Dow May Open Lower As Investors Draw Breath

Stock index futures indicate that the Dow Jones and S&P 500 may open slightly lower this morning, after setting new records last week.

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LONDON — Stock index futures at 6.30am ET indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI) may open down by 0.08% this morning, while the S&P 500 (SNPINDEX: ^GSPC) may open down by 1.2 points. The CNN Fear & Greed Index is set to open at 60, or greed, down from Friday’s close of 68, perhaps indicating that investors are turning more cautious.

European markets touched two-month highs this morning, after the latest eurozone private sector PMI showed returned a reading of 50.5 for July, suggesting that the eurozone’s private sector has returned to growth for the first time since January 2012. In the UK, the service sector PMI for July rose to 60.2, a level last seen in 2006, and a big increase in June’s reading of 56.9. In corporate news, HSBC Holdings dropped 4.2% after its first-half earnings disappointed investors. At 7.00am ET, the FTSE 100 was up 0.05%, the DAX was down 0.05% and France’s CAC 40 was up 0.16%.

US markets may have a more subdued start to the week, after Friday’s jobs disappointment. No major economic reports are due today, except for July’s Institute of Supply Managers’ non-manufacturing PMI at 10am ET, which is expected to rise to 53.1%, up from 52.2%. Investors may also be tracking developments relating to the terror threats that have closed 19 U.S. consulates and embassies, mainly in Muslim countries.

On the corporate front, meat and processed foods producer Tyson Foods is expected to report fiscal third-quarter earnings of $0.60 per share on revenue of $8.7bn, before markets open this morning. Rockwood Holdings reported quarterly profits of $0.41 per share, an 86% fall from the same period last year, when it earned $2.81 per share. The company said that the losses were due to charges taken on disposals and poor performance in its paint pigment business. Other companies due to report earnings this morning include E. W. Scripps Company and Kosmos Energy Ltd.

Other stocks that may be actively traded when markets open include Warren Buffett’s Berkshire Hathaway, which reported a 46% increase in second-quarter profits after markets closed on Friday. The firm’s B-class shares closed up 0.5% on Friday, before the results announcement. Shares in cruise ship operator Carnival Corp were 1% higher in pre-market trading this morning, and oil services giant Schlumberger was also higher.

Finally, let’s not forget the Dow’s daily movements can add up to some serious long-term gains. Indeed, Warren Buffett recently wrote: “The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions.

If you, like Buffett, are convinced about the long-term power of the Dow, you should read “5 Stocks To Retire On“. Your long-term wealth could be transformed, even in this uncertain economy. Simply click here now to download this free, no-obligation report.

> Roland owns shares in HSBC Holdings but does not own shares in any of the other companies mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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