The US stocks continued to trade in tight range bracketing the unchanged mark, despite a sizeable drop in jobless claims as seasonal factors may have amplified the decline, and as volume remains scarce ahead of the New Year. Treasuries are lower following the employment release, while reports on regional manufacturing and housing sales wait in the wing. In equity news, Endo Pharmaceuticals Holding Inc announced that the US Food and Drug Administration approved the company's treatment for low testosterone levels, while Lockheed Martin Corp led a team that won a combat ship contract from the US Navy. Overseas, Asia finished mostly higher as most major market finished out 2010, but a manufacturing read in China disappointed, which is weighing on European stocks.
As of 8:44 a.m. ET, the March S&P 500 Index and the Nasdaq 100 Index Globex futures are at fair value, while the DJIA is 3 points above fair value. Crude oil is $0.45 lower at $90.67 per barrel, and the Bloomberg gold spot price is down $2.10 at $1,409.65 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is down 0.2% at 79.60.
Endo Pharmaceuticals Holding Inc. (ENDP $35) announced that the US Food and Drug Administration (FDA) has approved the company's Fortesta gel for the treatment of low testosterone. ENDP said it expects to introduce Fortesta gel in the US in early 2011.
Lockheed Martin Corp. (LMT $69) reported that the US Navy has awarded an industry team led by LMT a contract to construct up to ten combat ships, with the first ship to be acquired in fiscal 2010. If all the options of the contract are exercised, the total value of the ship construction will reach about $3.6 billion.
Jobless claims fall, regional manufacturing and housing reads on the horizon
Weekly initial jobless claims fell by 34,000 to 388,000, versus last week's figure which was upwardly revised by 2,000 to 422,000, and the 415,000 level that economists surveyed by Bloomberg had expected. The four-week moving average, considered a smoother look at the trend in claims, dropped by 12,500 to 414,000, but continuing claims rose by 57,000 to 4,128,000, above the forecast of economists, which called for continuing claims to come in at 4,084,000. However, the reaction to the data was muted as traders are pointing out that seasonal factors probably played a role in the large decline in claims.
Treasuries remain lower following the employment data. The yield on the two-year note is 2 bps higher at 0.65%, while the yields on the 10-year note and the 30-year bond are gaining 3 bps to 3.38% and 4.46%, respectively.
Later this morning, the economic calendar will yield the releases of the Chicago PMI, forecasted to decline from 62.5 in November to 61.0 for December, and pending home sales, which are expected to rise 0.8% in November, following the 10.4% jump that was seen in October.
Europe under pressure as action remains thin
Stocks in Europe are lower in afternoon action as 2010 winds down and volume remains soft. Meanwhile, a disappointing reading on Chinese manufacturing is causing some uneasiness across the pond and losses are being felt broadly, with some modest weakness in crude oil prices contributing to the downward direction in the region. However, there was some economic data out of Italy that deserves a mention, with a larger-than-expected increase in business confidence failing to keep stocks above water, while a separate report showing the nation's producer prices unexpectedly rose on a year-over-year basis may be prompting some selling pressure.
The UK FTSE 100 Index is down 0.2% and France's CAC-40 Index is declining 0.9%, while Germany's DAX Index and Italy's FTSE MIB Index are falling 1.2%.
Asia mostly higher as most markets close out 2010
The equity markets in Asia were mostly higher in continued light volume as most major markets posted their final trading sessions for 2010, including Japan, South Korea, and Thailand, which will remain closed tomorrow. Stocks in China finished modestly higher, with the Shanghai Composite Index rising 0.3% and Hong Kong's Hang Seng Index inching 0.1% higher, as a read on manufacturing activity in the region remained at a level depicting expansion for December, but the rate of growth decelerated for the first time in five months, per Bloomberg, keeping gains in check. Chinese stocks found some modest support from some bargain hunting as these markets have come under persistent pressure as of late, exacerbated by recent interest rate hikes by the Chinese central bank. Also, shares in Australia gained ground, with the S&P/ASX 200 Index increasing 0.3%, led by miners on the recent strength in commodity prices, while South Korea's Kospi Index posted a 0.4% advance even after reports showed the nation's Leading Index decelerated and industrial production rose at a rate that was below economists' expectations. However, a stronger yen versus the US dollar weighed on export issues and Japan's Nikkei 225 Index bucked the trend, falling 1.1%, to close out the year. Tomorrow, markets in Australia and Hong Kong will close early.
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