Stocks Regain Ground Following Initial Downward Move
After
closing lower in the three previous sessions, stocks saw some further
downside at the start of trading on Thursday. The major averages slide
firmly into negative territory, although selling pressure waned not long
after the open.
The major averages have climbed well off their lows for the young session but currently remain in the red. The Dow is down 81.28 points or 0.6 percent at 12,889.78, the Nasdaq is down 2.78 points or 0.1 percent at 2,917.43 and the S&P 500 is down 8.31 points or 0.6 percent at 1,36.83.
The
initial weakness on Wall Street was partly due to a negative reaction
to comments by European Central Bank President Mario Draghi, who traders
felt failed to live up to last week's promise to do whatever is
necessary to support the beleaguered eurozone.
Speaking at a
press conference following the ECB's monetary policy meeting, Draghi
told reporters that the central bank "may undertake outright open market
operations." Traders seemed disappointed that there was not more
conviction behind Draghi's remarks.
Carl Weinberg, Chief
Economist at High Frequency Economics, said, "Once again, we have no
commitment to action from the ECB, and no execution of promises
previously made."
"Nothing seems set to happen now," he added.
"Traders and investors who expected immediate action are, and should be,
disappointed."
The markets did not see much follow-through on
the early downward move, however, as traders shifted their focus to
tomorrow's monthly U.S. jobs report from the Labor Department.
Ahead of the monthly report, the Labor Department released a report showing a smaller than expected increase in initial jobless claims in the week ended July 28th.
The
report showed that initial jobless claims crept up to 365,000 from the
previous week's revised figure of 357,000. Economists had expected
jobless claims to climb to 370,000 from the 353,000 originally reported
for the previous week.
Nonetheless, natural gas stocks
continue to see considerable weakness on the day, as reflected by the
2.3 percent loss being posted by the NYSE Arca Natural Gas Index. Apache
and Williams are posting notable losses are reporting their quarterly
results.
Brokerage, biotechnology, and steel stocks are also
seeing significant weakness, with Knight Capital Group once again
leading the brokerage sector lower after revealing that a trading glitch
resulted in a $440 million loss.
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Thursday. Japan's Nikkei 225 Index crept up by 0.1 percent, while Hong Kong's Hang Seng Index ended the day down by 0.7 percent.
Meanwhile, the major European markets have turned lower over the course of the trading day. The U.K.'s FTSE 100 Index is down by 0.5 percent, while the German DAX Index and the French CAC 40 Index have tumbled by 1.4 percent and 1.6 percent, respectively.
In the bond market, treasuries are
seeing notable strength on the heels of the headlines out of Europe.
Subsequently, the yield on the benchmark ten-year note, which moves
opposite of its price, is down by 5.3 basis points at 1.486 percent.
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TSX Dips At Open Thursday
Toronto stocks
dipped at open Thursday amid selling across a variety of sectors, with
the S&P/TSX Composite Index losing 103.50 points or 0.89 percent to
11,515.03.
The Energy Index was down over 1 percent, with
Petrominerales diving over 13 percent after reporting a much lower third
quarter net earnings.
Cenovus Energy and Suncor Energy
lost around 2 percent each. Oil transporter Enbridge Inc. shed nearly 2
percent after posting a steep decline in its second-quarter earnings.
International gold miner Centerra Gold
was down 2 percent after slipping into the red in second-quarter.
Financial services company Home Capital Group eased 0.50 percent even
after reporting improved second quarter net income.
Meanwhile, base-metals miner First Quantum Minerals Ltd. edged up 1 percent even after reporting a lower second-quarter net earnings.
The
price of crude oil was firm near $90 Thursday morning as demand worries
eased amid falling inventories. Wednesday during trading hours, the EIA
revealed that U.S. crude oil stocks dived 6.50 million barrels and
gasoline stocks shed 2.20 million barrels in the weekended July 27.
Crude for September edged down $0.72 to $88.19 a barrel.
Financial services company Home Capital Group
reported improved second quarter net income of C$53.2 million or C$1.54
per share compared to C$48.2 million or C$1.38 per share for the
year-ago quarter. Excluding a tax adjustment, net income for the latest
quarter was C$55.2 million or C$1.60 per share. Analysts were expecting
the company to report a earn C$1.53 per share this quarter.
Software solutions provider Constellation Software Inc.
reported second quarter net income of $17.59 million or $0.83 per share
down from $55.99 million or $2.64 per share in the year-ago period.
