The US equity markets are hanging around the unchanged mark as traders appear content to ride out the rest of the year without making any major moves in the waning sessions of 2010. Modest early gains were relinquished following an upward 3Q GDP revision that was smaller than economists had expected.Treasuries are flat in early action after paring losses in the wake of the GDP report, ahead of the release of existing home sales. In other economic news, MBA mortgage applications fell on a sharp drop in refinancing. In equity news, Nike Inc is under some pressure as the company's disappointing orders figure is outweighing its better-than-expected profit report. Overseas, Asia was mixed, while Europe is hovering around the flatline.
As of 8:51 a.m. ET, the March S&P 500 Index Globex future is 1 point above fair value, the Nasdaq 100 Index is at fair value, while the DJIA is 3 points above fair value. Crude oil is $0.45 higher at $90.27 per barrel, and the Bloomberg gold spot price is up $3.20 at $1,388.80 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is down 0.2% at 80.55.
Nike Inc. (NKE $92) reported fiscal 2Q EPS of $0.94, above the $0.88 consensus estimate of analysts surveyed by Reuters, with revenues growing 10% year-over-year (y/y) to $4.8 billion, roughly inline with the Street's forecast. The athletic shoe and apparel maker said almost every brand, category and geography delivered growth and going forward it has "far more opportunities than challenges." NKE said its futures orders for its footwear and apparel scheduled for delivery from December 2010 through April 2011 were up 11% y/y to $7.7 billion, but that was short of some analysts' expectations and shares are lower.
3Q GDP revised higher, but below expectations, existing home sales on deck
The final look at 3Q Gross Domestic Product, the broadest measure of economic output, was released this morning and showed a slight upward revision to a 2.6% quarter-over-quarter (q/q) annualized rate of growth, compared to the 2.5% increase previously reported, and after expanding by 1.7% in 2Q. Economists surveyed by Bloomberg forecasted a 2.8% rate of growth. Personal consumption rose 2.4%, down from 2.8% in the preliminary report, and below the 2.9% estimate.
The GDP Price Index was revised lower to a 2.1% increase, compared to the 2.3% rise that was expected by economists, and the core PCE Index, which excludes food and energy, was revised to a 0.5% rate of growth, from 0.8%, which was where economists had expected it to remain. Treasuries are nearly unchanged
after paring losses following the GDP report. The yield on the two-year note is flat at 0.61%, the yield on the 10-year note is up 1 bp at 3.31%, and the 30-year bond yield is unchanged at 4.42%.
In other economic news, the MBA Mortgage Application Index fell by 18.6% last week, after the index that can be quite volatile on a week-to-week basis, declined 2.3% in the previous week. The drop came as a 24.6% tumble in the Refinance Index was accompanied by a 2.5% decline in the Purchase Index. The steep loss in the overall index also came as the average 30-year mortgage rate remained at 4.85%, above the record low of 4.21% on October 8.
Meanwhile, shortly after trading begins, existing home sales will be released, which reflect closings from contracts entered one to two months earlier, forecasted to rise 7.1% month-over-month (m/m) in November to an annual rate of 4.75 million units after falling 2.2% in October.
Europe nearly unchanged as conviction continues to be subdued
Stocks in Europe are hovering around that flatline as traders digest some economic data, while dealing with lingering euro-area debt concerns in the region. Moreover, conviction continues to be running low with the end of the year around the corner, which is keeping market moves muted. However, shares of ARM Holdings Plc. (ARMH $20) are solidly higher after reports suggested Dow member Microsoft Corp. (MSFT $28) will unveil a new version of its Windows operating systems early next year that will run chips manufactured by ARM Holdings. MSFT and ARMH have not commented on the reports. Meanwhile, the UK reported that its 3Q GDP grew at a slower pace than originally estimated, as it rose 0.7% q/q, compared to the 0.8% q/q rate that was previously reported and economists expected it to remain.
In other economic news across the pond, the minutes from the Bank of England's monetary policy meeting earlier this month showed policymakers were split three ways on what changes it should make to its interest rate. The BoE kept its benchmark interest rate unchanged at 0.5% and it made no changes to its asset purchase program. Additionally, the UK's 3Q business investment unexpectedly rose, German import prices increased much more than expected, while Italy's consumer confidence surprisingly improved and the
nation's retail sales declined.
The UK FTSE 100 Index is 0.4% higher, France's CAC-40 Index is 0.1% lower, Germany's DAX Index is flat, and Italy's FTSE MIB Index is gaining 0.2%.
Asia mixed in lackluster session
With volume continuing to be light as the end of the year looms on the horizon, stocks in Asia finished mixed in a subdued session. Japan's Nikkei 225 Index declined 0.2%, as sentiment was soured slightly after the
Japanese government cut its outlook for exports and business sentiment, thwarting an early advance that came from a report showing growth in Japan's exports in November accelerated for the first time in nine months, per Bloomberg. Meanwhile, stocks in China diverged, with the Shanghai Composite Index declining 0.9%, while the Hong Kong Hang Seng Index rose 0.2%. Moreover, South Korea's Kospi Index inched 0.1% higher, reaching a 38-month high, aided by strength in auto issues. Elsewhere, Australia's S&P/ASX 200 Index also rose 0.1% as some profit taking limited the advance that was aided by continued M&A news in the region and a report showing the nation's Leading Index increased for October.
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