Morning Report: April 20, 2011

Ahead of the Bell: Dow futures are trading up 136 points and S&P futures are trading up 18 points.  Investors will be focusing on earnings following better than expected first quarter results from Intel.  The company raised its guidance as a result of enterprise strength and new products.  Also, AT&T, United Technologies, and CSX Corporation all reported positive first quarter earnings results.

  • On the economic calendar today, existing home sales from the National Association of Realtors will be out before the opening.  According to Briefing.com, economists are looking for existing home sales to increase by 5 million annualized units.  Companies reporting earnings include Apple, AT&T, Travelers, United Technology, Freeport McMoRan, Qualcomm, and Wells Fargo.  Crude oil is currently trading about $109 a barrel.  The dollar is up against the Japanese yen and down against the euro and the British pound.  
  • Yesterday, stocks closed higher after Johnson & Johnson reported solid earnings results and a strong housing reports.  Also, gold topped a record $1,500 for the first time ever.  
  • According to IMF chief economist Olivier Blanchard the U.S. lacks a credible plan to cut its deficit over the medium term.  Blanchard also said the euro zone countries must  improve their productivity or trim salaries, or both, to get their economies back on track.
  • On CNBC today, CEO of CSX Corporation, Michael Ward talked about his company’s first quarter earnings.  Ward said he was really pleased with the results and sees positive trends as the economy keeps growing.  Ward also said assets in storage are being used, the company has experienced record capital spending in car fleets, he is very positive on the direction of the economy, the metals business is up 10% this quarter and he expects it to continue to grow.  Ward pointed out the higher prices of crude oil gives his company a competitive advantage.  However, the higher fuel cost continues to drag on the company.  Ward went on to say he sees a 45% increase in coal shipments helped by strong demand and a weak dollar helps.
  • Also, on CNBC today CFO of United Technologies Corp., Gregory Hayes talked about his company’s first quarter earnings.  Hayes said the increase in revenues comes from two areas, the carrier business and the U.S. commercial spare parts businesses.  Hayes also said he is seeing a renaissance in the manufacturing business in America, especially in the company’s Otis elevator business as the unit is not back yet but well on the road to recovery.  Hayes said customer pent up demand is driving the business as the economy recovers.  Hayes went on to say orders from China in the elevator business was positive and he sees a good year from the commercial airline business.
  • Today is the one-year anniversary of the BP oil spill in the Gulf of Mexico, Happy Wednesday, have a nice day.  

Tuesday’s Close

DJIA up 65.16 pts/+0.53%/12,266.75

S&P up 7.48 pts/+0.57%/1,312.62

Nasdaq up 9.59 pts/+0.35%/2,744.97

Wednesday’s Futures

Dow Futures up 136.00 pts/+1.09%

S&P Futures up 18.10 pts/+1.34%

Nasdaq Fut up  32.00 pts/+1.42%

Overseas Markets

FTSE +2.18%

CAC 40 +2.35%

NIKKEI 225 +1.76%

HANG SENG +1.60%

Overseas:  World stock markets were up today.  European and Asian markets were up on upbeat earnings news and housing data from the U.S.

Economic Reports:  Existing Home Sales expected to be 5.000 M @ 10:00 a.m.

Top Headlines:    

  • AES Corporation (AES) announced it is acquiring DPL Inc. (DPL) for about $3.5 billion in cash or $30 per share to expand its business in the Mid West by adding 500,000 new customers.
  • Reports indicate BofA (BAC) plans to exit the business of making private equity investments.  BofA inherited the business from Merrill which had made about $5 billion in investments.
  • NRG Energy (NRG) said it will abandon plans to build two nuclear reactors in Texas and writing off its investment of $331 million after uncertainties created by the accident in Japan.
  • MBA reports mortgage application rose 5.3 percent in the week ended April 15.  The 30-year mortgage rates averaged 4.83 percent in the week, down from 4.98 percent the week before.    

 Commodities/Currency:

Gold:up $6.65 to $1,503.85
Oil:up $1.70 to $109.40

EUR/USD 1.4493 +0.0160
USD/JPY 82.7750  +0.2100
GBP/USD 1.6350 +0.0031

Volatility Index (VIX): As of the close of business Tuesday, April 19, the VIX is down 1.09 pts to 15.87

Companies Reporting Quarterly Earnings:   

Altria (MO): Q1 EPS of $0.44 in-line. Revenue of $3.94B (-0.2% Y/Y) beats by $0.05B.

United Technologies (UTX): Q1 EPS of $1.13 beats by $0.06. Revenue of $13.34B (+10.8% Y/Y) beats by $490M.

Nasdaq (NDAQ): Q1 EPS of $0.61 in-line. Revenue of $415M (+3.8% Y/Y) beats by $6M.

Quest Diagnostics (DGX): Q1 EPS of $1 vs. consensus of $1.01. Revenue of $1.82B (+0.9% Y/Y) beats by $0.02B.

Abbott Laboratories (ABT): Q1 EPS of $0.91 beats by $0.01. Revenue of $9.04B (+17% Y/Y) beats by $0.22B.

MGIC Investment (MTG): Q1 EPS of -$0.17 misses by $0.23. Revenue of $353M (-4.8% Y/Y) misses by $3M.

Autoliv (ALV): Q1 EPS of $1.92 beats by $0.16. Revenue of $2.10B (+22.6% Y/Y) beats by $0.08B.

Huntington Bancshares (HBAN): Q1 EPS of $0.14 beats by $0.02.

Hanesbrands (HBI): Q1 EPS of $0.49 beats by $0.16. Revenue of $1.03B (+12% Y/Y) beats by $0.03B.

EnCana (ECA): Q1 EPS of $0.02 vs. consensus of $0.15.

Knight Capital Group (KCG): Q1 EPS of $0.33 beats by $0.06. Revenue of $340M (+19% Y/Y) beats by $44M.

Eaton (ETN): Q1 EPS of $0.84 beats by $0.04. Revenue of $2.10B (+22% Y/Y) beats by $0.08B.

Textron (TXT): Q1 EPS of $0.10 misses by $0.07. Revenue of $2.48B (+12% Y/Y) misses by $0.03B.

Elan (ELN): Q1 EPS of -$0.01 beats by $0.04. Revenue of $310M (-0.8% Y/Y) beats by $13M.

Today’s Opening and Closing Bells:

Air Lease Corporation Celebrates IPO on the New York Stock Exchange. Chairman & CEO, as well as billionaires (see Forbes list) Steven F. Udvar-Házy will ring the opening bell. 

NYSE Euronext CEO Duncan Niederauer and Leadership Group Discuss Importance of Capital Markets at SMU Cox School of Business will remotely ring the closing bell .