Futures slightly lower after sell-off
Wall Street awaits a slew of economic data coming out this morning.
U.S. equity futures were slightly lower in early premarket trade after another sell-off Wednesday despite an upswing in mergers and acquisitions activity. Several deals have been announced this week and the M&A market has remained strong in 2013, a key sign of corporate confidence in the economic recovery.
In other news, Japanese flow of funds data showed net selling by domestics for the second consecutive week as the Nikkei Index dropped over 5% and the yen strengthened against the dollar. For the government's stimulus policies to truly take hold, investors would want to see Japanese domestics purchasing foreign assets, which would further aid in the decline in the yen.
Italy sold 5.75 billion euros in five- and 10-year bonds with yields rising in each maturity despite strong demand. The yield on the five-year BTP rose to 3.01% from 2.84% at the previous auction and the yield on the 10-year BTP rose to 4.14% from 3.94%.
Two large M&A deals were announced Wednesday. The first deal involved Smithfield Foods (SFD) being bought for $4.72 billion by a Chinese company. Also, Berkshire Hathaway's (BRK.A) (BRK.B) MidAmerican Energy purchased NV Energy (NVE) for $5.6 billion.
S&P 500 futures fell 3.00 points to 1,644.00.
The EUR/USD was higher at 1.2997.
Spanish 10-year government bond yields rose 2 basis points to 4.44%.
Italian 10-year government bond yields rose 4 basis points to 4.22%.
Gold rose 1.09% to $1,407.00 per ounce.
Asian shares were in flux overnight with Japanese stocks closed sharply lower as the Nikkei Index officially entered correction territory after reaching a five-year high last week. The Japanese Nikkei Index closed 5.15% lower as the Shanghai Composite Index rose 0.13% and the Hang Seng Index declined 0.31%. Also, the Korean Kospi fell 0.05% and Australian shares lost 0.89%.
European shares traded mostly higher overnight save for shares in Spain as the government announced that GDP fell 0.5% last month, in line with expectations, but the previous month's figure was reduced to -0.8% growth from the initial estimate of -0.5%. The Spanish Ibex Index declined 0.07% as the Italian FTSE MIB Index rose 2.1%. Meanwhile, the German DAX rose 1.16% and the French CAC 40 gained 0.12% while U.K. shares added 0.08%.
Commodities were mixed overnight as energy futures lagged and metals gained. WTI crude futures fell 0.77% to $92.41 per barrel and Brent crude futures declined 0.73% to $101.68 per barrel. Copper futures rose 0.29% to $330.65 after Wednesday's drop. Gold was higher and silver futures rose 1.03% to $22.69 per ounce.
Currency markets continued Wednesday's moves as the dollar retreated from recent highs against most other currencies. The EUR/USD was higher at 1.2997 and the dollar fell against the yen to 100.82. Overall, the Dollar Index fell 0.35% on weakness against the Swiss franc, the euro, the pound, and the yen.
Earnings reported Wednesday
Key companies that reported earnings Wednesday include:
Bank of Montreal (BMO) reported second quarter earnings per share of $1.46 vs. $1.50 expected on revenue of $588.7 million vs. $609.73 million expected.
DSW Inc. (DSW) reported first quarter earnings per share of $1.00 vs. $0.90 a year ago on revenue of $601.4 million vs. $588.83 million expected.
Michael Kors Holdings (KORS) reported fourth quarter earnings per share of $0.50 vs. $0.39 expected on revenue of $597.2 million vs. $544.71 million expected.
The Fresh Market (TFM) reported first quarter earnings per share of $0.46 vs. $0.44 expected on revenue of $366.6 million vs. $369.83 million expected.
Stocks moving in the premarket included:
NV Energy (NVE) shares rose 24.43% premarket after the acquisition announcement Wednesday.
Alcoa (AA) shares declined 1.63% premarket after Moody's cut its credit rating to Ba1 from Baa3, which now places the company in junk bond territory.
Newmont Mining (NEM) shares rose 0.88% as gold futures rose back above $1,400.00 per ounce.
Royal Caribbean (RCL) shares declined 1.00% premarket after the ship fire earlier this week.
Notable companies expected to report earnings Thursday include:
Costco (COST) is expected to report third quarter earnings per share of $1.03 vs. $0.88 a year ago.
Joy Global (JOY) is expected to report second quarter earnings per share of $1.58 vs. $2.04 a year ago.
Krispy Kreme Doughnuts (KKD) is expected to report first quarter earnings per share of $0.17 vs. $0.14 a year ago.
Palo Alto Networks (PANW) is expected to report third quarter earnings per share of $0.05 vs. $0.07 a year ago.
Splunk (SPLK) is expected to report a first quarter loss of $0.06 per share vs. a loss of $0.04 per share a year ago.
On the economics calendar Thursday, the latest revision to first quarter GDP is due out as well as initial jobless claims, corporate profits, and the pending home sales index. Also, the Treasury is set to auction seven-year notes. Overnight, Japanese industrial production and the eurozone unemployment rate are expected to be released.
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