Futures indicated a higher open for the stock market on Wednesday, prompted by a follow through buying from yesterday’s final hour rally and another decline in oil prices. Investors seems to be getting more comfortable with the rational ; that a correction and continued downward pressure in oil prices is the right remedy in order for the markets and the economy to start lifting.
As traders waited the weekly Petroleum inventory data, Dow Jones Industrial showed strength through the first hours of trading, posting as many as 90 points to the upside. However, despite continued buying interest in the financial sector – the major averages reversed from their morning highs as crude pushed to a new intraday rebound high. The reversal occurred following investor reactions to the inventory data which showed a larger than expected draw, allowing this way crude to pare some of its losses, spike, to only then pull back again and hit fresh session lows of $124.56.
The Dow, S&P 500 and Nasdaq Composite trended lower in mid-session as a rally by financial stocks lost some of its momentum. However, modestly firmer levels of trade persisted while broader stock indicators advanced in the final hour of trading, allowing Dow Jones to add almost 30 pts in marginal gains.
With a continued downtrend and the presence of a corrective pattern in oil prices, the progression of a stock market from extremely oversold levels to a bull market ; remains intact.
In other news
– On the earnings front, drug maker Pfizer Inc. (PFE) reported its quarterly results. The company beat by $0.01 of $0.54 consensus and saw its 2Q sales rise 9.5% to $12.13 billion. U.S. revenues declined 2% to $4.8 billion amid the loss of market exclusivity for allergy drug Zyrtec and cancer drug Camptosar. However, non-U.S. revenue rose 18% to $7.4 billion. Favorable currency-exchange rates boosted revenues by $800 million, or 7%. Pfizer reiterated its 2008 guidance.
– The data storage company – EMC Corp. (EMC) topped estimates by $0.01, better than consensus of $0.17. Co’s sales outside the United States, grew 18 percent – to $3.67 billion from $3.12 billion y/y and its net income increased by 13 percent – to $377.5 million or 18 cents per diluted share. Today’s reporting marked the co’s 20th consecutive quarter of double-digit revenue growth.
– ConocoPhillips (COP) one of the three largest U.S. oil companies, reported its second-quarter earnings rose significantly, benefiting from the record crude oil prices. Net income in the quarter rose to $5.44 billion, or $3.50 a share – $0.05 better than the consensus estimate.
Meanwhile, Boeing Co (BA), Yahoo! Inc. (YHOO), E*Trade (ETFC), VMware (WMW), and Washington Mutual (WM) fell short of Street’s expectations while Costco Wholesale Corp. (CSCO) warned that its fiscal fourth-quarter and full-year profits will fall below the current consensus due to inflation.
– Fed’s Beige Book release today, stated – “Reports from the 12 Federal Reserve districts suggested that the pace of economic activity slowed somewhat since the last report”.
– Gold finished negative of $22 to $926.50 ounce.