Market Analysis

The major U.S. index futures are pointing to a mostly higher opening on Friday, with sentiment precariously poised, as traders digest mixed earnings and durable goods orders report. Traders are reacting positively to earnings from some big name tech companies such as Microsoft, Amazon and Google. That said, there were disappointments as well. In the meantime, a Commerce Department report released short while ago showed that durable goods orders rose sharply, although excluding transportation, orders disappointed to the downside. Added to these mixed cues, traders may also remain wary over what transpires at the eurozone finance ministers meeting at Riga, Latvia.

U.S. stocks advanced on Thursday, as oil prices rallied strongly and traders focused on some positive earnings reports. The markets largely brushed aside some disappointing overseas and domestic economic data.

The major averages opened lower and showed nervousness until the mid-session, with all three major averages nervously hugging the unchanged line. The averages subsequently spiked higher and saw further upside in afternoon trading before giving back ground going into the close.

The Dow Industrials added 20.42 points or 0.11 percent before ending at 18,059 and the S&P 500 closed 4.97 points or 0.24 percent higher at 2,113, while the Nasdaq Composite Index ended at a new record closing high of 5,056, up 20.89 points or 0.41 percent.

Seventeen of the thirteen Dow components closed higher for the session, while the remaining thirteen stocks retreated. IBM (IBM), Disney (DIS), Nike (NKE), Pfizer (PFE), Travelers (TRV), Verizon (VZ) and Wal-Mart (WMT) rose notably, while 3M Co. (MMM) and Procter & Gamble (PG) fell sharply in reaction to their financial results. Intel (INTC) and DuPont (DD) also came under selling pressure.

Among the sectors, biotechnology, oil service and gold rallied strongly but housing and semiconductor stocks saw significant weakness.

On the economic front, the Labor Department reported that jobless claims rose to 295,000 in the week ended April 18th from 294,000 in the previous week. The four-week average rose to 284,500 from 282,750. Continuing claims calculated with a week’s lag rose by 50,000 to 2.325 million in the week ended April 11th.

Flash estimate released by Markit showed that the manufacturing purchasing managers’ index for the U.S. unexpectedly fell to 54.2 in April from 55.3 in March, while economists expected an increase to 56.

The Commerce Department reported that new home sales came in at a seasonally adjusted annual rate of 481,000 in March compared to a 543,000 million-unit rate in February. Economists expected a rate of 518,000 for the month. New home inventories rose by 4,000 to 213,000 and inventories measured in terms of months of sales rose to 5.3 months from 4.6 months. The median price of a new home fell 1.7 percent year-over-year.

Currency, Commodity Markets

Crude oil futures for June delivery are slipping $0.07 to $57.67 a barrel after jumping $1.58 to $57.74 a barrel on Thursday. Gold futures, which rose $7.40 to $1,194.30 an ounce in the previous session, are currently falling $7.20 to $11,87.10 an ounce.

Among currencies, the U.S. dollar is trading at 119.49 yen compared to the 119.58 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0826 compared to yesterday’s $1.0824.

Asia

The Asian markets closed mixed, with the Australian, Hong Kong, Malaysian, New Zealand and Taiwanese markets advancing, while the rest of the major markets in the region retreated.

The positive close on Wall Street overnight, especially the Nasdaq’s record climb, and the rally in oil prices offset growth worries to some extent.

The Japanese market retreated on profit taking. The Nikkei 225 average opened lower and declined steadily in the morning. The index went about a consolidation move in the afternoon before ending down 167.61 points or 0.83 percent at 20,020, snapping a 3-session winning streak.

Export, real estate and financial stocks came under selling pressure, while defensive telecom, utility and food stocks gained ground.

Australia’s All Ordinaries opened higher and rose sharply in early trading and steadily thereafter. The index rallied 86.50 points or 1.49 percent before closing at 5,907.

The market witnessed broad based strength, with consumer discretionary, energy, material and utility stocks bring the best gainers of the session.

Hong Kong’s Hang Seng Index ended at 28,061, up 233.28 points or 0.84 percent, while China’s Shanghai Composite eased off its multi-year closing high by virtue of its 20.82-point or 0.47 percent retreat to 4,394.

