs data.
As of 6.30 am ET, the Dow Futures were up 85 points, the S&P Futures were up 11.40 points, and the Nasdaq 100 futures were up 27.25 points.
Tuesday, stocks ended in positive territory, led by some late buying activity, as the major averages meandered back and forth across the unchanged line for most of the session. While the economic numbers were better than expected, the quality of growth raised apprehensions, more than offsetting the positive sentiment generated by better-than-expected results from Goldman Sachs (GS) and Johnson & Johnson (JNJ).
A report released by the Commerce Department revealed that retail sales increased by a little more than expected in June, although the sales growth was due in large part to higher gasoline prices. The report showed that retail sales rose 0.6% in June following an unrevised 0.5% increase in May. Economists had been expecting retail sales to increase by a modest 0.4%. Excluding increases in gas station and motor vehicle and parts sales, retail sales actually fell 0.2 percent for the month.
The U.S. Labor Department revealed that producer prices, a key measure of wholesale inflation, rose 1.8% in June, following a 0.2% increase in the previous month. Core producer prices, which exclude food and energy prices, climbed 0.5%.
Rail-road stocks, gold, oil service, natural gas, semiconductor and airline stocks posted gains, while the healthcare sector continued to be the laggard.
The Dow closed up by 27.81 points or 0.3% at 8,359, the Nasdaq advanced by 6.52 points or 0.4% to 1,800 and the S&P 500 rose by 4.79 points or 0.5% to 906.
It is going to be yet another busy day for traders, as they will look forward to the release of results from Abbott (ABT), Gannett (GCI) and Xilinx (XLNX).
Traders will also closely watch the consumer prices report for June, which is due to be released at 8.30 a.m ET. Economists expect the headline figure to rise 0.6% after climbing by 0.1% last month. Traders will also turn their attention to Federal Reserve's industrial production report for June scheduled for release at 9.15 a.m. ET, with economists expecting a 0.6% decline in output after a 1.1% decline in May.
Also on the agenda would be the results of the New York Federal Reserve's empire state manufacturing survey, slated to be released at 8:30 AM ET. The headline general business conditions index for July is expected to come in at -5. The minutes of the June FOMC meeting is due to be released at 2 pm ET.
After the markets closed Tuesday, chip maker Intel Corp. (INTC) stated that it swung to a second quarter loss, impacted by a charge associated with a $1.45 billion antitrust fine imposed by the European Commission in May. Excluding the impact of the charges, the company's quarterly earnings per share breezed past Wall Street expectations. The company also forecast third quarter revenue well above analysts' current consensus estimate.
Chip maker Altera Corp. (ALTR) said its profit for the second quarter dropped sharply from the prior year on charges related to worldwide equity compensation cost sharing and lower revenues. Earnings, however, were in line with estimates, while revenues came in short.
Networking and communications services provider Adtran Inc. (ADTN) reported a 16% decline in profit for the second quarter from the prior-year period, primarily due to lower sales as cost-conscious customers have slowed down spending amid the economic downturn.
JB Hunt Transport Services Inc. (JBHT), reported a sharp decline in second-quarter profit as revenues decreased 21% from corresponding period a year ago, on weaker demand resulting from the continuing economic recession. Both earnings and revenues for the quarter were short of Wall Street analysts' consensus.
Restaurant chain operator Yum! Brands Inc. (YUM) said its second quarter profit increased 35%, driven by lower-than-anticipated tax rate and one-time gain from increasing its ownership in its business in China.
According to reports, US Airways Group (LCC) is contemplating to trim the airport staff by 600 later in the year citing lower revenue and weak demand for business travel as the primary reason. However, the group reiterated that it is not planning to downsize its capacity though rival airliners had resorted to downsizing their capacity on weak demand.
Light sweet crude oil for August delivery is gaining $0.92 and trading above the $60-mark at $60.44 amid hopes of a recovery in demand. The price of the commodity is likely to be in focus amid the release of the weekly inventory report by the Energy Information Administration at 10:30 am ET. The dollar is trading weaker against the Euro and the Pound, while showing strength against the Japanese currency.
The European markets are trading in positive territory, led by banks, mining and oil stocks following a rise in commodity prices and a rosy outlook for the financial sector. The CAC-40 Index in France is gaining 1.97%, the DAX Index in Germany is rising 1.98% and the FTSE Index in the U.K is gaining 1.69%.
On the economic front, the Eurostat confirmed that annual inflation in the Euro area turned negative for the first time on record in June. Meanwhile, the Office for National Statistics in the UK revealed that the number of people claiming Jobseeker's Allowance benefit in the U.K. increased 23,800 to 1.56 million in June. This was the smallest monthly rise in the claimant count since May 2008 and was much smaller than the expected increase of 41,200.
The Asian markets continued their northward march and ended in the positive territory taking cues from Wall Street where the indices ended in the green Tuesday and chipmaker Intel provided better results for the second quarter raising hopes of a sooner-than-expected recovery.
In a central bank decision, the Bank of Japan retained its key interest rate, and at the same time extended its special funding measures for three months to facilitate corporate financing. The Policy Board of the central bank unanimously voted to hold the uncollateralized overnight call rate at 0.1% as expected. The Bank, however, trimmed the growth forecast for 2010 to 1% from its earlier expectation of a 1.2% rise.
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