However excluding items, adjusted net income rose to $36.16 million or
$1.71 per share from $33.51 million or $1.58 per share in the prior-year
quarter.
Insurance services provider Great-West Lifeco Inc.
reported second quarter net profit of C$491 million or C$0.517 per
share, lower than C$526 million or C$0.553 per share last year. Analysts
were expecting the company to report a earn C$0.48 per share this
quarter.
Communications and consumer electronics company Wi-Lan Inc.
reported second-quarter GAAP net loss of $0.1 million, or breakeven per
share, compared to GAAP earnings of $10.3 million, or $0.08 per share
in the same period last year. Adjusted earnings were $10.1 million or
$0.08 per share compared to $20.8 million or $0.17 per share in the
comparative period. Analysts were expecting the company to report
earnings of $0.08 per share.
Oil transporter Enbridge Inc.
posted a steep decline in its second-quarter earnings at C$11 million
or C$0.01 per share compared to C$302 million or C$0.40 per share last
year. However, adjusted earnings per share were C$0.36 up from C$0.34 in
the same quarter a year ago. Analysts were expecting the company to
report earnings of $0.38 per share.
International pharmaceuticals company Valeant Pharmaceuticals International,
Inc. slipped into the red in second quarter, reporting net loss of
$21.6 million or $0.07 per share for the quarter compared to a profit of
$56.36 million or $0.17 per share last year.
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European Stocks Broadly Higher At Mid-day
European stocks
rose for a second day on Thursday as investors await key interest rate
decisions in the eurozone and Britain. Investor mood remains slightly
upbeat after German daily Sueddeutsche Zeitung reported that the
European Central Bank and the euro zone's permanent rescue fund, the
European Stability Mechanism, were planning coordinated action to buy
Spanish and Italian government bonds.
Meanwhile, Spain
successfully raised more than the maximum target of EUR 3 billion from
its debt auction at higher costs, with 10-year bond yields inching up to
6.647 percent, up from the 6.43 percent paid at the prior auction on
July 5.
The Euro STOXX 50 Index is currently up 0.63
percent, while the broader Stoxx Europe 50, which also includes U.K.
stocks, is moving up 0.72 percent. Around Europe, the German DAX,
France's CAC 40, the U.K.'s FTSE 100 and Switzerland's SMI are moving up
between 0.3 percent and 0.9 percent.
The Bank of England
will announce its latest interest rate decision in a short while from
now, while the ECB's decision is due at 7.45 am ET. As expectations
remain high for strong European Central Bank action to quell the
region's sovereign debt crisis, there is considerable scope for
disappointment.
Asian markets ended on a mixed note after
the Federal Reserve moved a step closer to pumping additional stimulus,
but didn't announce any measures following last month's extension of
Operation Twist. Offering a sobering assessment of the U.S economy, the
Fed predicted that economic growth would remain moderate over the coming
quarters.
In stock specific action, shares of Deutsche Post DHL are
climbing 4.2 percent after the German postal and logistics firm lifted
its fiscal 2012 forecast for EBIT, a key earning metric.
Continental AG
is rallying 3.3 percent after the tire maker reported higher second
quarter net income and sales. Airliner Lufthansa is climbing 3 percent
after it posted operating profit that beat consensus estimates.
ING Group
is moving up 0.4 percent in Amsterdam after the company said it is
reviewing strategic options for ING Direct Canada and ING Direct UK.
In
economic releases, eurozone industrial producer prices fell 0.5 percent
month-over-month in June, the same rate of decline as seen in the prior
month, Eurostat reported. Economists had expected a more modest
decrease of 0.4 percent. On a yearly basis, inflation eased to 1.8
percent from 2.3 percent in May.
Separately, data from Markit Economics showed that the U.K. construction sector logged
a bigger than expected growth in July, driven by an increase in
commercial output. The Chartered Institute of Purchasing &
Supply/Markit Purchasing Managers' Index rose to 50.9 in July from 48.2
in June. The reading was forecast to rise to 48.7.
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Asian Stocks End Lower Ahead Of ECB
Most stock markets
in the Asian region ended lower Thursday after the Federal Reserve
yesterday disappointed traders by refraining from any new stimulus
measures in their latest decision on monetary policy. In a sign that
policy makers are concerned with the pace of the recovery, Federal Open
Market Committee members repeated their promise to keep interest rates
at zero until late 2014.
However, hopes of stimulus measure from the European Central Bank supported stocks.
