Soft Private Payrolls Data Renders Mood Cautious

(RTTNews) - The major U.S. index futures are pointing to a mixed opening on Wednesday, with sentiment reflecting nervousness amid the release of a report that showed softer than expected addition to U.S. private payrolls. Global cues are subdued, with European stocks seeing some volatility. The domestic markets may now turn towards some Fed speeches and a service sector reading for direction.

U.S. stocks reversed course and advanced on Tuesday, with the Dow Industrials settling at a fresh record closing high, as some M&A news and fairly positive U.S. auto sales provided much needed thrust to the markets.

The major averages opened higher and after a steady upward climb in early trading, they moved sideways until the afternoon. The averages advanced going into late trading before moving sideways yet again.

The Dow Industrials ended up 102.75 points or 0.58 percent at 17,880, the S&P 500 Index closed 13.11 points or 0.64 percent higher at 2,067 and the Nasdaq Composite ended at 4,756, up 28.46 points or 0.60 percent.

Twenty-one of the thirty Dow components closed higher, with Exxon Mobil (XOM), Procter & Gamble (PG), Pfizer (PFE), 3M Co. (MMM), JP Morgan (JPM), Intel (INTC), Goldman Sachs, Chevron (CVX) and American Express (AXP) leading the gains. On the other hand, Verizon (VZ) and AT&T (T) retreated sharply.

Transportation, biotechnology, oil, financial and computer hardware stocks gained ground, while gold stocks saw substantial weakness.

On the economic front, vehicle sales came in at a seasonally adjusted annual rate of 17.2 million units in November compared to expectations of 16.5 million units.

The Commerce Department reported that construction spending rose 1.1 percent month-over-month in October, exceeding expectations for a 0.5 percent increase. Annually, construction spending was up 3.3 percent.

Spending on public construction climbed 2.3 percent and private residential construction spending was up 1.3 percent, while private non-residential construction spending edged down 0.1 percent.

Currency, Commodity Markets

Crude oil futures are rising $0.52 to $67.40 a barrel after tumbling $2.12 to $66.88 a barrel on Tuesday. An ounce of gold is currently trading at $1,203.10, up $3.70 from the previous session's close of $1,199.40. On Tuesday, gold fell $18.70.

On the currency front, the U.S. dollar is trading at 119.34 yen compared to the 119.21 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.2324 compared to yesterday's $1.2383.

Asia

Most Asian markets advanced, although the Hong Kong and Taiwanese markets pulled back sharply. The optimism stemmed from the positive performance by Wall Street stocks overnight and a better than expected Chinese service sector reading.

Japanese stocks advanced amid the weakness of the yen, which suffered from a renewal in risk appetite. The Nikkei 225 index opened higher and advanced till late morning trading. Despite giving back some of its gains over the remainder of the session, the index closed up 57.21 points or 0.32 percent at 17,720.

Resource stocks led the gains, while export stocks also gained some ground. On the other hand, utility, real estate, pharma, telecom and construction stocks came under selling pressure.

Australia's All Ordinaries opened little changed but moved higher in early trading and held above the unchanged line for the rest of the session. The index ended up 41.20 points or 0.78 percent at 5,301.

The market witnessed broad based strength, with utility, energy, healthcare and consumer stocks advancing notably in the session.

China's Shanghai Composite ended a volatile session up 15.98 points or 0.58 percent at 2,780. However, Hong Kong's Hang Seng Index closed at 23,428, down 225.68 points or 0.95 percent.

On the economic front, a report released by the Reserve Bank of Australia showed that GDP rose a less than expected 0.3 percent sequentially in the third quarter. Annually, the growth was 2.7 percent compared to the 3.1 percent growth expected by economists.

A separate report released by the Australian Industry Group showed that the service sector in Australia continued to contract in November. The service sector purchasing managers' index edged up 0.2 points to 43.8 but remained below 50.

Meanwhile, two separate reports showed robust activity in the Chinese service sector. Revised estimates released by HSBC and Markit showed that their service sector purchasing managers' index inched up 0.1 point to 53 in November.

The National Bureau of Statistics and the China Federation of Logistics and Purchasing reported that their non-manufacturing purchasing managers' index rose to 53.9 in November from 53.8 in October. Europe

European stocks are seeing volatility amid the release of mixed domestic data and soft U.S. non-farm payrolls report.

In corporate news, Swedish telecommunications firm TeliaSonera and Norwegian telecom company Telenor reached an agreement to merge their Danish operations into a new joint venture, under which both the parties would own 50 percent.

