A Peek Into The Market Before The Trading Starts

US stock futures are mixed this morning as investors are awaiting the key retail-sales data as well as the US Federal Open Market Committee's (FOMC) decision on monetary policy. Futures for the Dow Jones Industrial Average lost 3 points to 11,363, while the S&P 500 index futures gained 2.80 points at 1,239.00. Futures for the Nasdaq 100 index moved up 4.25 points to 2,215.

Mixed sentiments ruled the European markets today. While STOXX Europe 600 Index has fallen 0.16%, London's FTSE 100 Index moved up 0.19%. Asian markets ended in the positive territory, with Japan's Nikkei Stock Average adding 0.22%, Australia's S&P/ASX 200 moving up 0.20% and China's Shanghai Composite gaining 0.14%.

Sterne Agee is downgrading A.O. Smith Corp.

to Neutral from Buy. It has a $43 price target on shares. In a note sent to investors Sterne Agee writes, "We are downgrading AOS to Neutral from Buy as we believe that shares are likely to consolidate in the near term as AOS closes on the divestiture of its EPC business. Additionally, with the company receiving $700M in cash and $175M in stock, we believe that while the avenues for reinvestment of the proceeds appear robust, the timing of the redeployment remains uncertain. While management noted that there are plenty of markets for investment, particularly in water infrastructure in developed markets and water heating and treatment in overseas regions, we believe that multiple acquisitions will likely have to be accomplished over an extended period to account for the loss in earnings from the divestiture. Also, as shares are within 1% of our $43 price target, we believe at the current valuation the risk/reward is not as attractive given the uncertainty of timing for cash redeployment." Shares of AOS lost 52 cents yesterday to close at $42.55.

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