January 31, 2011
It’s a bit of a critical day for stocks. Stock traders sold on Friday and asked questions over the weekend against the backdrop of unrest in Egypt. Worries of escalating violence and perhaps disruption of Suez Canal traffic are still around this morning, but appear to have been set on the back burner.
On the front burner are earnings from ExxonMobil. $1.85 of profit is 22 cents better than expected. Exxon shares are indicated about one percent higher pre-market.
The deal that has Alpha Natural buying Massey Energy is done. The deal by which Sanofi is trying to buy Genzyme is still alive, as the companies have agreed to exchange some confidential information.
Home Depot received a broker upgrade this morning and Lowe’s was downgraded on word that Home Depot will be taking step to increase their appeal to women.
Personal Income and Spending numbers come at 8:30. At 9:45 the Chicago PMI is expected to cool off from December’s 68.6 to a still-healthy level of 65.
Mainland China was up over one percent overnight, although most other Asian markets were a bit lower. European stocks are back up to about the breakeven point.
Our futures, on the famous other hand, have been a bit higher since around 7 o’clock, and were boosted by the Exxon numbers twenty minutes ago. At this point, adjusted for fair value, the S&P 500 futures are higher by 4½ points, the Dow futures are up 39, but the NASDAQ futures are about 6½ points above fair value.
For the first time in recent memory, we’re looking at several earnings reports that for one reason or another fell short of Wall Street estimates. Poster child of the morning is over in Dearborn at Ford Motor. Falling far short of what Wall Street was thinking, Ford earned only a nickel per share during the quarter. After one-time items, the profit was actually 30 cents per share, but the Street was expecting 48 cents. Ford shares are indicated about 7 ½ percent lower pre-market.
Amazon reported last night, and although profits we’re bad, margins slipped and the stock looks to open 8 or 9 percent lower this morning. Microsoft, whose earnings were leaked early on Twitter around 3:30 yesterday afternoon, earned 77 cents. That’s an 11 cent beat after selling 8 million Kinect units in the quarter.
Yesterday the Wall Street Journal reported that Borders was in the process of lining up 500 million dollars of debtor-in-possession financing, just in case a bankruptcy filing was necessary. Border’s stock jumped 36% last night on the news. If you wonder why a stock would rally 36%, when apparently on the brink of bankruptcy, you may have discovered the difference between investing and speculation.
In just 12 minutes, the Government’s first guess at 4thquarter Gross Domestic Product is expected to read 3.5%. That would be a pretty sizable improvement from the final third quarter increase of 2.6 percent.
Overseas markets are mixed, and our stock futures are playing wait-and-see with the GDP Report at 8:30. They’ve been hovering around the flat line all morning. At this point, adjusted for fair value, the S&P 500 futures are basically flat, the Dow futures are up 6, but the NASDAQ futures are about 4 points below fair value.
Lots of data to process this morning, and that’s even before we get the Weekly Jobless Claims and Durable Goods numbers at 8:30.
Big domestic earnings reports have been, without exception, better than expected this morning. The star of the show has been Caterpillar, earning $1.47 versus the estimated $1.27, although a piece of that 20 beat may have been an unusual tax benefit. No matter. Revenue was more than a billion higher than expected and guidance was raised.
Procter & Gamble checked in with $1.13 versus the $1.10 estimate. Although revenue came up a little short, P&G reaffirmed its guidance, although it’s at the low end of analyst estimates.
AT&T beat by a penny. However, new customers in their last quarter of iphone exclusivity, appear to be on the light side. Microsoft and Amazon report in after 4 o’clock today.
It looks like the one-two punch of iphone and Android may have Nokia on the ropes. Nokia says their profit is lower by 16% and their outlook isn’t so hot.
Mainland China is up 1½ percent. Most of Europe is higher, and absent an unpleasant surprise from the economic numbers at 8:30, we’ll start higher at 9:30.
At this point, adjusted for fair value, the S&P 500 futures are up by about 2 points, the Dow futures are up 23 and NASDAQ futures are more than 10 points above fair value.
