The major U.S. index futures are pointing to a roughly flat opening on Tuesday, as traders digest domestic earnings news. Strong earnings from Disney could give a lift to the Dow, although profit taking could prevent any meaningful upside. A Commerce Department report released short while ago showed that the U.S. trade deficit widened to a 6-year high in March. The markets also stay focused on two separate service sector readings and a Fed speech scheduled during the market hours.
The mood across the Atlantic is volatile, with the major averages in the region currently modestly lower, with the May 6th deadline for Greece to make a 200 million euro payment to the IMF and the May 7th election in the U.K. draw closer. That said, earlier in the global trading day, the European Commission raised its growth and inflation forecast for the euro area. Crude oil prices are up over $1.50-a-dollar, as the dollar has given back some ground.
U.S. stocks advanced on Monday, extending the gains from last Friday, as some global data and encouraging domestic earnings helped sustain the momentum. The major averages opened higher and rose steadily in early trading only to give back some ground over the course of the morning. The averages began moving roughly sideways thereafter, ending modestly higher for the session.
The Dow Industrials ended up 46.34 points or 0.26 percent at 18,070, the S&P 500 Index closed 6.20 points or 0.29 percent higher at 2,115 and the Nasdaq Composite ended at 5,017, up 11.54 points or 0.23 percent.
Twenty-one of the thirty Dow components closed higher for the session, while the remaining nine stocks declined. JP Morgan Chase (JPM), Goldman Sachs (GS), Merck (MRK) and UnitedHealth (UNH) led the advances, while McDonald's (MCD) moved notably lower after the company announced a turnaround plan.
Among the sectors, banking stocks saw considerable strength on the day, while airline stocks came under significant selling pressure.
On the economic front, the Commerce Department reported that factory orders rose 2.1 percent month-over-month, in line with estimates and snapping a declining streak of 7 months. Much of the gain was due to a jump in civilian aircraft orders. Excluding transportation, orders were unchanged.
Currency, Commodity Markets
Crude oil futures are climbing $0.93 to $59.86 a barrel after dipping $0.22 to $58.93 a barrel on Monday. Meanwhile, an ounce of gold is currently trading at $1,190.50, up $3.70 from the previous session's close of $1,186.80. On Monday, gold climbed $12.30.
On the currency front, the U.S. dollar is trading at 120.49 yen compared to the 120.13 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1120 compared to yesterday's $1.1146.
Asia
The Asian markets ended the day mixed, although the Japanese markets remained closed. The Australian market ended marginally higher, as the nation's central bank lowered interest rates, as expected by economists.
The Malaysian, Indonesian and New Zealand also advanced, while the Chinese market retreated notably to a near 4-month low on liquidity concerns ahead of a raft of IPO offerings. The Hong Kong market also witnessed steep losses.
After trading above the unchanged line for much of the session, Australia's All Ordinaries Index retreated below the unchanged in late trading only to sneak back into positive territory in the final few minutes of trading. The index ended up 0.30 points or 0.01 percent at 5,817.
Gains in the consumer, financial, healthcare, real estate and telecom spaces helped offset weakness in energy, material, utility and IT stocks. The financial space rebounded, encouraged by strong results from ANZ Bank.
Meanwhile, China's Shanghai Composite Index tumbled 181.76 points or 4.06 percent before ending at 4,299 and Hong Kong's Hang Seng Index lost 368.28 points or 1.31 percent before closing at 27,756.
The Reserve Bank of Australia opted to lower its official cash rate by 25 basis points to a record low of 2 percent at the conclusion of its May monetary policy meeting. The bank previously lowered rates in February. The easing was premised on the inflationary environment. Nevertheless, the Australian dollar gained ground, as the easing bias was removed from the statement.
Earlier, a report released by the Australian Bureau of Statistics showed that the nation's trade deficit came in at A$1.322 billion in March, wider than the A$1 billion shortfall expected by economists. Exports fell 2 percent month-over-month, while imports declined 2 percent.
The service sector in Australia entered into contraction territory in April, according to the results of a survey released by the Australian Industry Group. The service sector PMI fell to 49.7 in April from 50.2 in March.
Europe
European stocks opened the session mixed, with the French CAC 40 Index and the German DAX Index opening lower and spending early trading below the unchanged line, while the U.K. market opened higher.
Buying strengthened in late morning trading, as traders digested some key domestic earnings and the European Commission's updated forecasts. The German and French markets have moved into positive territory and the U.K. market has seen further gains. However, by mid-session, stocks have moved back to the downside and are currently seeing lackluster sentiment.
In corporate news, UBS (UBS) reported first quarter profits that nearly doubled year-over-year, helped by strong performances by its wealth management and investment banking businesses. Adidas reported strong profit growth for its first quarter. Metro AG also reported strong sales growth for its second quarter.
