The Day Ahead: Anticipating Large-Cap Reports

 | Jan 24, 2012 | 8:29 AM EST  | Comments
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In the Headlines

With a number of prominent large-caps set to report earnings on Tuesday, NYSE and Nasdaq futures pointed to a lower open.

European indices were trading lower before Wall Street trade got under way. Uncertainty about a Greek debt deal sent eurozone stocks lower, creating selling pressure on U.S. stocks in the premarket.

However, some analysts say Greece and its creditors will eventually reach a deal about interest rates on the nation's debt.

In Asia, with several markets shuttered for the lunar New Year holiday, Japan's Nikkei closed 0.15% higher on the session. The Bank of Japan cut its economic outlook for the year, while leaving key interest rates unchanged.

Energy-related stocks were among some of the biggest gainers in Tokyo trade, as oil prices remain in focus.

The Federal Open Market Committee begins its two-day policy meeting today, with its decision expected Wednesday at 12:30 p.m. EST.

Tonight, President Obama will deliver the annual State of the Union address.

Commodities Corner

Looking at commodities trade early Tuesday, crude oil fell $0.34 per barrel, to $99.24. Analysts continue to monitor its proximity to the $100 level after Iran's threat to block crude shipments following the European Union's embargo of that nation's oil.

Gold slipped by $10.40 per ounce, to $1,667.90 in early trade.

Earnings News

It's a Dow-fest of quarterly results before today's opening bell.

DuPont (DD) reported fourth-quarter earnings of $0.35 per share ex-items, two cents ahead of views. Revenue came in below views, however, at $8.42 billion vs. expectations for $8.53 billion. The chemical company had previously slashed its full-year earnings outlook on weakened demand in some of its business units. DuPont fell $0.06 in the premarket, a loss of 0.12%, to $49.29.

Insurer Travelers (TRV) said it earned $1.48 per share in the quarter, shy of expectations for $1.53. Revenue also fell short, coming in at $5.26 billion, vs. views of $5.5 billion. The company said it was pleased with results, and that it was successfully raising premiums. The shares traveled $0.19 higher, 0.32%, to $60.48 before the open.

McDonald's (MCD) earned $1.33 per share in its fourth quarter, beating views of $1.30. Sales also topped expectations, coming in at $6.82 billion, vs. views of $6.8 billion.

Pharmaceutical and consumer products maker Johnson & Johnson (JNJ) reported fourth-quarter revenue of $16.3 billion, in line with views. Income was $1.13 per share, four cents better than expected. The shares fell $0.38, 0.58%, to $64.62 in early trade.

Still another blue chip, Verizon (VZ), earned $0.52 per share in the fourth quarter, a penny below views of $0.53. Revenue was just slightly above expectations, at $28.4 billion. Wall Street had expected $28.39 billion.

Handbag, clothing and accessories retailer Coach (COH), often considered a barometer for the luxury-goods market, beat second-quarter earnings views by three cents, reporting per-share income of $1.18. Sales of $1.45 billion also topped views. In early trading, Coach jumped $1.76 on the news, up 2.74%, to $66.

After the bell is what's likely to be the day's most closely scrutinized report. Apple (AAPL) is set to deliver results for its first full quarter with CEO Tim Cook at the helm. It's expected to earn $10.08 a share on revenue of $38.85 billion. Some analysts say the whisper number is actually much higher, at $12.18 per share. Typically the company beats views, although it reported a miss in the most recent quarter. Apple shares fell $1.819 in early trade, down 0.43%, to $425.59.

Another company that's frequently in the news, Yahoo! (YHOO) also is also scheduled to report later today. It's seen earning $0.24 a share on revenue of $1.19 billion. Yahoo! shares were up by a penny, a fractional gain, to $15.69 ahead of the bell.

Analyst Actions

An early analyst action came from JPMorgan, which downgraded fertilizer maker Potash (POT) to Neutral from Overweight. The analyst cited valuation as the stock nears JPMorgan's price target of $48.

Recent IPO Fusion-io (FIO) was initiated with a rating of Outperform at William Blair, which said the company will benefit as corporations move toward flash data storage.

Fusion-io shares have bolted nearly 22% this month, closing Monday at $29.44. However, the stock is still trading well below its November high of $41.74.  The stock went public in June at $19.

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