The Day Ahead: Alcoa Spurs Optimism

 | Jan 10, 2012 | 8:29 AM EST  | Comments
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In the Headlines

A better-than-expected start to earnings season helped boost stocks around the world. Wall Street was poised for a higher open Tuesday, on the heels of gains on the indices Monday.

In its fourth-quarter report after the bell Monday, Alcoa (AA) issued a sunny outlook for aluminum demand, sending shares higher in the premarket. As expected, the company reported a quarterly loss that was in line with analyst forecasts.

European stocks were trading sharply higher Tuesday, on Alcoa-generated optimism about the fourth-quarter earnings season.

On the sovereign debt front, Fitch said that Italy's debt burden makes that nation the largest threat to the euro's survival. The bond rater is reviewing Italy's debt, and may issue a downgrade before the end of this month. The euro inched up vs. the U.S. dollar Tuesday morning.

In Asia, the Shanghai Composite extended its winning streak to three sessions. The upside action followed news that Chinese regulators would institute market reforms, including monetary easing.

Alcoa's outlook spurred gains in aluminum companies and other resource-related issues in Asia. Japanese markets re-opened for business after a holiday, finishing the session with a gain of 0.38%.

Economic Docket

There isn't much on the U.S. economic calendar today. At 10 a.m. EST, the Commerce Department reports wholesale inventories for November. Analysts see a gain of 0.6%, following October's increase of 1.6%. This release generally does not have much effect on equity markets.

Also at 10, the Labor Department issues its monthly job opportunities and labor turnover survey, dubbed JOLTS. These data indicate how many workers are voluntarily quitting their jobs, which is interpreted as a sign of confidence: People don't generally quit their jobs unless they anticipate an opportunity ahead.

Commodities Corner

In commodities news, gold attempted a rebound after Monday's downside trade, gaining $22.90 early Tuesday, to $1,631 per ounce.

Crude oil advanced $1.33 per barrel in electronic trade, to $102.64.

Earnings

While the Alcoa earnings news grabbed attention after the bell Monday, the pace slows down today, with not much on the docket.

After the close, electronics distributor Synnex (SNX) is expected to report fourth-quarter earnings of $1.14 per share and revenue of $2.82 billion. Shares of the California-based small-cap are working on their fourth straight month of gains.

Market Movers

Turning to premarket movers, Alcoa advanced $0.26, or 2.8%, to $9.69.

Juniper Networks (JNPR) slumped $0.08 to $21.45 in early trade. On Monday, the stock bolted 5.4% in heavy volume, before the company lowered its fourth-quarter earnings outlook. It reports on Jan. 26. Nonetheless, Piper Jaffray upgraded the stock to Overweight from Neutral this morning, saying it expects fiscal 2012 to be strong. 

Tiffany & Co. (TIF) wasn't looking too lustrous early Tuesday, after slashing its earnings guidance for 2011. Its fiscal year ends this month, and the company is expected to report results in March. Shares skidded $4.97, 7.42%, to $61.97 in the premarket.

Meanwhile, Lululemon Athletica (LULU) raised its fourth-quarter earnings outlook. It now sees profit in the range of $0.47 to $0.49 per share, vs. earlier guidance of $0.40 to $0.42. In a statement, CEO Christine Day cited strong customer response to holiday-season offerings. Shares vaulted $5.71, 10.68%, to $59.15 ahead of the open.

Apple (AAPL) rose $4.38, or 1.04%, to $426.11 in the premarket. The company was in the news for a couple of reasons this morning. According to Securities and Exchange Commission filings, CEO Tim Cook's total compensation tallies $378 million.  Some company watchers say Steve Jobs had been instrumental in determining Cook's pay level.

In product news, Apple is not showing its TV technology at this week's Consumer Electronics Show in Las Vegas. However, many industry analysts are anticipating that developments from the Cupertino, Calif., company will have a dramatic impact on the TV business. Other manufacturers are showing their latest-generation screens at CES.

Analyst Actions

In addition to Piper Jaffray's upgrade of Juniper, analyst moves Tuesday included a Deutsche Bank resumption of coverage of AT&T (T). The telecom got started with a rating of Hold, with Deutsche Bank citing pressures on wireless margins and strategic uncertainty ahead. Shares of the DJIA component rose $0.21 to $29.87 in early trade.

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