Following the steep losses registered yesterday as the US debt ceiling deadlock stymied sentiment, the US equity markets are slightly to the upside on the heels of weekly initial jobless claims falling below the key 400,000 mark for the first time since early April. However Treasuries, which have been relatively stable amid the US debt ceiling uncertainty, are higher despite the employment data, while a read on pending home sales is set to be released later this morning. Meanwhile, earnings news is mixed, with Dow member Exxon Mobil Corp missing the Street's bottomline forecasts, while fellow Dow component DuPont exceeded analysts' expectations. Elsewhere, Whole Foods Market Inc and Visa Inc both achieved better-than-anticipated profits. Overseas, Asian markets came under pressure on the debt worries facing the US and Europe, while some disappointing earnings results out of Europe are exacerbating sentiment across the pond.
As of 8:51 a.m. ET, the September S&P 500 Index Globex future is 3 points above fair value, the Nasdaq 100 Index is 8 points above fair value, and the DJIA is 31 points above fair value. WTI crude oil is $0.15 higher at $97.55 per barrel, and the Bloomberg gold spot price is up $2.18 at $1,615.65 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is up 0.3% at 74.27.
Whole Foods Market Inc. (WFM $65) reported fiscal 3Q EPS of $0.50, two cents above the consensus estimate of analysts surveyed by Reuters, with revenues growing 11% year-over-year (y/y) to $2.4 billion, roughly inline with the Street's expectations. The natural and organic foods supermarket said its 3Q same-store sales-sales at stores open at least a year-rose 8.4% y/y, and it is continuing to gain market share at a faster rate than most public food retailers. WFM added that it will accelerate its new store openings.
Visa Inc. (V $88) announced adjusted fiscal 3Q earnings of $1.26 per share, above the $1.23 that the Street was looking for, as revenues increased 14% y/y to $2.3 billion, mostly matching analysts' estimates. The credit card transaction processing firm said it benefitted from increased global payments volume, and solid cross border and processed transaction growth. The company also announced a new $1 billion stock repurchase program.
Dow member Exxon Mobil Corp. (XOM $83) posted 2Q EPS of $2.18, below the $2.33 that analysts had projected, while revenues of $125.5 billion exceeded the $121.4 billion that was expected on the Street.
Fellow Dow component DuPont (DD $52) achieved 2Q profits ex-items of $1.37 per share, above the $1.34 analyst expectation, with revenues rising 19% y/y to $10.3 billion, topping the $9.9 billion that was anticipated by the Street. The company said sales in developing markets grew 29%, while it saw strong performances in its agriculture, performance chemicals and safety & protection units, as well as its acquisition of Danisco. DD raised its full-year EPS outlook, due to the expectation for continued global economic growth.
Jobless claims fall more than expected, more housing data due out later this morning
Weekly initial jobless claims fell below the key 400,000 mark for the first time since April 1, dropping by 24,000 to 398,000, versus last week's figure which was upwardly revised by 4,000 to 422,000, and compared to the 415,000 level that economists surveyed by Bloomberg had expected. Also, the four-week moving average, considered a smoother look at the trend in claims, dropped by 8,500 to 413,750, while continuing claims declined by 17,000 to 3,703,000, but above the forecast of economists, which called for continuing claims to come in at 3,700,000.
Treasuries are higher in early action despite the data and the US debt ceiling issue, with the yield on the 2-year note down 2 bps to 0.42%, the yield on the 10-year note 4 bps lower to 2.94%, and the 30-year bond rate losing 3 bps to 4.26%.
Later this morning, we will get the release of pending home sales, forecasted to fall 2.0% month-over-month (m/m) in June, but is projected to be 14.7% higher y/y.
Disappointing earnings and debt worries weigh in Europe
The equity markets in Europe are under pressure in afternoon action, as the debt uneasiness facing the US and the eurozone is being met by a plethora of disappointing corporate earnings reports. Headlining the day's heavy dose of earnings data across the pond, Volkswagen AG (VLKAY $38) is down sharply after Europe's largest carmaker, per Bloomberg, reported earnings that missed analysts' expectations, while warning that higher commodity prices and the strengthening euro will negatively impact profits for the year. Moreover, financials are being bogged down by a solid decline in shares of Credit Suisse Group AG (CS $36) after the lender posted profits that came in short of estimates, while announcing that it plans to cut about 2,000 jobs. Meanwhile, the basic materials group is the worst performing sector in today's action, as chemical company BASF SE (BASFY $93) is under solid pressure after it announced 2Q earnings that missed forecasts.
Elsewhere, the economic calendar in Europe is doing little to help sentiment after reports showed German unemployment fell by a smaller amount than economists anticipated in July and UK sales unexpectedly declined in July, while a read on the eurozone business climate came in below estimates.
The UK FTSE 100 Index is down 0.5%, France's CAC-40 Index is 1.3% lower, Germany's DAX Index is falling 1.5%, Spain's IBEX 35 Index is declining 0.7%, and Italy's FTSE MIB Index is dropping 0.9%.
Asia declines on debt concerns
Stocks in Asia finished lower on the heels of the steep losses registered in the US, as the debt ceiling gridlock in Washington and lingering eurozone debt crisis concerns continued to hamper sentiment. Japan's Nikkei 225 Index fell 1.5% amid the debt uneasiness in the US and Europe, while a solid gain in the yen pressured export issues, exacerbating the downward move. The negative tone in the region overshadowed a report that showed Japan's retail trade rose more than economists forecasted. Meanwhile, after the closing bell in Japan, Nintendo Co. Ltd. (NTDOY $22) cut its full-year profit forecast amid sluggish demand for its new 3-D handheld video game player, while Sony Corp. (SNE $26) also lowered its full-year guidance on a reduced outlook for TV sales. Elsewhere, Australia's S&P/ASX 200 Index dropped 1.6% and South Korea's Kospi Index declined 0.9%. However, stocks in China finished mixed, with the Shanghai Composite Index falling 0.5%, while the Hong Kong Hang Seng Index rose 0.1%. The modest gain in Hong Kong came ahead of a report that showed the nation's trade deficit widened more than expected, as exports and imports both rose more than anticipated in June.
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