Markets Set To Pause Following Recent Rally

(RTTNews) - The major U.S. index futures are pointing to a mixed opening on Friday, with sentiment reflecting caution among traders concerning the overbought levels of the markets despite strengthening hopes that the economic momentum would be preserved. That said, some key bank earnings released earlier in the day have been encouraging, boosting hopes concerning corporate profit growth. The markets may also focus on the results of a consumer sentiment survey. Asian stocks closed mixed earlier in the day, while the European markets are seen moving higher amid some volatility.

U.S. stocks rallied on Thursday on the extended lease of life provided for the rally by Federal Reserve Chairman Ben Bernanke when he suggested that the stimulatory environment will prevail in the foreseeable future. The major averages opened higher and moved sideways until late afternoon trading. Thereafter, the indexes saw further upside before closing notably higher. The Dow and the S&P 500 reached fresh record closing highs.

The Dow Industrials ended up 169.26 points or 1.11 percent at 15,461 and the S&P 500 Index closed 22.40 points or 1.36 percent higher at 1,675, while the Nasdaq Composite Index added 57.55 points or 1.63 percent before closing at 3,578.

All thirty of the Dow components closed higher, with Intel (INTC), Alcoa (AA), Microsoft (MSFT), Disney (DIS) and Caterpillar (CAT) leading the gains.

Most sectors advanced, with the exception of some banking stocks. Gold and housing stocks were among the best performers of the session.

On the economic front, initial claims for unemployment benefits unexpectedly rose by 16,000 to 360,000 in the week ended July 6th. The four-week average rose to 351,750 from 345,750 in the previous week. Continuing claims calculated with a week's lag rose to 2.98 million units in the week ended June 29th from 2.95 million units.

Currency, Commodity Markets

Crude oil futures are rising $0.72 to $105.63 a barrel after ending Thursday's session down $1.61 at $104.91 a barrel. Gold futures are currently slipping $7.90 to $1,272 an ounce. In the previous session, gold climbed $32.50 to $1,279.90 an ounce.

Among currencies, the U.S. dollar is trading at 99.58 yen compared to the 98.96 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3037 compared to yesterday's $1.3097.

Asia

The Asian markets showed some apprehension after their recent gains and closed mixed amid the release of a weak growth forecast by Chinese Finance Minister Lou Jiwei. In the process, the markets overlooked the strong finish by Wall Street stocks overnight.

Japan's Nikkei 225 average moved about with a lack of conviction, flitting back and forth across the unchanged line a couple of times before closing up 33.67 points or 0.23 percent at 14,506. Nippon Sheet Glass rallied 10.78 percent, while Toho Zinc, Dainippon Screening, Nippon Soda and Hokuetsu Kishu Paper also advanced notably. On the other hand, retail, real estate and some utility stocks declined.

Australia's All Ordinaries opened higher and rose steadily in early trading. After " giving back some ground, the index went about a consolidation move, closing up 10.60 points or 0.21 percent at 4,958. Material stocks advanced strongly in the session, helping to offset weakness among most other sectors.

Meanwhile, Hong Kong's Hang Seng Index closed at 21,269, down 168.50 points or 0.79 percent. The Chinese Shanghai Composite was the worst performer among the regional indexes as it ended down 1.62 percent.

On the economic front, Singapore's second quarter GDP rose 15.2 percent sequentially. The GDP growth was stronger than the 8 percent rate expected by economists.

A report released by the Australian Bureau of Statistics showed that the total number of owner-occupied home loans in Australia was up a seasonally adjusted 1.8 percent month-over- month in May. This missed forecasts for a 2.2 percent increase following the 1.2 percent increase in April.

Revised industrial production data for May released by Japan's Ministry of Economy, Trade and Industry showed that the growth in industrial production was downwardly revised to show a 1.9 percent increase.

Europe

Despite seeing some degree of volatility, European stocks are currently higher, savoring some domestic deal speculation, better than expected bank earnings across the Atlantic and amid the release of industrial production data from the eurozone, which declined for the first time in four month, although in line with expectations.

In corporate news, Schneider Electric made an offer to buy O.K. Invests for 3.3 billion pounds. Swiss reinsurer Swiss Re confirmed an approach for U.K. life insurer Phoenix Group.

U.S. Economic Reports

With energy prices showing a substantial increase, the Labor Department released a report showing that U.S. producer prices rose by more than expected in the month of June. The Labor Department said its producer price index rose by 0.8 percent in June following a 0.5 percent increase in May.

Economists had been expecting the price growth to match the increase seen in the previous month. Excluding food and energy prices, core producer prices edged up by 0.2 percent in June after inching up by 0.1 percent in May. The increase in core prices matched economist estimates

Reuters and the University of Michigan will release the results of their preliminary consumer sentiment survey at 9:55 am ET. The consumer sentiment index is expected to have remained unchanged at 84.1.

Philadelphia Federal Reserve Bank President Charles Plosser and St. Louis Federal Reserve Bank President James Bullard are due to participate in a panel discussing the economic outlook in Jackson Hole, Wyoming at 2:45 pm ET. Additionally, San Francisco Federal Reserve Bank President John Williams will speak on moderation in monetary policy in Vancouver, British Colombia at 5:15 pm ET.

Stocks in Focus

JPMorgan Chase (JPM) posted second quarter net income of $1.60 a share, compared with $1.21 a share, in the year-ago quarter. The earnings exceeded estimates. On a managed basis, the firm clocked revenue of $26.0 billion compared with last year's $22.9 billion, with reported total net revenue rising to $25.21 billion, from $22.18 billion.. Analysts estimated revenues of $24.84 billion for the quarter.

Peer, Wells Fargo (WFC) reported better than expected second quarter results.

Dell (DELL) announced that the special committee of its board has cautioned that billionaire investor Carl Icahn's entreaties that the company pursue an appraisal with respect to the Dell acquisition misrepresents the related risks and costs. The company noted that a potential termination of the deal in the wake of shareholders not voting in favor of the deal will deprive them of the opportunity to receive the $13.65 per share cash merger. Therefore, the committee urged the shareholders not to be swayed by Icahn's appraisal option and reaffirmed its recommendation for embracing the $13.65 per share all cash merger.

H&R Block (HRB) said it has reached an agreement to sell all assets and transfer liabilities of H&R BlockBank to Republic Bank and Trust Co. The company expects the transaction to result in limited one-time charges in fiscal year 2014 and upon completion of the transaction, H&R Block Bank will cease to exist.

Infosys Technologies (INFY), which re-appointed co-founder and former chairman NR Narayana Murthy as its executive chairman of the board last month, reported a marginal rise in first-quarter profit, benefiting from higher revenues and lower income tax expenses. The earnings and revenues topped Wall Street expectations. The company also backed its full year revenue forecast.