January 25, 2011
We’ll have the State of the Union tonight, the State of the Consumer at 10 o’clock this morning and the state of corporate earnings, which have been gushing out all morning long.
I’ll just mention a handful here. Amgen’s $1.17 of earnings beat estimates by 6 cents. Kimberly Clark beat by a nickel, and 3M beat by a penny. 3M, however, raised their sale and earnings guidance pretty substantially for the remainder of the year. DuPont also beat estimates and raised their guidance.
Johnson and Johnson matched their number. However, Verizon and Corning each came up a penny short.
Coach, Travelers and Quest Diagnostics will all expand their stock buy-back plans this morning, which is usually a sign on management not knowing what else to do with their cash.
At 10 o’clock, the Conference Board’s Consumer Confidence number is expected to improve to 54.3 from last month’s 52.5.
Overseas markets are a mixed picture at this hour, and if we were to open right now, we’d give back some of yesterday’s big gains.
At this point, adjusted for fair value, the S&P 500 futures are down a little more than 4 points, the Dow futures are down 31 and NASDAQ futures are almost 13 points below fair value.
If you love to shop from the J.C. Penney catalog, well, you’re evidently a little too unique. Either that, or you just haven’t been buying enough. Penney announced this morning that it will close five department stores, one home store, 19 outlet stores and wind down its catalog business, all over the next couple of years.
There’s absolutely nothing on the economic calendar today, but earnings reports are hitting their stride. We’ll have half of the Dow Jones 30 reporting in this week, starting with McDonalds. $1.16 of earnings matched estimates. Revenue was also right in line.
Halliburton is out with 68 cents of reported operating earnings. That’s nearly 30% higher than the same quarter last year.
Southern energy company Entergy reported $1.29, which was 9 cents better than expected. Entergy also reaffirmed their guidance for the remainder of the year.
Japanese stocks rose overnight, but mainland China was again lower. And although the U.K. is a bit higher, mainland Europe is in the red. Our futures haven’t moved a lot this morning, but we should start a little bit higher .
At this point, adjusted for fair value, the S&P 500 futures are up a fraction, the Dow futures are up 6 and NASDAQ futures are about 2 points above fair value.
There are a handful of really big companies that will see their share prices rise this morning in the wake of some good earnings and dividend news.
Last night, Google announced a leadership shake-up, but also quarterly earnings that beat estimates handily. Google shares are indicated about 1½ percent higher this morning. Not to be outdone, oil services giant Schlumberger announced 85 cents in profit, which was an 8 cent beat. Schlumberger also raised its dividend by 19 percent.
General Electric’s profit rose 51%. The 36 cent profit was 4 cents better than expected. Advanced Micro Devices also beat estimates.
The most interesting report of the morning is from Bank of America. The 4 cents in profit appears on its >
If you’re looking for a pay raise, you might want to try moving east – like WAY east. Shanghai has announced a 10 percent hike in the minimum wage overnight to keep up with skyrocketing food prices.
The Japanese market was lower by about a percent and a half overnight, but mainland Chinese stocks rose. Europe is higher across the board and we’ll head higher at 9:30 as well.
At this point, adjusted for fair value, the S&P 500 futures are higher by about 5 points, the Dow futures are up 35 and NASDAQ futures are about 8 points above fair value.
The Dow Jones Industrial Average only dipped about a tenth of a percent yesterday but a five point rise in IBM really hid the scope of the damage as the overall market finished lower between one and two percent. The Russell 2000 index of smaller companies was actually off 2½ percent.
But today is another day, and it started off with a report on the Chinese economy that sent mainland Chinese stocks lower by three percent. Chinese Gross Domestic Product rose 9.8 percent last quarter. That’s hotter than the third quarter number and hotter than expected. Although the Chinese December inflation rate of 4.6% was a little better than expected, that 9.8% GDP is likely to usher in more monetary tightening in China, and that’s not good for profits.