On the economic front, a report released by the Bank of Japan showed that its corporate service price index for Japan rose 3.2 percent year-over-year, slower than the 3.3 percent increase expected by economists.

The Japanese Ministry of Economy, Trade and Industry reported that an index measuring all industry activity in Japan edged up 0.1 percent month-over-month in February, belying expectations for a 1 percent drop. The upside was primarily due to strengthening activity in the services sector, while industrial output and construction activity declined.

Europe

European stocks opened higher and saw further upside in the morning amid the release of some domestic earnings and a positive German business confidence reading. However, the averages have given back some of their gains and are currently mixed.

Sentiment is likely to remain cautious as eurozone finance ministers meet in Riga, Latvia. The lack of any concrete reform proposals from Greece means that there is unlikely to be any breakthrough agreement. However, any progress towards a resolution of the Greek debt crisis could be market positive.

In corporate news, Sweden’s Electrolux reported better than expected first quarter earnings and said it expects the appliances market in the U.S. and Europe to grow in 2015. AstraZeneca (AZN) reported a decline in its first quarter profits, hurt by the loss of patent protection for some of its products.

Air Liquide reported an increase in its first quarter profits and also forecast higher profits for 2015. Suez Environment reported a strong increase in its first quarter profits, while Reckitt Benckiser’s first quarter revenues were ahead of estimates.

On the economic front, German business confidence improved for the sixth consecutive month in April, the results of a survey by Munich-based Ifo Institute showed. The business confidence index rose more-than-expected to 108.6 in April from 107.9 in March. The index was forecast to rise to 108.4.

U.S. Economic Reports

New orders for U.S. manufactured durable goods increased by much more than expected in the month of March, according to a report released by the Commerce Department, although the jump was primarily due to strength in the volatile transportation sector.



The report said durable goods orders surged up by 4.0 percent in March after slumping by 1.4 percent in February. Economists had expected orders to edge up by just 0.5 percent.

However, excluding a 13.5 percent jump in orders for transportation equipment, durable goods orders actually fell by 0.2 percent in March compared to a 1.3 percent drop in the previous month. Ex-transportation orders had been expected to rise by 0.3 percent.

Stocks in Focus

Google’s (GOOG) first quarter adjusted earnings and revenues missed estimates, with a stronger dollar weighing on the results.

Meanwhile, Microsoft (MSFT) reported better than expected third quarter results.

Amazon.com (AMZN) reported first quarter results that exceeded estimates and issued positive guidance for the second quarter.

Juniper Networks’ (JNPR) first quarter results also topped estimates and it issued upbeat second quarter guidance.

Verisign (VRSN) reported below consensus results for its first quarter. Altera (ALTR) also reported below consensus results for its first quarter and issued second quarter revenue guidance that trailed estimates.

Unisys (UIS) reported a narrower than expected loss for its first quarter, while its revenues were below estimates.

KLA-Tencor (KLAC) reported better than expected third quarter results and announced plans to reduce its global workforce by up to 10 percent.

Maxim Integrated (MXIM) reported above-consensus adjusted earnings for its third quarter, while its revenues missed estimates. The company’s fourth quarter guidance was weak.

NETGEAR (NTGR) reported first quarter earnings that trailed expectations, while its revenues exceeded estimates. However, the company’s second quarter revenue guidance was weak.

Starbucks (SBUX) reported in line second quarter earnings and better than expected revenues. The company said it continues to expect full-year revenue growth of 16-18 percent and adjusted earnings of $1.55-$1.57 per share.

Biogen Idec (BIIB) reported first quarter results below expectations.

Time Warner Cable (TWC) and Comcast Corp. (CMCSA) have mutually agreed to terminate their merger agreement.

Xerox’s (XRX) first quarter adjusted earnings were in line, while its revenues missed expectations. The company also lowered its 2015 earnings per share guidance.

Capital One Financial (COF) reported better than expected earnings, while its revenues missed estimates.

H&R Block (HRB) announced that its total U.S. revenues for the period through April 16th, 2015 rose despite a 0.9 percent drop in returns prepared to 20.5 million. The company also said it continues to expect EBITDA margins of about 30 percent.

Regions Financial (RF) said its board approved an increase in its quarterly dividend to 6 cents per share and also announced an $875 million stock buyback program.