Earnings And Economic Woes May Pressure Stocks

(RTTNews) - The major U.S. index futures are pointing to a notably lower opening on Tuesday, with the mood turning markedly negative following the release of disappointing results and guidance many big name companies, including Pfizer, Procter & Gamble and Caterpillar. A report released short while ago showed that durable goods orders unexpectedly dropped in December, while the results of a house price survey fell in November. The weak data and earning news could aggravate risk aversion in the markets.

U.S. stocks managed to end Monday's session higher despite trading in a lackluster manner for much of the session. The major averages opened lower amid geopolitical worries following the Greek election results. However, the averages recouped their losses over the course of the session before ending modestly higher.

The Dow Industrials, which languished below the unchanged line for the bulk of the session, ended up 6.10 points or 0.03 percent at 17,679, while the S&P 500 Index closed 5.27 points or 0.26 percent higher at 2,057 and the Nasdaq Composite added 13.88 points or 0.29 percent before closing at 4,772.

Seventeen of the thirty Dow components closed higher, while the remaining thirteen stocks declined. Chevron (CVX), Home Depot (HD), McDonald's (MCD), Pfizer (PFE) and Exxon Mobil (XOM) were among the biggest gainers of the session. On the other hand, United Technologies (UTX), Intel (INTC) and American Express (AXP) declined notably.

Among the sectors, biotechnology, energy, gold and housing stocks gained ground in the session, while computer hardware stocks came under selling pressure.

Currency, Commodity Markets

Crude oil futures are rising $0.34 to $45.49 a barrel after ending down $0.44 at $45.15 a barrel on Monday. Meanwhile, gold futures are climbing $4.50 to $1,283.90 an ounce. On Monday, gold fell $13.20 to $1,279.40 an ounce.

Among currencies, the U.S. dollar is trading at 117.46 yen compared to the 118.46 yen it fetched at the close of trading on Monday. Against the euro, the dollar is trading at $1.1328 compared to yesterday's $1.1238.

Asia

Most Asian markets advanced, although the Hong Kong and Chinese markets bucked the uptrend. Assurances from the Eurogroup that it aims to keep Greece in the eurozone seemed to have allayed worries for the time being.

The waning risk aversion dragged the yen lower, which was positive for the Japanese markets. The Nikkei 225 average opened higher and moved roughly sideways throughout the session before ending up 299.78 points or 1.72 percent at 17,768.

A majority of stocks advanced in the session, led by Kyowa Hakko Krin, Keisei Electric Railway, MEIJI Holding, JFE Holding and Nippon Sheet Glass.

The Australian market, which opened after Monday's public holiday, rallied strongly. The All Ordinaries started on a nervous note but advanced thereafter. After stabilizing in the middle of the session, the index rose steadily yet again, closing 43.30 points or 0.79 percent higher at 5,512.

Consumer, healthcare, financial IT, real estate and telecom stocks rose notably in the session, while material and energy stocks came under selling pressure.

Meanwhile, China's Shanghai Composite Index fell 30.22 points or 0.89 percent before closing at 3,353, and Hong Kong's Hang Seng Index ended at 24,807, down 102.62 points or 0.41 percent.

On the economic front, the results of a survey by the National Australia Bank showed that business conditions in Australia eased slightly, with the corresponding index slipping to 4 in December from 5 in November. At the same time, the business confidence index rose 1 point to 2.

The Chinese National Bureau of Statistics reported that industrial profits in China fell by 8 percent year-over-year in December following a 4.2 percent drop in November.

Europe

European stocks opened lower and saw further downside in early trading, as profit taking after eight straight sessions of gains took a toll on the markets. The weakness comes despite Eurogroup Chairman and Netherlands' finance minister Jeroen Dijsselbloem brushing off questions regarding a Greek exit as irrelevant. The negative sentiment has intensified following the release of weak U.S. data and earnings.

Dijsselbloem reiterated that the Eurogrouop remains committed to keeping the eurozone together along with the leaders of the largest political parties in Greece. Weak domestic earnings are also impacting sentiment.

In corporate news, Philips reported a sharp drop in its fourth quarter profits and also warned that it may not hit its financial targets for 2016, citing operational bottlenecks at its healthcare business segment.

Novartis (NVS) reported a decline in profits and slower than expected sales growth for its fourth quarter, although it forecasts faster sales and profit growth for 2015.

Telecommunication equipment maker Ericsson (ERIC) reported below consensus earnings for its fourth quarter, weighed down by weak growth in North America. Citing the economy and lower oil prices, Siemens (SI) reported a decline in its first quarter profits.

On the economic front, first estimate released by the U.K. National Bureau of Statistics showed that the U.K. economy expanded by less than expected in the fourth quarter.