Speaking of profits, United Health and Morgan Stanley are both out with better than expected results this morning. United Health reported 94 cents of operating profit. That’s a ten-cent beat. Morgan Stanley’s 43 cents was 8 cents higher than expected. Southwest Airlines matched the expected 15 cent per share profit.
A veritable slew of economic reports are on the way. Weekly Jobless Claims at 8:30 (look for 420,000 new claims) Existing Home Sales, Leading Economic Indicators and the Philly Fed Survey at 10, and then the EIA Petroleum Inventory Data at 11.
So, there’s a chance that there’s some good news in the offing that could turn stocks higher, but they wouldn’t open that way if the market were to open right now. Adjusted for fair value, the S&P 500 futures are lower by about 3 points, the Dow futures down 20 and the NASDAQ futures are about 12 points below fair value.
For financial assets like stocks, in the long run, it’s all about interest rates and earnings. As everyone knows, interest rates can’t get much better and sometimes it seems like certain companies are able to print more in profits than the U.S. Treasury can print in dollars.
Last night, IBM announced that hardware sales were up 21 percent, software sales rose 7 percent and quarterly profits hit $4.18 per share, which was ten cents better than expected. IBM projects 2011 profits of $12.56 per share.
Speaking of printing profits, there must be an app for that over at Apple. Take ipads, add iphones, add imacs, and you get iprofits that hit $6.32 for last quarter. That was more than a dollar better than Wall Street expected. Sales were 490 billion versus the expected 448 billion. Apple shares, that slipped a bit more than 2 percent yesterday on the news of Steve Jobs’ medical leave, made up more than half of that loss in the after-hours last night.
This morning, U.S. Bancorp and Wells Fargo matched estimates, State Street Bank beat by a penny. Goldman Sachs made $3.79 cents, 3 cents better than expected, although revenue looks light and the stock looks about 3 percent weaker pre-market.
Housing starts at 8:30 are expected to hold fairly steady.
Overseas markets are mixed.
Big earnings announcements just after 4pm can cause big differences between closing levels of the cash market and the futures. That means a big fair value adjustment, and after the IBM and Apple announcements yesterday afternoon, that’s exactly what we have this morning.
So, although the futures look a little lower on their >
In case you’re looking for an example of how one stock can bring down an index, look no further than your favorite fruit-named company. Steve Jobs announced yesterday that he is taking yet another medical leave of absence from his duties at Apple. Pre-market traders are giving Apple shares a 4½ percent haircut this morning, down almost 16 bucks to $332 per share.
Everything’s bigger in Texas, they say. This morning, Texas-based Comerica is getting bigger. Comerica is acquiring Sterling Bancshares in a deal that values Sterling at 10 bucks per share. That’s nearly a 30% premium to Sterling’s closing price Friday.
At 8:30 the Empire Manufacturing Survey, which reported a big increase in northeast manufacturing in November, is expected to continue that strength in December. Expect a reading of 14 from November’s 10.6.
Delta reported 19 cents of operating earnings this morning. That missed the mark by a nickel. Citigroup announced four cents per share of earnings. That’s only half of what was expected. Citi shares looking about 4½ percent lower pre-market. Apple reports earnings later on today.
Overseas markets are, for the most part, slightly higher. India bounced back one percent from its dive yesterday. Our stock market is looking to open a little lower, especially if you’re talking about your little slice of the Apple.
Right now, adjusted for fair value, the S&P 500 futures are down about a point, the Dow futures up only about 5 points. However, the NASDAQ futures, of which Apple is a significant component, are quite the mess. They are18points below fair value.
If it was all about earnings reports this morning, we’d be off to a good start. However, overnight and for the 7thtime since 2009, China’s Central Bank raised the reserve requirement on the Chinese banking system. It’s now up another half-percent to 19 percent, as the Chinese Central Bank tries to tamp down on inflation. You know, that’s the stuff our Central Bank is trying so hard to create. Anyway, that move sent markets overseas lower by one percent or so and it won’t help us in the early going, either.
India’s December inflation rate was 8 percent. Of course, they count silly things like food heavily in their index, which is a lot different than ours.
