15th May 2014 12:17
LONDON (Alliance News) - US stocks are called to open modestly lower Thursday, as investors digest a weaker-than expected quarterly earnings report from Wal-Mart, and ahead of a raft of top-tier US macro-economic data.
Wal-Mart, which is the world's biggest retailer, is weighing on equity futures ahead of the Wall Street open Thursday after it said that its first-quarter profit dropped from the year before and missed analysts expectations, partially due to the particularly harsh winter weather in the US.
The company said that its first-quarter 2014 net income dropped to USD3.6 billion from the prior year's USD3.8 billion, with earnings per share declining to USD1.11 from USD1.14 in the year earlier quarter, missing analysts' expectations of USD1.15 per share.
As a result, the stock is down more than 3% in premarket trading.
"Wal-Mart maybe better positioned than some its peers, though, following the news that its online sales growth outpaced that of Amazon last year," says CMC Markets market analyst Jasper Lawler. "If the company can make back the lost market share online, it may be able to outperform the retail sector."
Ahead of the New York bell, the DJIA, S&P 500 and NASDAQ Composite are all called to open down 0.2%. Prior to Wal-Mart's quarterly results, stock futures had pointed to a mixed, but muted open.
Investor focus is now likely to shift to a raft of US macro economic data that is still to be released.
"For a long time now the inflation figures in the US have been overlooked as the rate has remained around 1% which isn?t low enough to be concerned about deflation or high enough to worry about excessive inflation," says Craig Erlam, a market analyst at Alpari.
However, the US Labor Department is expected to reveal that consumer price inflation has risen to 2% year-on-year in April, up from 1.5% posted in March, with the core reading coming in at 1.7%. On a monthly basis, economists expect a 0.3% increase in consumer prices, up from the 0.2% seen in the previous month, and a 0.1% increase in core consumer prices.
"Should we see this, there may be more pressure on the Federal Reserve to taper at a faster pace and even raise rates earlier than currently planned," says Erlam.
Weekly US jobless claims data are released at the same time. Economists' expectations are for initial jobless to claims to have risen slightly to 320,000 in the week ending May 9, up from the 319,000 posted in the previous week.
The New York Federal Reserve also is set to release its regional manufacturing survey for May at 1230 GMT. Economists expect the general business conditions index to rise to 5 in May from 1.29 in April.
Shortly after, April's US industrial production report is published at 1315 GMT. The consensus estimate calls for flat industrial production growth in the month, while capacity utilisation is expected to remain unchanged at 79.2%.
The National Association of Home Builders' housing market index and the latest Philadelphia Federal Reserve manufacturing survey are both released at 1400 GMT. The general business conditions index that is based on the Philadelphia Fed's manufacturing survey is expected to slip to 14.0 in May from 16.6 in April. The NAHB housing market index is expected to rise to 49 in May from 47 in April.
Meanwhile, Federal Reserve Chair Janet Yellen gives a speech at 2300 GMT.
In Europe, prior to the Wall Street open, major stock indices trade lower. Ahead of the Wall Street open, the UK's FTSE 100 is fractionally lower at 6,877.56, the FTSE 250 is down 1.2% at 15,787.19, the CAC 40 in Paris is down 0.3%, and the DAX 30 in Frankfurt is down 0.1%.
The FTSE 250 is underperforming, as it is being weighed heavily upon by steep declines by some of its key individual constituents. Thomas Cook Group, Dixons Retail, and Carphone Warehouse Group are down 7.3%, 5.9%, and 4.7%, respectively, following interim results from Thomas Cook and the announced merger between Dixons and Carphone Warehouse.
By James Kemp & Jon Darby; [email protected]; @jamespkemp
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