Markets Lower, Closing News 1/26/12

Markets could not hold onto gains driven by enthusiasm over yesterday’s Fed report to hold interest rates near zero until at least 2014 as well as mostly positive economic reports.


Despite weekly jobless claims increasing 21,000 last week to 377,000 (370k expected), the figure still held below the 400,000 and the underlying trend continued to point to improving employment conditions.


Durable goods orders increased 3% (+2.0% expected) in December, the second straight monthly gain, and leading indicators increased 0.4% (+0.7% expected) to 94.3, rising to a five-month high in December.   The increase in orders showed stronger capital spending by businesses and suggested manufacturing is holding up in a slow-moving economy while the increase in leading indicators, though a little light, pointed to continued growth in the U.S. economy.


Lending to the drag on the Dow, new home sales (single-family properties) posted a surprising drop of 2.2% in December for the first time in four months to a seasonally adjusted 307,000 showing continued softness in the home sales markets as discounted properties remain available after the housing disaster.  Homebuilding stocks were impacted negatively by the report.


Market Indices/Statistics:



  • Dow closed down 22.33 pts/-0.18% to 12,734.63

  • S&P closed down 7.60 pts/-0.57% to 1,318.45

  • Nasdaq closed down 13.03 pts/-0.46% to 2,805.28

  • 6 of the 30 Dow stocks closed higher

  • 1 of 10 S&P 500 sectors closed up

  • Utilities was the only positive sector (+0.31%);  Telecom stocks were the laggards (-1.87%)

  • The VIX was up 0.26 to 18.57

  • Oil is up $0.50 to $99.90

  • Nat Gas is down $0.123 to $2.646

  • Gold is up $24.90 to $1,725.00

  • Euro vs. Dollar down $0.0001 to $1.3103

  • Dollar vs. Yen is down $0.35 at $77.42

Companies in the News:


J.C. Penney (JCP, +$6.44/+18.8% to $40.72) was up again today after giving earnings guidance of $1.59 ahead of analysts’ expectations of $1.25 during an analyst meeting today, a day after announcing its plans for reinventing its stores and changing the pricing strategies.


Earnings:


3M Co. (MMM, +$1.10/+1.3% to $87.58) reported EPS of $1.35 vs. expectations of $1.31; revenue was $7.1 billion, 5.7% higher than the $6.7 billion from the year ago period. 


AT&T Inc. (T, -$0.76/-2.5% to $29.45) reported EPS of $0.42 vs. expectations of $0.43; revenue was $32.5 billion , 3.6% higher than the $31.4 billion from the year ago period. AT&T announced a $6.7 billion loss due to a large break-up fee for its failed T-Mobile merger and expensive subsidies for smartphones; the company’s wireless service margin dropped to 28.7% from 43.7% a year ago as its subscriber growth lagged behind Verizon’s.


Bristol-Myers Squibb (BMY, -$0.22/-0.7% to $32.48) reported EPS of $0.53 vs. expectations of $0.55; revenue was $5.45 billion slightly below estimates of $5.5 billion.  The company warned that 2012 earnings could fall 12-17%, due in large part because Plavix sales are expected to decline significantly in the wake of cheaper generic versions being available. 2012 Results were hurt by spending to promote its next generation of “blockbuster drugs.”


Caterpillar (CAT, +$2.26/+2.1% to $111.31) announced EPS of $2.32 vs. expectations of $1.73; revenue was $17.2 billion, 34.6% higher than the $12.8 billion from the year ago period and ahead of analyst estimates of $16.05 billion.  The huge increase was due to a record year of sales and profits for the company thanks to acquisitions, increased demand for mining equipment, favorable commodity prices, and growth in construction machinery and parts sales.  The company projected strong growth for 2012 despite global economic uncertainly.


Colgate-Palmolive (CL, +$1.91/+2.1% to $91.35) returned EPS of $1.30 vs. expectations of $1.29; revenue was $4.2 billion, 4.9% higher than the $4.0 billion from the year ago period.


Time Warner Cable (TWC, +$5.40/+7.8% to $74.51) returned EPS of $1.31 vs. expectations of $1.20; revenue was $5.0 billion, 4.0% higher than the $4.8 billion from the year ago period.


JetBlue (JBLU, +$0.21/+3.8% to $5.80) reported EPS of $0.08 vs. expectations of $0.04; revenue was $1.1 billion, 22.2% higher than the $938.0 million from the year ago period.


Neflix (NFLX, +$21.15/+22.3% to $116.01)  shares soared again today after it reported better than expected EPS of $0.73 vs. expectations of $0.55; revenues were $875 million, up 18.8% from $595 million from the year ago period.  Results were driven by subscriber growth and resulted in several analyst upgrades and increased price targets.


Earnings after the Bell:


Juniper Networks (JNPR, -$0.25/-1.1% to $22.37) announced EPS of $0.28 in line with expectations; revenue was $1.1 billion down from $1.2 billion from the year ago period.  Q4 profit fell 49% as the network-gear maker's router sales continued to weaken.  The company forecast a grim first-quarter adjusted profit between 11 cents and 14 cents a share on revenue of $960 million to $990 million vs. analyst expectations of $0.26 and $1.1 billion, respectively.  Shares dropped 7.5% to $20.69 in after hours trading.


Starbucks EPS $0.50 vs. $0.49; Q1 revenue was $3.4 billion vs. $3.3 billion; upped low end of FYE guidance from $1.75 to a range of $1.78-$1.82 vs. expectations of $1.78. Global same store sales were robust during holiday season.  Highest quarterly earnings in company’s history.


Coming Friday:


Economic Reports:  Q4 GDP (QoQ +3.0% expected), Q4 Personal Consumption (+2.4% expected) at 8:30 a.m.; Jan. U. of Michigan Confidence (74.0 expected) at 9:55 a.m.   Earnings:  Altria Grp (est: $0.49), Chevron Corp. (est: $2.85), Dominion Resources (est: $0.64), Ford Motor (est: $0.25), Honeywell Intl (est: $1.04), NextEra Energy (est: $0.91), Procter & Gamble (est: $1.08), Southern Copper Corp. (est: $0.65)