Indecision Prevails As Markets Stay Overbought

(RTTNews) - The major U.S. index futures are pointing to a higher opening on Friday, with modest optimism evident despite earnings news flow turning mixed. Some early support may emerge from weak private sector activity from the U.K., which saw both the manufacturing and the services sectors plunging into contraction territory, courtesy the developments on the Brexit front. The weak data could reignite stimulus hopes and in turn lead traders to equities. The dollar is firmer and most commodities are lower. In the absence of any major domestic economic catalysts, save a preliminary manufacturing activity data, valuations concerns may also exert downward pressure on the markets.   U.S. stocks retreated on Thursday, as valuation concerns drove the major averages lower.     The major averages opened mixed following the release of mixed domestic economic data and mostly positive earnings. The Dow Industrials opened lower and saw volatility till early afternoon trading but moved decisively lower thereafter. After declining steadily until late trading, the index cut some of its loss before ending down 77.80 points or 0.42 percent at 18,517.    The S&P 500 Index and the Nasdaq Composite held above the unchanged lint till early afternoon but declined thereafter, ending moderately lower for the session. The S&P 500 Index closed 7.85 points or 0.36 percent lower at 2,165 and the Nasdaq Composite closed at 5,074, down 16.03 points or 0.31 percent.    Among the sectors, gold and biotechnology stocks rallied strongly, but oil service, airline and railroad stocks came under selling pressure.    Twenty-four of the thirty Dow components closed lower for the session and one stock was unchanged, while the remaining five stocks advanced. Intel (INTC), American Express (AXP), Nike (NKE), Goldman Sachs (GS) and Home Depot (HD) were among the biggest losers of the session.    On the economic front, the Labor Department reported that jobless claims unexpectedly edged down to 253,000 in the week ended July 16th from 254,000 in the previous week. The four-week average fell to 257,750 from 259,000. Continuing claims calculated with a week's lag also dropped by 25,000 to 2.128 million in the week ended July 9th.    The results of the Philadelphia Federal Reserve's business outlook survey for July showed that the diffusion index of business activity fell to -2.9 from 4.7 in June. Economists expected a reading of 5. However, the inner details were positive. The new orders index climbed to 11.8 from -3, the shipments index improved to 6.3 from -2.1 and the unfilled orders index rose to 1.9 from -12.6. The employment indexes improved but continued to indicate a contraction. The number of employees index rose to -1.6 from -10.9, and the average workweek index moved up to -3.6 from -13.1.    The Federal Housing Finance Agency's house price index rose 0.2 percent month-over-month in May compared to a downwardly revised 0.3 percent increase in April and the consensus estimate of 0.4 percent. Annually, house prices were up 5.6 percent.    The National Association of Realtors reported that existing home sales rose 1.1 percent month-over-month to a seasonally adjusted annual rate of 5.570 million units in June compared to a downwardly revised 5.510 million-unit rate for May. Economists had expected a 5.475 million-unit rate for the month.  Single-family sales rose 0.8 percent and condominium sales were up 3.7 percent. Existing home inventories fell 0.9 percent to 2.12 million units, and inventories measured in terms of months of supply dipped to 4.6 months from 4.7 months. The median sales price of an existing home rose 3.7 percent to $247,700, resulting in an annual rate of growth of 4.7 percent.    The Conference Board's survey showed that its leading economic indicators index for the U.S. rose 0.3 percent month-over-month in June, in line with estimates and reversing the 0.2 percent drop in May. Interest rate spread, unemployment claims and building permits all positively impacted the index.     Currency, Commodity Markets    Crude oil futures for September delivery are rising $0.15 to $44.90 a barrel after sliding $1 to $44.75 a barrel on Thursday. Gold futures are currently trading at $1,322.80 an ounce, down $8.20 from the previous session's close of $1,331 an ounce. On Thursday, gold climbed $11.70. 

