Dow May Fall Ahead Of Home Sales Report

LONDON — Stock index futures at 7am ET indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI) may open down by 0.13% this morning, while the S&P 500 (SNPINDEX: ^GSPC) may open down by 0.10%. CNN’s Fear & Greed Index remains in the fear zone, but is set to open higher at 32 today, after closing at 26 yesterday.

European markets were mixed this morning, ahead of this afternoon’s eurozone consumer sentiment report. In the UK, revised second-quarter GDP figures show that the UK economy grew by 0.7% in the second quarter, up slightly from the initial estimate of 0.6%. Investors were also digesting remarks by European Central Bank council member Ewald Nowotny, who said yesterday that he could see no reason for further interest rate cuts in the eurozone, as a weak recovery was underway. At 7am ET, the FTSE 100 was up 0.22%, the DAX was unchanged, and the CAC 40 was down 0.44%.

Today’s US economic calendar is relatively quiet, but investors will watch for July’s new home sales report, which is due at 10am, and is expected to show that new home sales fell to 485,000 in July, down from 497,000 in June.

Companies scheduled to report earnings before markets open this morning include Hibbett Sports, which reported a 33% increase in second-quarter earnings per share, compared to the same period last year. Hibbett said that comparable store sales increased by 0.3% on a calendar basis but cut its 2014 earnings guidance, indicating that it now expects diluted earnings per share of between $2.65 and $2.77 next year, down from a previous estimate of $2.85 to $3.05. Fellow retailer Foot Locker is also expected to report quarterly results before the opening bell, as is Ann Inc.

Financial stocks may be actively traded today, after credit rating agency Moody’s placed Goldman Sachs, J.P. Morgan Chase, Morgan Stanley and Wells Fargo under review for a rating downgrade. J.C. Penney stock may be in demand; the struggling retailer’s share price rose by 9.5% in pre-market trading this morning, after it announced yesterday that it was adopting a ‘poison pill’ defence against possible hostile takeovers. However, Pandora Media was down 5.8% in pre-market trading; the internet radio company reported earnings that beat analysts’ estimates last night, but its third-quarter outlook came in below forecast, disappointing investors.

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.