The Day Ahead: Upside Action

 | Jan 18, 2012 | 8:30 AM EST  | Comments
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In the Headlines

Wednesday brought higher futures trade to Wall Street, as well as upside action on most global indices.

With bank earnings in the spotlight this week, Goldman Sachs (GS) reported better-than-expected profit before the opening bell.

Overseas, European indices traded moderately higher as officials in Greece held discussions with bondholders on possible write-downs on that nation's debt. The euro edged higher vs. the dollar early Wednesday.

In Asia, most indices finished higher. However, the closely watched Shanghai Composite erased some of Tuesday's gains on worries that Beijing's monetary easing may be milder than many had believed.

Early Wednesday, the Mortgage Bankers Association said mortgage applications rose 23.1% last week. The trade group said demand for refinancings drove the gains.

Economic Docket

U.S. economic reports today include the Labor Department's Producer Price Index (PPI) for November, which is due out at 8:30 a.m. EST. Economists expect a gain of 0.1% on the headline number. Minus more volatile food and energy prices, the core PPI is seen rising 0.1%, as well.

At 9 a.m. is November's Treasury International Capital report, showing inflows of overseas capital into the U.S. Many analysts use the data to track Chinese purchases of U.S. debt.

Fifteen minutes later, the Federal Reserve is set to release data on December industrial production and capacity utilization. Economists expect an increase 0.5% in production, and capacity utilization to come in at 78.1%, up from November's level of 77.8%.

At 10 a.m., the National Association of Home Builders steps up with its January housing market index. It's expected to show a reading of 21, unchanged from last month.

Commodities Corner

Crude oil continued its rise on global supply concerns. West Texas Intermediate was up $0.37 to $101.08 per barrel in early Nymex trade.

Gold, meanwhile, slipped $2.90 per ounce before Wall Street's open, to $1,652.70.

Earnings News

Before the bell this morning, Goldman Sachs said its fourth-quarter income was $1.84 per share, beating views of $1.24 per share. Revenue, however, was on the light side, coming in at $6.05 billion, vs. views of $6.54 billion. Goldman Sachs shares jumped $1.53 in the premarket, or 1.57%, to $99.21.

After the close, eBay (EBAY) is set to report its fourth-quarter results. Wall Street is eyeing profit of $0.57 per share on sales of $3.32 billion. Revenue growth has been trending higher in recent quarters. eBay shares were trading $0.59 higher in the premarket, up 1.93%, to $31.12.

Network optimization specialist F5 Networks (FFIV) is also scheduled to report after the bell. It's expected to show first-quarter income of $1.01 a share on revenue of $319.15 million. Shares are trading well below their high of 145.76, reached in January, 2011.

From the energy sector, pipeline operator Kinder Morgan (KMP) is also set to report later today. The Houston-based limited partnership is seen earning $0.61 a share in its fourth quarter. Revenue is expected to be $2.38 billion.

Early Movers

Premarket movers included Yahoo! (YHOO) , climbing $0.47, 3.05%, to $15.90. The move follows Tuesday's news that company co-founder and former CEO Jerry Yang was resigning from the board. Investors view his exit as potentially clearing the way for a sale of the company's Asian assets or an infusion of private equity.

Analyst Actions

DirecTV (DTV) slipped $0.42, 0.97%, to $43.08 on the heels of a UBS downgrade to Neutral from Buy. The analyst expects subscription growth to slow due to competition from cable and maturity of the U.S. pay-TV market. DirecTV recently told customers it was raising rates.

Raymond James initiated coverage on LinkedIn (LNKD) with a rating of Outperform. LinkedIn shares are working on their third week in a row of upside trade.

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