On the economic front, the British Retail Consortium released the results of a survey showing a steady annual inflation rate of 1.9 percent for November. On a monthly basis, shop price inflation was at 0.1 percent. Food prices were down 0.2 percent year-over-year.

On the economic front, Eurotat reported that eurozone's retail sales rose le than expected in October. UK service sector grew at a faster-than-expected pace in November, as both activity and new business rose at sharper rates, the results of a survey by Markit Economics and the Chartered Institute of Purchasing and Logistics showed. Revised estimates released by Markit Economics showed that composite purchasing managers' index was downwardly revised to 51.1 in November from 51.4, down from 52.1 in October.

U.S. Economic Reports

While payroll processor ADP released a report showing another notable increase in U.S. private sector employment in the month of November, the pace of job growth in the sector fell short of economist estimates.

ADP said private sector employment rose by 208,000 jobs in November following an upwardly revised increase of 233,000 jobs in October. Economists had expected employment to climb by about 225,000 jobs compared to the addition of 230,000 jobs originally reported for the previous month.

Labor productivity in the U.S. increased by more than previously estimated in the third quarter, according to a report released by the Labor Department on Wednesday, although the pace of growth still came in below expectations.

The Labor Department said productivity increased by an upwardly revised 2.3 percent in the third quarter compared to the previously reported 2.0 percent growth. Economists had expected the pace of growth to be revised to 2.4 percent.

Meanwhile, the revised data showed that unit labor costs fell by 1.0 percent in the third quarter compared to the 0.3 percent increase that had been reported.

Markit is set to release final estimates of its U.S. non-farm manufacturing index for November at 9:45 am ET. Preliminary estimates had shown a pullback by the index to 57.1.

The Institute for Supply Management is scheduled to release the results of its service sector survey at 10 am ET. The consensus estimate calls for an increase by the non-manufacturing index to 57.3.

The non-manufacturing index dropped to 57.1 in October from 58.6 in September. While a reading above 50 indicates continued growth in the service sector, economists had expected the index to show a more modest drop to 58.0.

Philadelphia Federal Reserve Bank President Charles Plosser is due to speak on the economic outlook in Charlotte, North Carolina at 12:30 pm ET. Fed Governor Lael Brainard will take part in a conversation on financial stability in Washington at 2 pm ET.

Later in the day at 7:30 pm ET, Dallas Fed President Richard Fisher is scheduled to speak on the Texas economy and monetary policy in Dallas.

The Energy Information Administration will release its weekly petroleum status report for the week ended November 29th at 10:30 am ET.

Crude oil stockpiles rose by 1.9 million barrels to 383 million barrels in the week ended November 21st and were in the upper half of the average range.

Gasoline inventories rose by 1.8 million barrels but remained in the lower half of the average range. Meanwhile, distillate inventories fell by 1.6 million barrels, remaining near the lower limit of the average range.

Refinery capacity utilization averaged 90.3 percent over the four weeks ended November 21st compared to 89.1 percent over the four weeks ended November 14th.

The Federal Reserve is scheduled to release its Beige Book, which gives anecdotal evidence of economic conditions in the 12 Fed districts, at 2 pm ET.

Stocks in Focus

Bob Evans (BOBE) reported better than expected second quarter earnings but its revenues missed estimates. The company narrowed its earnings guidance for 2015, with the guidance in line with estimates, while it lowered its revenue guidance.

Abercrombie (ANF) reported better than expected third quarter adjusted earnings, while its revenues missed expectations. The company also provided weak outlook for 2014.

Microchip Technology (MCHP) raised the low end of its guidance for the third quarter, citing an improvement in bookings and billings.

Callaway Golf (ELY) announced that its CFO Bradley Holiday plans to retire in 2015. The company also said it would conduct a search for his successor in early 2015.

Accenture (ACN) announced an agreement to buy Australian digital agency Reactive Media. The company did not reveal the financial terms of the deal.

Fred's (FRED) announced total sales of $154.3 million for November, up 2 percent year-over-year, while comparable store sales were down 2.3 percent compared to flat sales in the year-ago period.

Cooper Tire (CTB) announced that its board has elected Ginger Jones to the post of CFO, effective December 3rd, 2014, replacing Brad Hughes, who was appointed as president of the company's international operations.

Guess? (GES), Aeropostale (ARO), Pacific Sunwear (PSUN), PVH (PVH), Synopsys (SNPS) and Wet Seal (WTSL) are among the companies due to release their quarterly results after the close of trading.