Futures lower after Cisco earnings, weaker dollar
Investors also remain concerned over when the Fed will begin to taper its stimulus programs.
U.S. equity futures were slightly lower in early premarket trade following some weak guidance from Cisco (CSCO) for the upcoming quarter and as the dollar traded lower. Also, some weak earnings in Europe weighed on sentiment.
In other news, the South China Morning Post followed up its report from Monday on Agbank, one of four state-owned lenders, saying it made other large loans. The moves to lend to local governments to invest in diversifying local economies is being considered a stealth fiscal stimulus.
Japan's chief cabinet secretary and finance minister both spoke overnight, refuting claims from earlier this week that the government was going to cut corporate taxes to offset a sales tax hike. The move was cheered by markets earlier this week when it was first rumored.
Retail sales in the U.K. rose a whopping 1.1% in July. This was much better than the anticipated gain of 0.6% and an acceleration from June's 0.2% rise. Retail sales were up 3.1% from a year ago.
S&P 500 futures fell 2 points to 1,680.00.
The EUR/USD was higher at 1.3286.
Spanish 10-year government bond yields were flat at 4.42%.
Italian 10-year government bond yields were flat at 4.18%.
Gold rose 0.52% to $1,340.40 per ounce.
Asian shares were mostly lower overnight, led down by Japanese stocks on the news that senior Japanese officials refuted the tax cut rumors. The Japanese Nikkei 225 Index fell 2.12% and the Topix Index dropped 1.67%. In Hong Kong, the Hang Seng Index was flat and the Shanghai Composite Index fell 0.87% in China. Also, the Korean Kospi rose 0.57% and Australian shares fell 0.1%.
European shares were lower on weak sentiment from Asia and some poor earnings reports, while Italy's market was closed. The Spanish Ibex Index fell 0.01% and the French CAC 40 Index declined 0.26%. Meanwhile, the German DAX dropped 0.44% and U.K. shares fell 0.44%.
Commodities were mostly higher overnight with oil rising and silver once again leading gains. WTI crude futures rose 0.59% to $107.48 per barrel and Brent crude futures gained 0.93% to $111.23 per barrel. Copper futures dropped 0.4% to $332.90 per pound. Gold was higher and silver futures rose 1.3% to $22.07 per ounce.
Currency markets were on the move as the dollar weakened across the board. The EUR/USD was higher at 1.3286 and the dollar fell against the yen to 97.86. Overall, the Dollar Index fell 0.23% on weakness against the pound, the Canadian dollar, the yen, the euro, and the Swiss franc.
Earnings reported Wednesday
Key companies that reported earnings Wednesday include:
Cisco (CSCO) reported fourth quarter earnings per share of $0.52 vs. $0.51 expected on revenue of $12.42 billion vs. $12.4 billion expected. However, the company announced it was cutting 4,000 jobs and will see charges from the layoffs, which led the company to guide Q1 earnings per share between $0.50-0.51 vs. the consensus estimate of $0.51. The company also guided revenue lower than expected and sees revenue between $12.23 billion and $12.47 billion vs. the consensus forecast of $12.46 billion.
Deere and Co. (DE) reported third quarter earnings per share of $2.56 vs. $2.16 expected on revenue of $10.0 billion vs. $9.28 billion expected.
Macy's (M) reported second quarter earnings per share of $0.72 vs. $0.79 expected on revenue of $6.07 billion vs. $6.28 billion expected.
Silver Wheaton (SLW) reported second quarter earnings per share of $0.20 vs. $0.26 expected on revenue of $166.9 million vs. $194.17 million expected.
NetApp (NTAP) reported first quarter earnings per share of $0.53 vs. $0.49 expected on revenue of $1.52 billion vs. $1.53 billion expected. The company also guided second quarter earnings per share between $0.60-0.65 vs. the consensus estimate of $0.63 and revenue between $1.56-1.66 billion vs. the estimate $1.63 billion.
Stocks moving in the premarket included:
Cisco (CSCO) shares fell 8.82% after its fourth quarter report but shares were off of the after-hours lows by about 2%.
NetApp (NTAP) shares declined 3.47% premarket on some weak guidance as well.
J.C. Penney (JCP) shares rose 1.83% after rallying into the close Wednesday on reports that sales improved in July.
Newmont Mining (NEM) shares rose 1.44% premarket as metals prices rebounded.
Notable companies expected to report earnings Thursday include:
Wal-Mart (WMT) is expected to report second quarter earnings per share of $1.25 vs. $1.18 a year ago on revenue of $119.7 billion vs. $114.3 billion a year ago.
Kohl's Corp. (KSS) is expected to report second quarter earnings per share of $1.05 vs. $1.00 a year ago on revenue of $4.3 billion vs. $4.2 billion a year ago.
Perigo (PRGO) is expected to report fourth quarter earnings per share of $1.56 vs. $1.28 a year ago on revenue of $1.00 billion vs. $831.77 million a year ago.
On the economics calendar Thursday, Federal Reserve President James Bullard is expected to speak, followed by the CPI report and initial jobless claims. Later, the Empire State manufacturing index, TIC flows, industrial production, the NAHB housing market index, and the Philly Fed survey are due out. Overnight, the German home price index and the eurozone CPI report are due out.
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