U.S. Economic Reports

The two-day FOMC meeting gets underway, although the post-meeting policy statement is not expected until tomorrow.

New orders for U.S. manufactured durable goods showed a substantial decrease in the month of December, according to a report released by the Commerce Department, with the drop partly due to a sharp decline in orders for transportation equipment.

The report said durable goods orders tumbled by 3.4 percent in December following a revised 2.1 percent decrease in November. Economists had expected durable goods orders to increase by 0.5 percent compared to the 0.7 percent drop originally reported for the previous month. Excluding orders for transportation equipment, orders fell by a more modest 0.8 percent in December compared to a 1.3 percent decrease in November.

At 9 am ET, the S&P/Case-Shiller house price index for November is due for release. The house price index is expected to have risen a seasonally adjusted 0.6 percent month-over-month in November compared to a 0.8 percent increase in October. Annually, prices may have risen an unadjusted 4.3 percent, slower than the 4.5 percent increase in October.

Markit is scheduled to release the preliminary results of its service sector survey for January at 9:45 am ET. The service sector purchasing managers' index is expected to rise to 53.8 from 53.6 in December.

The Commerce Department will also release its new home sales report for December at 10 am ET. The consensus estimate calls for new home sales to come in at a seasonally adjusted annual rate of 452,000.

In November, new home sales fell 1.6 percent month-over-month to 438,000, below economists' expectations. The median price of a new home fell 3.2 percent month-over-month to $280,000, but prices were up 1.4 percent annually. Inventories measured in absolute terms rose to 213,000 from 210,000, while inventories measured in terms of months of supply rose to 5.8 months from 5.7 months.

Also at 10 am ET, the Conference Board is set to release the results of its consumer confidence survey for January. Economists expect the consumer confidence index to have risen to 96.

The consumer confidence index rose to 92.6 in December from an upwardly revised reading of 91 for November. The current conditions index climbed 5.1 points to 98.6, while the expectations component slid 0.8 points to 88.5.

The Richmond Federal Reserve is scheduled to release the results of its regional manufacturing survey at 10 am ET. Economists expect a reading of 5.5 for January, lower than December's 7.

Stocks in Focus

Among tech companies, Texas Instruments (TXN) reported a fourth quarter profit that came in line, while its revenues exceeded estimates. The company's first quarter guidance was in line.

Microsoft (MSFT) reported a decline in its second quarter profits, although its earnings and revenues were ahead of estimates.

Rambus (RMBS) reported better than expected fourth quarter earnings but revenues were slightly shy of estimates. The company also said its board has authorized the buy back of 20 million shares. The company's first quarter and full year revenue guidance was weak.

Sanmina's (SANM) second quarter earnings were ahead of estimates, while its revenues trailed expectations. The company's second quarter guidance was lukewarm.

United Technologies' (UTX) fourth quarter earnings matched estimates, while its revenues missed estimates. The company also lowered its 2015 outlook.

DuPont (DD) reported better than expected fourth quarter earnings but below consensus revenues. The company's 2015 operating earnings per share guidance was weak.

Pfizer (PFE) reported better than expected fourth quarter results but issued below consensus guidance for 2015.

Procter & Gamble's (PG) second quarter results trailed estimates but it affirmed it organic sales growth guidance.

Caterpillar (CAT) reported fourth quarter earnings that missed estimates but its revenues were ahead of estimates. The guidance for the full year was weak.

3M's (MMM) fourth quarter earnings beat estimates and its revenues were about in line.

Notwithstanding better than expected fourth quarter results, Bristol-Myers (BMY) issued weak 2015 guidance.

Marriott (MAR) said it has signed definitive agreements to acquire the Delta Hotels and Resorts brand and management and franchise business for C$168 million or around $135 million.

Packaging Corp. of America (PKG) reported fourth quarter results that trailed estimates. The company's earnings guidance for the first quarter was also weak.

Crane (CR) reported in line earnings for its fourth quarter, while its revenues were shy of estimates. The company's 2015 earnings and revenue guidance was below estimates.

A.O. Smith (AOS) announced a 27 percent increase in its dividend to 19 cents per share.

Actavis (ACT) and Allergan (AGN) announced that the SEC has declared effective a registration statement on Form S-4 relating to Actavis' pending acquisition of Allergan.

Amgen (AMGN), Apple (AAPL), AT&T (T), Boston Properties (BXP), Electronic Arts (ERTS), Illumina (ILMN), Juniper Networks (JNPR), Stryker (SYK), U.S. Steel (X), VMWare (VMW), Western Digital (WDC) and Yahoo! (YHOO) are among the companies due to release their quarterly results after the close of trading.