The Day Ahead: JPMorgan Earnings in the Mix

 | Jan 13, 2012 | 8:29 AM EST
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In the Headlines

JPMorgan Chase (JPM) got earnings season going for the financials with its fourth-quarter report this morning.

Futures pointed to a mixed open on this Friday the 13th, following the bank's in-line earnings. NYSE stocks indicated moderately lower, with the Nasdaq pointing to a slightly higher open.

Overseas, European banks were among leaders pulling the bourses higher. Traders remained optimistic following Thursday's successful bond auctions in Spain and Italy. Today's Italian bond auction resulted in lower yields, but currency traders expressed some disappointment that demand was not as high as expected.

After rebounding earlier this week, the euro skidded again following the auction, and was trading lower vs. the greenback.

Asian indices ended mostly higher, as traders in the region were also encouraged by Thursday's news from Europe. The Shanghai Composite retreated 1.34% after notching solid gains earlier in the week.

Economic Docket

Economic news includes the Commerce Department's numbers on November's trade balance, out at 8:30 a.m. EST. Economists anticipate that the gap increasing to $44.7 billion, up from October's $43.5 billion. The Commerce Department also releases December import/export prices at 8:30.

At 9:55 a.m. is the University of Michigan's Consumer Sentiment Index, always an eagerly anticipated report. Analysts see an increase to 71 from the most recent reading of 69.9.

Commodities Corner

Crude oil remained below the century mark early Friday, but advanced $0.07 per barrel to $99.17. Natural gas, which has fallen recently, slipped $0.029 in early electronic trade, to $2.67 per BTU.

Gold fell $6.30 per ounce before Wall Street's open, to $1,641.40.


JPMorgan shares fell $1.04, or 2.8%, to $35.81 in premarket trading, after saying fourth-quarter income came in at $0.90 a share, in line with views. That marked a year-over-year profit decline, which analysts had expected. Revenue of $22.2 billion was slightly below expectations. Analysts say the bank's trading unit was largely responsible for the shortfall.

In a statement, CEO Jamie Dimon called revenue "modestly disappointing." JPMorgan has been among the best-performing financials in recent quarters.

Early Movers

Meanwhile, Bank of America (BAC) slipped $0.15, 2.2%, to $6.64 in early trade. The company reportedly may exit some regions of the U.S. if its financial woes worsen.

Pharmaceutical Novartis (NVS) fell $0.77, 1.4%, to $55.96 before Friday's open. The Swiss company said it would cut 1,600 jobs. Its blockbuster blood-pressure medication, Diovan, loses patent protection later this year. That will allow generics to manufacture and sell the drug at lower prices.

Analyst Actions

Chipotle Mexican Grill (CMG) rose $3.38, or 1%, to $351 early Friday. William Blair upgraded the stock to Outperform from Market Perform, citing sales momentum. Sales grew at a rate of 17% in the most recent quarter, down from a 27% growth rate in the previous quarter.

A cloud play was the recipient of a downgrade Friday. Citigroup demoted VMware (VMW) to Sell from Neutral. The analyst said a slowdown in the server business was behind the move. At the same time, Citigroup recommended fellow virtualization specialist Citrix (CTXS) instead, upgrading the stock to Buy from Neutral.

VMware dropped $3.38, or 3.9%, to $84.50 in the premarket.

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