The sentiment on Wall Street has turned cautious on Monday after the strong gains recorded by the major averages in the past week. While Asian stocks closed mixed earlier in the global trading day, the major European averages have turned lower after a strong start, with a worse than expected fall in German business confidence serving as a dampener. The domestic markets may focus on a few earnings scheduled for the day and economic data on pending home sales, even as sentiment is expected to be subdued ahead of the FOMC decision due on Wednesday.
At 6:10 am ET, the Dow futures are declining 12 points, the S&P 500 futures are receding 3.00 points and the Nasdaq 100 futures are moving down 1.50 points.
U.S. stocks rebounded strongly in the week ended October 24th, with the Dow Industrials back in the black for the year. Positive domestic earnings and benign economic data helped traders overcome nervousness.
The FOMC decision is likely to headline the economic events of the unfolding week, which is fairly heavily loaded with several market moving economic data. The two day FOMC meet that kick starts on Tuesday is likely to watched with a lot of interest, as the traders look ahead to the central bank to signal a timeframe for normalizing rates by announcing an end to its assets purchase program.
Traders may also focus on the National Association of Realtors' pending home sales data for September, the Commerce Department's durable goods orders report for September, the results of separate consumer sentiment surveys by the Conference Board and the Reuters and the University of Michigan combined, advance third quarter GDP estimate, the Commerce Department's personal income and spending report for September, the jobless claims data and the results of the MNI Indicators' manufacturing survey for the Chicago region.
Flash estimate of Markit's U.S. service sector survey for October, the results of a few regional manufacturing surveys, the Labor Department's employment cost index for the third quarter and the results of the Treasury auctions of 2-year, 5-year and 7-year notes round up the economic events of the week.
Markit is set to announce the results of its preliminary service sector survey for October at 9:45 am ET. Economists expect the index to decline to 58 from 58.5 in September. The National Association of Realtors is due to release its pending home sales index for September at 10 am ET. The consensus estimate calls for a 0.8 percent month-over-month increase in the index for the month. The Dallas Federal Reserve is scheduled to release the results of its regional manufacturing survey for October at 10:30 am ET. Economists expect the index to slip to 7.5 from 10.8 in September.
In corporate news, Williams (WMB), Williams Partners (WPZ) and Access Midstream Partners (ACMP) announced a merger agreement, with Williams owning controlling interests in the two master limited partnerships. Level 3 Communications (LVLT) and twTelecom (TWTC) announced that the U.S. FCC has cleared Level 3's pending acquisition of tw Telecom, effective immediately.
Amgen (AMGN), Amkor (AMKR), Crane (CR), Crocs (CROX), CTS (CTS), DDR (DDR), Hartford Financial (HIG), Manitowoc (MTW), Owens & Minor (OMI), PartnerRe (PRE), PMC-Sierra (PMCS), Sanmina (SANM), Twitter Group (TWTR) and XL Group (XL) are among the companies due to release their quarterly results after the close of trading.
The Asian markets ended mixed, as relief over no major European bank failing the ECB bank stress results and renewed hopes concerning the U.S. economy's resilience led to buying even as the brewing political crisis in Hong Kong impacted the Chinese and Hong Kong markets.
The Japanese market rose on rising risk appetite, which exerted downward pressure on the yen. The Nikkei 225 average added 97.08 points or 0.63 percent before closing at 15,389. Australia's All Ordinaries ended up 42.60 points or 0.79 percent at 5,442. Meanwhile, China's Shanghai Composite Index closed 11.84 points or 0.51 percent lower at 2,290 and Hong Kong's Hang Seng Index ended at 23,143, down 158.97 points or 0.68 percent.
On the economic front, a report released by the Bank of Japan an index measuring corporate service price rose 3.5 percent year-over-year in September, in line with estimates. On a monthly basis, prices were up 0.1 percent, reversing part of the 0.2 percent drop in August.
European stocks have opened higher and traded on a firm note in early trading, encouraged by the bank stress test results. Subsequently, the averages have given back ground amid the release of German business confidence data and are currently trading firmly in the red.
European Central Bank's comprehensive assessment of the financial health of the banks in the region showed that only 25 banks had capital shortfall, with 12 of these banks having already wiped the deficit by raising capital.
In corporate news, Novartis (NVS) announced the sale of its global flu vaccine business of Australia's CSL for $275 million. BHP Billiton (BHP) announced that it remains on tack to meet its production guidance for the financial year 2015. The company also said it has initiated the marketing of its Fayetteville asset. TNT Express reported an operating loss for its third quarter, hurt by a provisioning, while its revenues were ahead of estimates by most analysts.
On the economic front, the results of IfO's business confidence survey for Germany showed a bigger than expected decline to 103.2 in October from 104.7 in September. The current conditions index also came in at a less than expected 108.4. Meanwhile, data released by the European Central Bank showed that M3 money supply rose 2.5 percent year-over-year in September, more than the 2.2 percent, more than the 2.2 percent increase expected by economists.
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