Back to the earnings news – well, that’s going very well, thank you. Last night Intel beat the 53 cent estimate by 6 cents on very strong sales and operating margins. Profits were 48% higher than a year ago. This morning, JPMorgan Chase reported 47% higher profits. They reported earnings of $1.12 versus the expected one dollar. A big chuck of that profit was from games accountants play with loss reserves, but still, it’s a good report.
At 8:30, Retail Sales are expected to have risen eight tenths of a percent, at 9:15 Industrial Production is expected to have inched up a tenth to a one-half of one percent increase, and just before 10, the University of Michigan’s first look at January Consumer Sentiment is expected to crawl up to a reading of 75 from December’s 74.5.
In front of all that, we should start a little lower this morning. Right now, adjusted for fair value, the S&P 500 futures are down 5 points, the Dow futures are lower by 44 and NASDAQ futures are almost 6 points below fair value.
Both the Bank of England and the European Central Bank stood still on interest rates this morning, as expected. South Korea’s Central Bank provided the surprise, raising short term rates to two and three-quarters percent.
On this side of the proverbial pond, the 8:30 report on weekly Jobless Claims could set our direction in the early going. Expect about 405,000 new claims, which would be a VERY slight improvement from last week’s 409,000. We’ll also get the December Index of Producer Prices, which is expected to hold steady at about an eight-tenths of a percent increase.
Yesterday, ITT announced that it would split itself into three separate companies. ITT stock rallied more than 14 percent yesterday. This morning, Marathon Oil announced that it will split its downstream operations off from its upstream operations. Look for a little gusher of price action in Marathon at the open.
Speaking of gushers, light sweet crude oil is just pennies below the 92 dollar per barrel mark once again.
Intel will report earnings later today. Analysts expect operating earnings of 53 cents per share. The big wave of blue chip earnings won’t wash ashore until next week.
Chinese stocks were flat overnight. Most of the rest of Asia were higher. European markets are pretty much nonplussed by the Central Bank rate decisions. Our futures, you might say are “small-plussed.” At this point, adjusted for fair value, the S&P 500 futures are higher by not quite a point, the Dow futures are up 7 and NASDAQ futures are about 2 points above fair value.
There’s a relief rally underway in Europe this morning. The “relief” is from fear that European sovereign debt problems were on the brink of getting a lot worse. However, this morning Portugal floated a variety of bond issues, totaling one and a quarter billion euros. Although Portugal will have to pay a higher interest rate than in the past, there was plenty of demand and the rate they will pay is not at break-the-bank levels.
The German and French markets have responded very well. Both are more than one percent higher. Of course, if Eurozone debt problems really deteriorate, it may be up to Germany and France to ride to the rescue, so the success of this morning’s auction is really good news there.
The focus for our markets today will be the 2 o’clock release of the Federal Reserve’s always fashionable Beige Book. That’s the Fed’s survey of regional economic conditions.
In front of that, keep an eye on ITT this morning. That big conglomerate will de-conglomerate before the end of the year, splitting into three companies. ITT stock is indicated about 15% higher in the pre-market.
Shares of General Electric and Goldman Sachs were hit with downgrades this morning. Wells Fargo, however, had some nice things to say about the domestic banking sector.
There’s nothing but green overseas, and our stock futures have us looking for solidly higher prices at 9:30. At this point, adjusted for fair value, the S&P 500 futures are higher by almost 8 points, the Dow futures are up 62 and NASDAQ futures are about 11 points above fair value.
The National Federation of Independent Businesses conducts a survey of small businesses each month and the results have reflected increasing optimism for four straight months – until now. The December survey dropped just a touch – down to 92.6 from 93.2 in November. Now remember, for most of December, Congress was still huffing and puffing about future income tax rates. Had the possible tax increases been averted earlier in the month, we’d probably be looking at better survey results. Check back next month.
Looking for another job this morning is the CEO of Advanced Micro Devices. Looking at about a 5 percent drop in price pre-market are the shares of AMD.
