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Stock-index futures fell deeper into the red on Tuesday after slightly weaker-than-expected housing data added to uneasiness over mixed earnings reports.
The markets have been on a roll in the last past several weeks, with the blue chips soaring more than 9% so far this month, and currently trading at the highest level since early August. Both the Dow and the Nasdaq are modestly in positive territory for the year, while the S&P 500 is teetering just points away.
Corporate earnings were in focus on Tuesday morning.
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3M (MMM) earned $1.52 a share in the third quarter, falling far short of expectations of $1.61 a share. The diversified technology company, and Dow component, also sliced its full-year earnings forecast, sending shares falling sharply. Shipping company UPS (UPS), sometimes regarded as a bellwether, unveiled net profits of $1.06 a share for the third quarter, beating estimates by a penny.
Dupont (DD) unveiled quarterly earnings of 69 cents a share, excluding one-time charges, easily topping analysts' estimates of 56 cents. The chemical maker's sales of $9.2 billion also zipped past estimates of $8.79 billion.
Xerox (XRX) posted adjusted quarterly profits of 26 cents a share, beating expectations by a penny. Netflix (NFLX) reported after the closing bell on Monday, and warned that it lost more customers than expected as a result of twin mistakes: a steep price hike on its video rental and streaming service, and then an abrupt split into separate streaming and DVD businesses that caused widespread upset disappoint among once loyal customers. Shares were pummeled in early trade, nose diving as much as 37%.
Housing, Consumer Confidence Take Spotlight
Market participants will have two major economic reports to digest on Tuesday morning.
The S&P/Case-Shiller composite index of 20 metropolitan areas showed home prices rose 0.2% in August from July on a non-seasonally adjusted basis, a smaller increase than the 0.4% rise economists had expected. Price are down 3.8% from last year, a deeper drop than the 3.5% economists anticipated.
Home prices have been adversely affected by anemic demand in many areas of the country, a glut of supply, and weak overall economic conditions.
Consumers' confidence in the economy ticked slightly higher in October, according to economists' estimates. The Conference Board's gauge is anticipated to have risen to 46.5 from 45.4 the month prior. Confidence took a big hit from the late-summer market turmoil, and continued uncertainty over the economy and U.S. fiscal policy. Consumers' faith that the economy will remain strong is a key component in buying decisions, meaning these data are particularly important with the crucial holiday shopping season set to begin shortly.
Traders Closely Eye European Developments
Traders will also be keeping a close eye on Europe, where euro zone policymakers are set to meet on Wednesday in the second summit in four days to discuss the region's deepening debt crisis. Analysts are expecting clarity on how much the currency bloc plans on leveraging its rescue fund, what steps it will take to recapitalize the region's banking sector, and specifics on how it will structure Greece's bailout.
The issue of leverage has been particularly contentious: the French strongly supported the fund having the ability to sell troubled sovereign debt to the ECB, which would dramatically increase its firepower, but that proposal has been shot down by the Germans, who are seeking to limit financial exposure to the crisis striking periphery nations. The crisis is reaching an intense moment where it is threatening larger economies such as France and Italy, and leaders across the world have pressured European officials to act swiftly.
The euro fell by 0.21% to $1.390, while the greenback fell 0.19% against a basket of world currencies. Euro zone blue chips dipped 0.35%.
Oil got a boost from a weaker dollar, and speculation that flooding in Thailand may increase demand in the region. Light, sweet crude jumped $2.91, or 3.2%, to $94.18 a barrel. Wholesale RBOB gasoline slipped a penny, or 0.3%, to $2.68 a gallon.
In metals, gold jumped $10.80, or 0.67%, to $1,663 a troy ounce. Yields on government debt nudged higher. The benchmark 10-year note yields 2.273% from 2.239%.
The English FTSE 100 slid 0.35% to 5,533 and the German DAX jumped 0.83% to 6,106.
In Asia, the Japanese Nikkei 225 slumped 0.92% to 8,762 and the Chinese Hang Seng jumped 1.1% to 18,968.