Morning Report: February 2, 2012

Ahead of the Bell: Dow futures are trading down 19 points and S&P futures are trading down 2 points despite reports that China will easy monetary policy to stimulate global growth.  Mining stocks will be in focus today after European based Xstrata said it is in talks to merge with Glencore to create a $79 billion company.  Greece said it has 3 to 4 sticking points remaining with private bondholders, but the major negotiations for a bond swap is all done.  

• On the economic calendar today, the Labor Department will release weekly initial jobless claims before the market opens and it is forecasted to be 370K compared with 377K for the prior week.  Productivity and Cost for the final quarter of 2011 will also be out before the market opens and is expected to be 0.8% versus 2.3% for the 3^rd quarter.  Federal Reserve Chairman, Ben Bernanke will be speaking on The Economic Outlook and Federal Budget Situation before the House Budget Committee.  Dallas Federal Reserve Bank President, Richard Fisher, will be speaking to the Headliners Club of Austin, Texas on the economy and monetary policy.  Companies reporting earnings include Allergan, Beazer Homes, Blackstone, Boston Scientific, Cardinal Health, Cigna, Dow Chemical , Goodrich, Kellogg, MasterCard, Merck & Co, New York Times, Royal Caribbean Cruises, Sara Lee, and Sony.   The dollar is up against the major currencies.  Crude oil is currently trading at $96 a barrel.  Gold is trading at $1,742.  


• Yesterday, stocks gained after manufacturing activity in the US, China, and the UK grew more than expected. Greece was close to an agreement with private bondholders for debt refinancing.


• On CNBC today, Andrew Liveris, President, Chairman and Chief Executive Officer of The Dow Chemical Company, talked about DOW’s Q4 earnings results and what he expects to see going forward.  The firm reported Q4 EPS 25c ex-items vs. consensus 30c and revenue of $14.1B vs. consensus $14.19B.  Liveris expects challenges in Western Europe to persist and acknowledges exchange rates will continue to impact the company.  He also sees higher feed stock costs in the future, though excess shale gas supplies may help ease pricing.  The company plans to continue its dividend and Liveris thinks Dow will benefit from higher margins going forward.  DOW is trading 2% lower in the pre-market.   


• Happy Thursday, have a nice day.  

Wednesday’s Close

DJIA up 83.55 pts/+0.66%/12,716.46

S&P up 11.67 pts/+0.89/1,324.08

Nasdaq up 34.43 pts/+1.22/2,848.27

Thursday’s Futures

Dow Futures down 19.00 pts/-0.09%

S&P Futures down 1.40 pts/-0.11%

Nasdaq Fut down 2.58 pts/-0.08%

Overseas Markets

FTSE -0.27%

CAC 40 -0.15%

NIKKEI 225 +0.76%

HANG SENG +2.00%

Overseas:  World stock markets were mixed today.  European and Asian markets were up after Greece said it is close to a deal with private bondholders.      

Economic Reports:  Initial Jobless Claims expected to be 370K and Productivity and Costs expected to be 2.3% at 8:30 a.m.

Top Headlines:    

• Bloomberg reports FINRA has filed a complaint against Charles Schwab (SCHW) accusing the firm of requiring customers to waive their rights to pursue class action suit against the company.


• Reports indicate the CFTC is conducting an extensive review of how futures brokerage houses are regulated, following the collapse of MF Global.


• Marathon Petroleum Corporation (MPC) announced it plans to spin off its pipeline business and implement a $2 billion share buyback.


• Pfizer Inc. (PFE) said it is recalling two types of birth-control pills as they might not contain adequate ingredients and could result in unplanned pregnancy.    

Commodities/Currency:

Gold:down $1.10 to $1,742.85
Oil: down 1.09 to $96.46

EUR/USD 1.3099 -0.0010
USD/JPY 76.1150  -0.0600
GBP/USD 1.5819 -0.0010

Volatility Index (VIX): As of the close of business Wednesday, February 1, the VIX is down 0.89 at 18.55

Companies Reporting Quarterly Earnings:     

Sara Lee (SLE): FQ2 EPS of $0.27 beats by $0.02. Revenue of $2.08B (+6.3% Y/Y) misses by $60M.

Goodrich (GR): Q4 EPS of $1.85 beats by $0.29. Revenue of $2.15B (+18.8% Y/Y) beats by $20M.

Navigant Consulting (NCI): Q4 EPS of $0.21 beats by $0.02. Revenue of $197M (+8.2% Y/Y) beats by $4.5M.

Dice Holdings (DHX): Q4 EPS of $0.15 in-line. Revenue of $47.4M (+25.2% Y/Y) in-line.

Benchmark Electronics (BHE): Q4 EPS of $0.17 beats by $0.07. Revenue of $559M (-10.8% Y/Y) beats by $47M.

TECO Energy (TE): Q4 EPS of $0.25 misses by $0.04. Revenue of $750.2M (-3.2% Y/Y) misses by $95M.

Alliant Techsystems (ATK): FQ3 EPS of $1.51 misses by $0.51. Revenue of $1.12B (-1% Y/Y) in-line.

Today’s Opening and Closing Bells:

Greenway Medical Technologies President and CEO Tee Green, joined by members of Greenway Medical Technologies’ management team, will ring the opening bell.

Sensient Technologies Visits NYSE to Celebrate 35-year Listing Anniversary on the NYSE, Paul Manning, Sensient Color Group President will ring the closing bell.