In the commodities markets,
the price of crude oil was extending gains Thursday after an official
data revealed U.S. crude oil stocks plummeted last week amid lower
imports. Wednesday during trading hours, the EIA revealed that U.S.
crude oil stocks dived 6.50 million barrels and gasoline stocks shed
2.20 million barrels in the weekended July 27.
The price of gold slipped back near $1,600 as the U.S. dollar was trading firm after Federal Reserve refrained from any new stimulus measures.
The Japanese market
settled marginally higher, recovering from previous session's steep
losses, with the Nikkei Index edging up 11.33 points or 0.13 percent to
8,653.18 as investors lapped up stocks that were battered Wednesday.
Seiko Epson Corp
edged up from its historical low, adding just over 1 percent and
Sumitomo Heavy Industries recovered 2 percent today, after falling about
15 percent in the previous session. Meanwhile, Fast Retailing shed
close to 3 percent as traders turned cautious ahead of its earnings
reports, due out after the market hours.
Meanwhile, the China's Shanghai Composite
index extended losses for a third session, easing 12.18 points or 0.57
percent to 2,118.18. Real estate stocks were the major losers amid
speculation that the government is keen in cooling down the red-hot real
estate market.
The Hong Kong market snapped its 5-day
winning streak to end lower, with the Hang Seng Index surrendering
130.18 points or 0.66 percent to 19,690.20. Traders overlooked
better-than-estimated retail sales data out of Hong Kong.
Hong Kong's retail sales
increased at a faster pace in June, and the rate of growth exceeded
economists' expectations, data released by the Census and Statistics
Department showed Thursday.
Poly Real Estate Group Co. and Beijing Capital Development Co. were among the notable losers, dipping close to 10 percent each. China Railway Construction Corp. slipped over 2 percent amid reports that the real estate company is eying for a 15 percent stake in an Italian soccer club.
On the other hand, Baoshan Iron & Steel Co. ended as a notable gainer on speculation that the steel company would opt for buy back its shares.
In Hong Kong, heavyweight stocks HSBC Holdings PLC and China Mobile Ltd. were down about 1 percent each.
Australia stocks ended marginally higher after retail sales data came in better-than-estimated. The benchmark S&P/ASX200 index edged up 6.7 points or 0.16 percent, at 4,269.50, a 10-week high and the broader All Ordinaries index was up 7.40 points or 0.17 percent, at 4,290.10.
Stocks in New Zealand ended near a three-month high helped by upsurges in telecommunications and construction stocks, with the NZX 50 index rising 33.46 points or 0.9 percent to 3564.11.
Shares of Telecom rose
close to 2 percent and telecommunications network operator Chorus added
over 1 percent. Country's largest construction company, Fletcher
Building was under the buyers' radar ahead of its earnings reports.
Elsewhere, the South Korean Kospi shed
10.53 points or 0.56 percent to 1,869.40. Samsung Electronics lost
close to 3 percent on profit taking as the stock moved near a 3-month
high int eh previous session. Markets in Singapore and India were in the
red, while Malaysian stocks settled marginally higher.
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Crude Steady Near $90
The price of crude oil
was firm near $90 Thursday morning as demand worries eased amid falling
inventories. Light Sweet Crude Oil (WTI) futures for September
delivery, edged up $0.27 to $89.18 a barrel. Yesterday, oil ended higher
after an official data revealed U.S. crude oil stocks plummeted last
week amid lower imports.
Wednesday during trading hours, the EIA revealed
that U.S. crude oil stocks dived 6.50 million barrels and gasoline
stocks shed 2.20 million barrels in the weekended July 27.
This
morning, the U.S. dollar was paring recent gains versus the euro and
ticking lower against sterling. The buck was moving lower versus the yen
and the Swiss franc.
In economic news, euro zone industrial
producer prices fell 0.5 percent month-on-month in June, the same rate
of decline as seen in the prior month, Eurostat reported. The rate was
marginally bigger than the expected decrease of 0.4 percent.
The Bank of England
today maintained the asset purchase programme at GBP 375 billion and
the key interest rate at a historic low of 0.50 percent, as widely
expected.
The European Central Bank is likely to leave its
benchmark interest rate at its record low of 0.75 percent. The bank
will announce its rate decision at 7.45 am ET.
Traders will
look to the weekly jobless claims data from the U.S. Labor Department,
due out at 8.30 a.m ET. Economists expect claims to increase to 370,000
in the recent reporting week from 353,000 in the previous week.
Later
during the session, the Commerce Department will release its report on
factory goods orders for June. Economists estimate a 0.7 percent
increase in orders for factory goods, the same pace of increase as in
the previous month.
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