Dow May Open Lower Ahead Of Home Sales Report And Earnings

LONDON — Stock index futures at 6.30am ET indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI) may open down by 0.11% this morning, while the S&P 500 (SNPINDEX: ^GSPC) may open 0.12% lower. The CNN Fear & Greed Index is gradually falling back from last week’s high of 68, and is set to open this morning at 60, suggesting that investor confidence may be weakening.

European markets edged higher this morning. At 6.30am ET, the FTSE 100 (FTSEINDICIES: ^FTSE) was up 0.27%, the CAC 40 was up 0.28% and Spain’s IBEX 35 was 0.57% higher. A number of individual stocks rallied in the wake of takeover and merger news, including Irish pharmaceutical firm Elan Corporation, which rallied 10% on news that US firm Perrigo is to acquire Elan in an $8.6bn cash and stock deal. London-listed advertising firm WPP was also higher, following news that advertising peers Publicis Groupe SA and Omnicom Group will merge in a deal valued at $35.1bn.

In the US today, the economic calendar is fairly quiet, but at 10am ET, June’s pending house sales report is expected to show that sales rose by just 0.1% in June, after gaining 6.7% in May. Investors may be watching this report closely, after home builders DR Horton and KB Home reported disappointing earnings last week, suggesting the housing recovery may be slowing. However, this week’s main economic highlight is likely to be the latest nonfarm payrolls report, which is due on Friday, and is currently expected to show that 175,000 new jobs were added in the private sector in July, down from 195,000 in June.

Earnings season continues, and one company whose results may attract particular attention is Herbalife, which is expected to report its second-quarter earnings after the close tonight. The nutritional supplements firm has been the subject of a feud between activist investors Bill Ackman, who is short Herbalife and has described the firm as a pyramid scheme, and Carl Icahn, who has built up a substantial long position in Herbalife stock.

Other companies scheduled to report their latest quarterly figures today include Loews Corp, Franklin Resources, Roper Industries, Simon Property Group, Hertz Global Holdings and Tenneco before markets open, while Anadarko Petroleum, Wynn Resorts, Caesars Entertainment and Eastman Chemical are amongst those expected to report after the close.

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.

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> Roland does not own shares in any of the companies mentioned in this article.