On the currency front, the U.S. dollar is trading at 106.19 yen compared to the 105.82 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1012 compared to yesterday's $1.1026.   Asia    The major Asian markets retreated, weighed down by the weak lead from Wall Street overnight.     The Japanese market fell, as the yen stalled its losses and gained ground. The Nikkei 225 Index opened notably and moved roughly sideways for the rest of the session before ending down 182.97 points or 1.09 percent at 16,627.    A majority of stocks retreated in the session, led lower by export and financial stocks. On the other hand, some food, pharma and telecom stocks moved to the upside.    After opening lower, Australia's All Ordinaries Index fell steadily till late trading and subsequently moved sideways. The index ended down 14.40 points or 0.26 percent at 5,574, snapping a 2-session advance.    Most sectors declined, with consumer staple stocks among the worst hit. On the other hand, the material space saw modest buoyancy.    Hong Kong's Hang Seng index ended 36.22 points or 0.16 percent lower at 21,964, and China's Shanghai Composite Index closed at 3,013, down 26.19 points or 0.86 percent.    On the economic front, the results of a preliminary survey by Markit and Nikkei showed that Japanese manufacturing activity contracted at a slower pace in July, with a PMI score of 49 compared to 48.1 in June. 

Europe    After initial volatility amid the release of private sector activity data from the eurozone and the U.K., European stocks moved solidly higher by early afternoon trading. Stimulus expectations following weak U.K. private sector activity data may have fueled the upside.  However, since then, the averages have turned mixed, with the France's CAC 40 and U.K.'s FTSE holding above the unchanged line, while the German DAX is modestly lower.   In major corporate news, Vodafone (VOD) reported 2.2 percent growth in first quarter organic sales.     On the economic front, flash PMIs released by Markit showed that the private sector in the eurozone grew at the weakest pace in 18 months in July. The composite PMI fell to 52.9 in July from 53.1 in June, while economists expected a reading of 52.5.     The manufacturing PMI for the eurozone fell to 51.9 from 52.8, coming in below the consensus estimate of 52.3. The service sector PMI eased 0.1 points to 52.7 in July but was above the 52.3 expected by economists.    U.K. private sector activity contracted at the steepest pace since early 2009 after the "Brexit" vote, the results of a flash survey by Markit showed. The flash composite output index fell to an 87-month low of 47.7 in July from 52.4 in June. A score below 50 indicates contraction.   The U.K. manufacturing PMI fell to a 41-month low of 49.1 in July, down from 52.1 in June, and the services PMI declined to an 88-month low of 47.4.     U.S. Economic Reports    Markit is set to release the flash estimate of its U.S. manufacturing PMI at 9:45 am ET. Economists expect the index to rise to 51.9 in July from 51.4 in June.    Stocks in Focus 

General Electric (GE) reported second quarter results that exceeded estimates and issued in line 2016 operating earnings per share guidance.

Honeywell (HON) reported above-consensus earnings per share for its second quarter but its sales trailed estimates. While lowering its sales guidance for the full year, the company raised its earnings per share guidance. The company also announced plans to split its Automation and Control Solutions business into Home and Building technologies or HBT and Safety and Productivity Solutions or SPS.

Whirlpool (WHR) reported better than expected second quarter results and raised its 2016 earnings per share guidance.   AT&T (T) reported in line second quarter adjusted earnings per share, but its revenues were shy of estimates.      Capital One (COF) reported below-consensus adjusted earnings per share for the second quarter, but its revenues were ahead of estimates.     Chipotle Mexican Grill's (CMG) second quarter results trailed estimates and its comparable store sale fell more than expected.    E*TRADE (ETFC) reported better than expected second quarter earnings per share, but its revenues were below estimates.    Flex (FLEX) reported in line first quarter adjusted earnings per share and better than expected revenues.    Maxim Integrated (MXIM) reported above-consensus fourth quarter adjusted earnings per share, but its revenues trailed expectations. The company's first quarter guidance was in line.    PayPal (PYPL) reported in line second quarter adjusted earnings per share and its revenues exceeded estimates. The company raised its full revenue guidance, with the revenue and earnings per share guidance in line.    Starbucks' (SBUX) third quarter profits edged past estimates, but its revenues missed expectations. The company's fourth quarter and full year earnings per share guidance was lackluster.    Visa (V) reported above-consensus adjusted earnings per share for its third quarter, but its revenues were shy of estimates.