Morning Report: February 22, 2012

Ahead of the Bell: Dow futures are trading down 5 points and S&P futures are trading down 2 points following reports that manufacturing in China may shrink for a fourth month in February, and Europe’s services and manufacturing output unexpectedly declined.  Tech companies will be in focus after Dell reported weak earnings and downside guidance.  



  • On the economic calendar today, existing home sales for January will be out after the market opens, and is expected to be 4.690M compared with 4.61M. Companies reporting earnings today include Boston Beer, MGM Resorts, Toll Brothers, Zale, Hertz, Hewlett-Packard, and Limited Brands.  The dollar is up against the euro and British pound and down against the Japanese yen.  Crude oil is currently trading at $105 a barrel.  Gold is trading at $1,753.  

  • Yesterday, stocks finished mixed after the Dow cracked 13K briefly, but erased earlier gains as Greece’s approval for a second round of bailout failed to spur enough consumer confidence, and crude oil surge, which weighed on the transportation and consumer sectors.

  • On CNBC today, Alison Deans, Varick Asset Management and Thomas Lee, JP Morgan Chief U.S. Equity Strategist, discussed the market rally. Deans predicted another 10-15% upside in the equity markets citing lower European risk, healthy corporate growth, and higher market multiples.  She thinks the concerns that were keeping people out of the markets are dissipating, but cautioned that crude oil and tensions in the middle east remain the wild cards.  Lee added that despite rising crude oil prices, inflationary pressures have largely declined and he agreed with Deans that the bull market is headed higher.

  • Happy Wednesday and have a nice day.

Tuesday’s Close


DJIA up 15.82 pts/+0.12%/12,965.69


S&P up 0.98 pts/+0.07/1,362.21


Nasdaq down 3.21 pts/-0.11/2,948.57


 


Wednesday’s Futures


Dow Futures down 5.00 pts/-0.05%


S&P Futures down 2.40 pts/-0.09%


Nasdaq Fut down 2.58 pts/-0.05%


 


Overseas Markets


FTSE -0.48%


CAC 40 -0.52%


NIKKEI 225 +0.96%


HANG SENG +0.33%


 


Overseas:  World stock markets were down today.  European and Asian markets are down on lower than expected service and manufacturing data from Europe and China.


 


Economic Reports:  Existing Homes Sales expected to be 4.690M at 10:00 a.m.


 


Top Headlines:    



  • The Obama administration is expected to detail plans today to lower corporate tax rate from 35%  to 28% as part of tax reform for corporations.

  • Reports indicate General Motors (GM) is in talks with PSA Peugeot Citroen over potential cooperation and alliance to manufacture cars.

  • Johnson & Johnson (JNJ) said CEO Bill Weldon will step down amid quality problems at its Tylenol unit.  Alex Gorsky, will become CEO this April and Weldon will remain Chairman.

  • Wells Fargo & Co (WFC) said it is buying BNP Paribas’s energy lending business, including $9.5 billion of total loan commitments and funded balances.   

  • MBA reports mortgage applications were down 4.5% vs. down 1% last week. The thirty-year fixed mortgage rate increased to 4.09% from 4.08%. 

Commodities/Currency:


Gold:down $5.10 to $1,753.85
Oil: down 0.60 to $105.65

EUR/USD 1.3225 -0.0001
USD/JPY 80.1545  +0.4195
GBP/USD 1.5705 -0.0075


 


Volatility Index (VIX): As of the close of business Tuesday, February 21, the VIX is up 0.45 at 18.23


Companies Reporting Quarterly Earnings:     


El Paso Electric Company (EE): Q4 EPS of $0.13 misses by $0.06. Revenue of $130.7M (+3.4% Y/Y) misses by $56M.


Donaldson Company (DCI): FQ2 EPS of $0.70 misses by $0.01. Revenue of $581M (+8.2% Y/Y) misses by $23M.


Garmin (GRMN): Q4 EPS of $0.96 beats by $0.31. Revenue of $910M (+8.6% Y/Y) beats by $140M.


Government Properties Income Trust (GOV): Q4 FFO of $0.56 beats by $0.04. Revenue of $51.7M (+40.2% Y/Y) beats by $3.7M.


Lumber Liquidators Holdings (LL): Q4 EPS of $0.30 misses by $0.05. Revenue of $174.5M (+13.9% Y/Y) beats by $4M.


Chico's FAS (CHS): Q4 EPS of $0.15 beats by $0.04. Revenue of $569.2M (+19.8% Y/Y) beats by $22.5M.


Anadigics (ANAD): Q4 EPS of -$0.14 misses by $0.02. Revenue of $36.5M (-39.4% Y/Y) misses by $1M.


Today’s Opening and Closing Bells:


 


Gazit-Globe Ltd. to celebrate the company’s listing on December 14, 2011 under the ticker symbol (GZT). Chairman and Founder Chaim Katzmanwill ring the opening bell.


 


Make-A-Wish Child Nachiketa Bhatnagar Visits the NYSE and will ring the closing bell.