Infineon's second quarter results were better than expected, and it also raised its 2015 guidance, citing a weaker euro and contributions from its recently acquired International Rectifier business. HSBC (HBC) reported better than expected quarterly profits.
On the other hand, commodity trader and miner Glencore reported a decline in its first quarter production.
On the economic front, the European Commission released its 2015 Spring Economic forecasts, wherein the commission raised its growth and inflation forecasts for the European Union and the euro area, reasoning that the region's economy is benefiting from positive economic tailwinds.
The growth forecast for the euro area is now at 1.5 percent, up from 1.3 percent estimated earlier, while the forecast for the European Union was raised to 1.8 percent from 1.7 percent. Inflation in the euro area is now seen at 0.1 percent compared to a negative 0.1 percent.
Eurostat reported that the producer price index for the euro area fell as expected in March. The producer price index fell 2.3 percent year-over-year in March, slower than the 2.8 percent drop in February.
The expansion by the U.K. construction sector slowed for a second month in a row in April, the results of a survey by Markit Economics revealed. The growth was the weakest in nearly two years amid sluggish output and new order growth. The Markit/CIPS U.K. Construction Purchasing Managers' Index fell sharply to 54.2 in April from 57.8 in March. Economists had forecast a modest drop to 57.4.
U.S. Economic Reports
The Commerce Department reported that the trade deficit widened substantially in the month of March, with the deficit being the highest in over 6 years, as import growth outpaced export growth.
The report said the trade deficit soared to $51.4 billion in March from a revised $35.9 billion in February. Economists had expected a significantly smaller deficit of about $42.0 billion.
Markit is due to release its final U.S. service sector PMI reading for April. Economists expect the index to be downwardly revised to 57.7 from the flash reading of 57.8. In March, the index was at 59.2.
The Institute for Supply Management is due to release the results of its service sector survey for April at 10 am ET. The consensus estimate calls for an unchanged reading of 56.5 for the month.
The March survey showed that service sector growth slowed slightly. The corresponding PMI eased to 56.5 from 56.9 in February, while economists expected a reading of 56.7.
Chicago Federal Reserve Bank President Charles Evans is due to speak on the economy and monetary policy in Columbus, Indiana at 12:25 pm ET. Minneapolis Fed President Narayana Kocherlakota will speak at a town hall in Marshall, Minnesota at 8 pm ET.
Stocks in Focus
Disney's (DIS) second quarter results trumped estimates, while DirecTV (DTV) first quarter results were below expectations.
Avis Budget (CAR) reported better than expected first quarter earnings, while its revenues missed estimates. The company reaffirmed its 2015 guidance.
Discovery Communications (DISCA) reported better than expected first quarter earnings and revenues were in line. However, the company's 2015 revenue growth guidance was lackluster.
Archer Daniels Midland (ADM) reported above consensus earnings for its first quarter, while its revenues missed estimates.
Office Depot's (ODP) first quarter adjusted earnings were in line, while its revenues missed expectations. The company said it continues to see lower sales for 2015.
Ingram Micro's (IM) first quarter adjusted earnings missed expectations, while its revenues exceeded estimates. The company's second quarter revenue guidance was positive, but its earnings guidance was lackluster.
Lattice Semiconductor (LSCC) reported in line first quarter earnings and its revenues beat estimates. The company issued upbeat guidance for the full year.
Anadarko (APC) reported a wider than expected loss for its first quarter and its revenues trailed expectations.
MDU Resources (MDU) reported first quarter results that trailed estimates, while it reaffirmed its 2015 adjusted earnings per share guidance.
Meanwhile, EOG Resources (EOG) reported better than expected first quarter earnings, but its revenues missed expectations.
Tenet Healthcare (THC) reported above consensus results for its first quarter and confirmed its 2015 guidance.
Dun & Bradstreet's (DNB) first quarter adjusted earnings exceeded estimates, while its revenues were below expectations. Giving effect to a pending acquisition, the company updated its 2015 guidance, which calls for adjusted revenue growth of 6-9 percent and adjusted earnings per share decline of 3 percent to an increase of 1 percent.
Vornado Realty's (VNO) first quarter adjusted funds from operations and revenues trailed expectations.
IBM (IBM) announced the completion of its acquisition of health management software provider Phytel. The company did not reveal the terms of the deal.
Allstate (ALL), Community Health (CYH), Cray (CRAY), Devon Energy (DVN), Electronic Arts (ERTS), Groupon (GRPN), International Game Technology (IGT), Mylan Labs (MYL), Papa John's (PZZA), Pioneer Natural Resources (PXD), RenaissanceRe (RNR) and Weight Watchers (WTW) are among the companies due to release their quarterly results after the close of trading.
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