Markets Higher, Closing News 1/10/12

Markets were in a positive mood today after absorbing Alcoa’s earnings release which was not as negative as feared even after the company lowered its guidance and announced a 12% reduction in its smelting capacity last week; AA was also bolstered by better than expected Chinese import results of +12.6%

According to several people familiar with the situation, as it stands, the plan for Greece to pay down its $200 billion in debt is to offer bondholders $0.15 in new cash and $0.35 in new debt for every 100 cents of Greek debt they hold. The maturity on the new debt is likely to be 30 years, but the interest rate is yet to be decided and is the most contentious part of the deal. The new bonds are expected to be under U.K. legal jurisdiction rather than Greek jurisdiction, because it prevents Greece from retroactively changing the terms of the debt. Also expected to be part of the offer, a structure that puts the new bonds on par with the European Financial Stability Fund.

Fitch currently does not expect to downgrade France’s debt in 2012.

Wholesale inventories raised 0.1% (+0.5% expected) while wholesale sales climbed 1.6 percent.

The JOLT’s number was 3.161 million vs. 3.224 mil. (revised down from 3.267 mil.) for October. Professional services down; leisure and hospitality were up.

NFIB Small Business Optimism was 93.8 (in line) and IBD/TIPP Economic Optimism was 47.5 (45.0 expected)

S&P closed up at its highest level since August and above a key benchmark number of 1285 after closing up 5 of the 6 session of 2012.

*Since 1950, the market has started the year with five consecutive gains on 38 occasions. It ended the year positive 87 percent of the time.

Market Indices/Statistics:

  • Dow closed up 69.78 pts/+0.56% to 12,462.47
  • S&P closed up 11.38 pts/+0.89% to 1,292.08
  • Nasdaq closed up 25.94 pts/+0.97% to 2,702.50
  • 23 of the 30 Dow stocks closed higher
  • All 10 S&P 500 sectors closed up
  • Financials was the most positive sector (+1.97%);  Utilities were the smallest gainers (+0.13%)
  • The VIX was down 0.38 to 20.69
  • Oil is up $0.84 to $102.15
  • Nat Gas is down $0.095 to $2.955
  • Gold is up $24.10 to $1,632.20
  • Euro vs. Dollar up $0.0010 to $1.2775
  • Dollar vs. Yen up $0.01 to $76.84

Companies in the News:

WebMD shares were hit hard, down $10.49/-28.6% to $26.25, after the company reported that CEO Wayne Gattinella has resigned; 2011 revenue and earnings will come in toward the lower end of guidance and 2012 outlook has also been decreased to a loss of 2-8%, this guidance excludes costs relating to the evaluation of strategic alternatives; the company also announced that it has terminated discussions relating to a potential sale of the company.

Lululemon Athletica rose $6.19/+11.6% to $59.87 after reporting that the company expects profit and sales in the current quarter to top earlier forecasts after a successful holiday season.  Sales at established stores are now expected to rise more than 20 percent in its fiscal fourth quarter putting to bed concerns over inadequate inventories and previously forecasted slow to low to mid-teens sales growth thanks to a higher quality customer with high brand loyalty. The company sees diluted earnings per share at $0.47 to $0.49, up from its previous forecast range of $0.40 to $0.42 a share. Revenue is seen between $358 million and $363 million, up from expectations of $327 million to $332 million and well ahead of $245 million in the fourth quarter a year earlier.

Tiffany & Co. (-$7.00/-10.5% to $59.94) cut its full-year earnings forecast following a disappointing holiday season due to weak spending in the U.S. and Europe. For its fiscal year ending Jan. 31, Tiffany now sees earnings of $3.60 to $3.65 a share, below its boosted November forecast for $3.70 to $3.80 a share and lower than the $3.76 per share expected by analysts.

Liz Claiborne shares dropped $1.29/-13% to $8.64 after cutting its outlook for the year as the company expects to push more of its cost cuts to 2013. The company expects earnings in 2012 of between $125 million and $140 million, compared with the $130 million to $150 million it previously forecast.

Charles River Labs shares traded up $4.79/+17.3% to $32.47 on rumors that it may be considering a sale of the company. The company is not commenting on the rumors.

In response to rumors that the European Commission’s Directorate-General for Competition had made a preliminary decision against the proposed merger between NYSE Euronext (+$1.22/4.6% to $27.79) and Deutsch Boerse, NYSE Euronext officially announced that it has not yet received any formal decision from the European Commission on the merger of the companies. The Commission has announced that it will make its final ruling on whether to clear the proposed merger by February 9, 2012. As a matter of policy, NYSE Euronext is not commenting on speculation. Further comments made by the media included the fact that an EU Antitrust Panel spokesperson shared that the agency has rejected the merger – and the EU Commission rarely goes against the Antitrust Panel. Many think NYX is worth more as a stand-alone entity than it would as a merged company with Deutsche Boerse – largely due to the sovereign debt issues in Europe.

Coming Wednesday:

Economic Reports:MBA Mortgage Applications (-4.1% for Nov.) at 7:00 a.m. and Fed’s Beige Book at 2:00 p.m.  Earnings:  None