Alcoa kicked off earnings season last night with 21 cents per share of operating earnings. That beat estimates by two cents, although revenue was a little light and the stock is looking a little weaker this morning.
Sears Holdings has raised guidance. Sears is now looking at quarterly earnings anywhere from $3.39 to $4.14. Analysts were looking for about $3.09 in quarterly operating profit.
Most Asian markets were a bit higher overnight. Europe is higher on the order of one percent or so. We’ll continue yesterday’s late momentum at the open as well. At this point, adjusted for fair value, the S&P 500 futures are up about 5 points, the Dow futures are up 49 and NASDAQ futures are about 9 points above fair value.
Almost lost in the excitement over the Auto Show, today is the unofficial start of fourth quarter corporate earnings season. Alcoa will check in shortly after 4 o’clock today. Expect operating earnings of 19 cents per share from Alcoa, which would be quite an improvement from the one penny per share of profit a year ago.
There are a couple of big mergers to report this morning, as cash-rich companies continue to look around for good investments. DuPont is buying Danish food ingredient company Danisco. That’s an almost 6 billion dollar deal.
In a stock swap that values Progress Energy at nearly 14 billion dollars, Duke Energy is picking up Progress.
On a much smaller scale, Playboy Enterprises is going private at $6.15 per share.
The Chinese trade surplus, which was 27 billion dollars in October and 23 billion in November, was down to just 13 billion in December.
Japanese stocks didn’t trade overnight. Russia and Venezuela are also off for a holiday.
It looks like we’ll be giving back some of last week’s gains, at least at the open. Overseas markets are lower. At this point, adjusted for fair value, the S&P 500 futures are lower by about 6 points, the Dow futures are down 42 and NASDAQ futures are about 9 points below fair value.
It is once again the first Friday of the month, and that means the financial world will hold its collective breath in anticipation of the 8:30am Employment Report. With a lot of economic statistics reflecting a recovery in process, consumer confidence is key. The key to consumer confidence is employment. Expect that the economy will have added 150,000 non-farm jobs in December, with the Unemployment Rate dropping from 9.8 percent to 9.7. That’s still pretty anemic, but it would be a step in the right direction. Average hourly earnings are expected to have increased just a tick after no rise in November.
Ben Bernanke has been fairly invisible of late. Now that Congress is back in business, his calendar will start to fill. I’m sure that he’s so happy. Bernanke will testify before the Senate Budget Committee starting at 10 o’clock this morning.
At 10 o’clock, we’ll get a report on Consumer Credit balances, but that’s about it as we await the beginning of fourth quarter earnings reports next week.
At this point, adjusted for fair value, the S&P 500 futures are up about a point, the Dow futures are higher by about 19 and NASDAQ futures are about 2 points above fair value.
We’ll get some feel for the rumored rebound in consumer spending this morning as retail chain stores are reporting their December sales results. So far, Limited Stores checked in with a 5 percent rise in same store sales, which was about a half-percent better than expected. TJX sales were is 2 percent, versus an anticipated decline. Target, GAP and Macy’s all reported sales numbers that fell short of expectations. Macy’s earnings report also missed the mark.
There’s yet another Consumer Sentiment survey out. This one, from RBC, is reporting a slight dip in January, to 44.9 from December’s 45.2. People are reportedly more confident about keeping their jobs, but are now worried about rising gas prices and interest rates. In the words of Gilda Radner, “It’s always something!”
Speaking of keeping their jobs, in just about 10 minutes we’ll get the weekly Jobless Claims number. Last week claims dropped under the 400,000 level to 388,000, which was a pleasant surprise. This morning, expect the number to come in right around 410,000. The more closely watched monthly Unemployment Report comes tomorrow.
Overseas markets are painting a Christmas-like theme this morning – about half red and about half green.
Our stock futures have wobbled a bit this morning. However, if trading were to start right now, it would start with higher prices. Adjusted for fair value, the S&P 500 futures are higher by almost 4 points, the Dow futures are up 38 and NASDAQ futures are about 8 points above fair value.
