Posted on September - 12 - 2010
Soft Data May Bring Uncertainties To The Fore
() - The major U.S. index futures are pointing to a lower opening on Wednesday, with the nervousness that was evident in yesterday’s trading likely to gain ground following the release of a report that showed that manufacturing activity in the New York region cooled off. Although intervention by the Japanese central bank to curb the yen’s strength led to some buoyancy in the Asian markets, the European averages have given back their gains and are currently trading lower.
Uncertainty has come to the fore following the release of some reports that could be qualified at the best as lackluster. Therefore, some flight from risky bets are likely in the session.
U.S. stocks turned in a mixed performance on Tuesday after a four-day rally, as traders expressed uneasiness over the yen’s strength and the impending economic data releases. Notwithstanding the release of the Commerce Department’s retail sales report showing an increase in retail sales for the second straight month, the major averages showed weakness in early trading before recovering over the course of the morning. Stocks experienced some volatility thereafter before closing on a mixed note.
The Dow Industrials fell 17.64 points or 0.17% to close at 10,527 and the S&P 500 Index closed down 0.80 points or 0.07% at 1,121. Meanwhile, the Nasdaq Composite Index rose 4.06 points or 0.18% at 2,290.
Seventeen of the thirty Dow components closed the session lower, with American Express (AXP), Boeing (BA) and Bank of American (BAC) leading the slide. However, Hewlett-Packard (HPQ), Travelers Co. (TRV) and Intel (INTC) rose strongly.
Among the sector indexes, the NYSE Arca Gold Bugs Index surged up by 3.3% on the back of record gold prices, the NYSE Arca Airline Index rose 1.64%, the Philadelphia Semiconductor Index advanced 1.71% and the S&P Retail Index gained 1.21%, while the KBW Bank Index slipped 1.35%.
On the economic front, the Commerce Department said retail sales for August were up 0.4% month-over-month, benefiting from back to school purchases, while economists expected a 0.3% increase. Sales, excluding autos, rose 0.6%, also exceeding expectations for a 0.3% increase. Core retail sales, excluding autos, gasoline and building materials, rose 0.6% following a 0.1% drop in July. Food/beverage, gasoline station and clothing sales showed solid strength, while auto, electronics appliance and furniture sales deteriorated.
Meanwhile, a separate report released by the Commerce Department showed that business inventories at the end of July were up 1% compared to the previous month, while economists estimated a more modest 0.7% increase. Wholesale inventories, accounting for roughly a quarter of business inventories, were primarily responsible for the upside. Meanwhile, wholesale sales increased 0.7% and consequently, the inventory to sales ratio remained unchanged at 1.26.
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