Wednesday October 21st


Ferrari offers Wall Street a distraction

U.S. stock index futures indicated a higher open on Wednesday, with investor's looking to Ferrari's first day of trading and a fresh slew of corporate earnings reports. Traders took in earnings reports from Kimberly-Clark, Boeing, General Motors and Coca-Cola before the bell, among others. American Express, eBay, Texas Instruments, Tractor Supply, Fortune Brands, Kinder Morgan, Morningstar and Sallie Mae report after the close. Ferrari begins trading Wednesday after its initial public offering priced at $52, the top of the range Tuesday. The luxury sports carmaker has found plenty of interest in the 9 percent stake it offered, versus other companies' offerings that have been priced on the weak side. "By way of a bit of background, 46 years ago in 1969 Fiat-Chrysler bought a 50 percent stake in Ferrari which it then increased to 90 percent in 1988," said chief market analyst at CMC Markets, Michael Hewson. "The company hopes to sell 9 percent of that stake, which amounts to around 17.2m shares on the open market at $52 a share, at the top end of the price range, which would value the company in the region of $10 billion and raise about $895 million," he said. Both Nordstrom and Albertsons delayed their IPOs in the past week, and First Data went ahead with its big IPO though its stock is trading under the $16 offer price. While S&P 500 companies are mostly beating on the bottom line, 60 percent have seen weaker revenue growth. Profits are expected to decline by about 4 percent this quarter, according to Thomson Reuters. On the data front, no key releases are scheduled for Wednesday. In Europe, stocks were slightly higher as investors look ahead to a meeting of the European Central Bank (ECB) on Thursday and digested a slew of mixed earnings. Asian stocks diverged on Wednesday, with China posting its worst one-day performance in five weeks after being hit by a sudden bout of selling in small-caps in the afternoon session. The key Shanghai Composite index fell as much as 4.6 percent to 3,265.4 — its lowest level since August 21 — before clawing back up to eventually finish Wednesday 3.5 percent lower. On the other hand, the Nikkei index at the Tokyo Stock Exchange jumped nearly 2 percent to six-week highs, as weaker-than-expected trade data stoked expectations for further stimulus from the Bank of Japan (BOJ). Oil prices fell on Wednesday following a big build in U.S. crude inventories that fed concerns demand may not be enough to absorb one of the largest global surpluses in modern times. The American Petroleum Institute reported on Tuesday a rise in U.S. commercial crude stocks of 7.1 million barrels to 473 million barrels in the week to Oct. 16, trumping expectations for an increase of 3.9 million barrels. Brent crude for December was down 50 cents at $48.21 a barrel by 8:32 a.m. EDT (1232 GMT). U.S. crude futures for December delivery were down 83 cents to $45.46 a barrel. Investors awaited official oil inventory figures from the U.S. Energy Information Administration, due at 10:30 a.m. EDT (1430 GMT), to see if they confirmed the API data. Gold steadied on Wednesday a day after snapping a three-day slide supported by a softer dollar and expectations that the U.S. Federal Reserve will push back an expected hike in U.S. interest rates to next year. Spot gold was at $1,175.23 an ounce, little changed from $1,175.75 late on Tuesday. Prices rose 0.5 percent on Tuesday after three days of losses. U.S. gold futures for December delivery were down $1.90 an ounce at $1,175.60