It’s a big day in Washington, D.C. Today’s the day our new Congress gets sworn in. It’s been said that tomorrow is the day the new Congress starts getting sworn at. Anyway, the battles begin anew.
The battle to keep your job in America appears to be getting a bit easier. Outplacement firm Challenger, Grey and Christmas issued their monthly report on the level of layoff announcements, and it’s encouraging. December Job Cuts were 34% lower than in November, and they’re at the lowest levels in ten years.
There’s one deal in the news this morning, confirming yesterday’s rumor, Qualcomm is using some of their 10 billion dollar cash hoard to buy Atheros for 45 bucks per share in cash. Telephone-centric Qualcomm is evidently looking to move into the tablet computer market.
Traders must be thinking that the new Congress will shrink the budget deficit, as the dollar index is higher by four tenths of one percent. That’s having a predictable impact on commodity and stock futures this morning. Oil is lower by more than a dollar per barrel. Gold, for the moment is holding steady at just under $1,379 per ounce, after dropping 3 percent this week alone.
Outside of Hong Kong and Malaysia, overseas markets are lower.
The stock futures are well off their lows of the morning, as the ADP Employment Report was just released and looks pretty good. However, we’re still looking to open with lower stock prices. At this point, adjusted for fair value, the S&P 500 futures are down about 4½ points, the Dow futures are down 44 and NASDAQ futures are about 10 points below fair value.
We’ll be hearing about December car sales all day long. The annualized rate is expected to hold above 12 million units for the third month running and all of the traditional “Big 3” are expected to have done well. Expect GM and Ford to post more than 9 percent sales increases with Chrysler expected to be up more than 15 percent.
Motorola will officially split into two companies today, although if you’ve been following the share price over the past ten years, you’d have sworn that the company had split up at least a couple of times already. Anyway, henceforth we’ll have Motorola Solutions and Motorola Mobility, with ticker symbols MSI and MMI.
At 10 o’clock, the November Factory Orders report is expected in at a negative two-tenths of a percent. Yes, that would be negative, but it would be quite an improvement from October’s negative nine tenths of a percent.
This afternoon, the Federal Reserve will release the minutes from their December 14thmeeting, which could make for an interesting read, especially if you’ve finished the Harry Potter series and all the other fiction that you’d swear was real.
Quarterly earnings are due from Mosaic and Sonic a little later on. Upgrades for Apple and Amgen this morning. A thumbs down for J. M. Smucker.
Overseas markets are up a just little, except in London, which was closed yesterday – so they’re catching up with more than a 2 percent rise. At this point, adjusted for fair value, the S&P 500 futures are higher by about a point and a half, the Dow futures are up 21 and NASDAQ futures are almost 6 points above fair value.
It’s the first trading day of the New Year. It’s that wonderful time of the year when you can hear a wide variety of stock market pundits forecast results for the next twelve months. Of course, if you really believe that any of them CAN foretell the future, see if they can give you the winning Mega Millions numbers for tomorrow night. Then, you won’t have to worry about that silly old stock market at all.
The only people worried about today’s market action are the people who bet against it. We’ll get 2011 off to a strong start, even though the big earnings guns won’t start firing until next week.
The December ISM manufacturing index is expected to rise just a bit from November’s 56.6. Expect 56.9. Of course, anything about 50 signifies growth in the manufacturing sector.
General Motors got the “thumbs up” from Goldman Sachs and another big broker this morning. Other stocks receiving upgrades include Alcoa, Broadcom, AMD and Apple. Downgraded were PG&E, Intel, and a whole bunch of retailers including Coach. Tiffany, Talbot’s, Urban Outfitters and Aeropostale.
Stocks are not trading in London today. Same story in Japan, Australia and New Zealand overnight. They can play catch-up tomorrow, because 2011 appears to be getting off to a good start for everyone else. Stocks in France are up more than 2 percent.
At this point, adjusted for fair value, the S&P 500 futures are higher by about 10 points, the Dow futures are up 88 and NASDAQ futures are about 22 points above fair value.
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