The Day Ahead: Optimism Runs High

 | Jan 19, 2012 | 8:31 AM EST  | Comments
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In the Headlines

If you like plenty of data, in the form of either economic reports or corporate earnings, then you'll be happy today. Wall Street futures were indicating a higher open Thursday, ahead of high-profile government reports and quarterly earnings sure to grab headlines.

Overseas, European stocks were trading higher following successful bond auctions in France and Spain. Meanwhile, Greek officials continue discussions with the government's creditors, with the hope of avoiding default.

The euro was showing gains against the greenback early Thursday.

Asian indices finished mostly higher Thursday. News that Beijing may ease lending restrictions cheered traders, as did word that the International Monetary Fund may raise more capital to address the eurozone sovereign debt crisis.

Economic Docket

Today's economic news includes the weekly jobless claims report from the Labor Department. After last week's jump up to 399,000 new filings, economists are eyeing the 385,000 level this week. That report is due out, as usual, at 8:30 a.m. EST.

Also at 8:30 is the December Consumer Price Index, also from the Labor Department. Analysts expect an increase of 0.1% on the headline number, with the core number -- which takes out volatile food and energy costs -- also gaining 0.1% last month.

There's still more data at 8:30, as the Commerce Department releases December housing starts. These are expected to come in at 676,000 units, down from November's level of 685,000.

At 10, the Philly Fed issues its manufacturing index for January. Analysts see an increase in regional activity rising to 11 from a reading of 6.8 previously.

Commodities Corner

Crude oil rose $1.30 per barrel to $101.89 in early trade. Gold advanced by $5.20 an ounce, to $1665.10.   

Earnings

Before the opening bell, Bank of America (BAC) said fourth-quarter earnings met views of $0.15 per share. Revenue of $25.1 billion beat expectations for $24.1 billion. The company said it has continued to strengthen its balance sheet, something analysts had been looking for; however, the bank continues to address financial and legal issues from its Countrywide mortgage unit. BofA shares soared $0.30, or 4.4%, to $7.10 in premarket trading.

Also reporting early today was Morgan Stanley (MS), where fourth-quarter revenue of $5.7 billion topped views of $5.57 billion. The bank reported a loss of $0.15 per share, less than Wall Street estimates for a shortfall of $0.57 per share. Morgan Stanley shares jumped $0.93, or 5.4%, to $18.28 before the open.

After the close, DJIA component American Express (AXP) is expected to report fourth-quarter income of $0.99 per share on revenue of $7.92 billion. Analysts will be watching for signs of consumer credit-card spending during the holiday season.

Some big techs also step up later today. Analysts expect Microsoft (MSFT) to show quarterly profit of $0.76 per share on sales of $20.93 billion. As always when Microsoft reports, expect plenty of attention to the health of the PC market in the consumer and business arenas.  Shares added $0.08 to $28.31 in the premarket.

Chipmaker and DJIA component Intel (INTC) also releases results after the close. Wall Street sees earnings of $0.61 per share on revenue of $13.72 billion. The company previously lowered fourth-quarter guidance, so its outlook for the current quarter will likely be in focus. Shares are trading at four-year highs. Intel shares rose $0.02 to $25.41 ahead of the bell.

IBM's (IBM) report later today will give a glimpse into the strength of the corporate tech services market. The company is expected to show fourth-quarter income of $4.62 per share on revenue of $29.71 billion. Those would be top- and bottom-line increases, year-over-year. Big Blue climbed $0.40 to $181.47 before Thursday trading got under way.

Google (GOOG) earnings are also due after today's close. Though the company is an innovator in mobile software, Web video and other areas, paid search is still a huge revenue driver. Wall Street expects fourth-quarter profit of $10.49 per share and revenue of $8.41 billion. Shares retreated from a new high earlier this month, but have been getting support at their 10-week average. Google rose $4.07 ahead of today's open to $636.99.

Early Movers

A big decliner early Thursday was Eastman Kodak (EK), which said it had filed for Chapter 11 bankruptcy protection. The former DJIA component, which most analysts agree failed to change as digital media overshadowed traditional film, tumbled $0.16, or 26.7%, to $0.39. The stock has been trading beneath $1 since last month.

Analyst Actions

Golar LNG (GLNG) was boosted to Buy from Hold at Dahlman Rose. Golar LNG is a natural gas shipper, operating a fleet of 12 vessels. Dahlman rose cited share price valuation and a bright outlook for the liquefied natural gas market. In the premarket, Golar LNG shares, which have been trading below their 10-week line recently, rebounded $1.55, or 3.9%, to $41.20, following the upgrade.

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