The Day Ahead: Slouching Start to the Week

 | Jan 30, 2012 | 8:19 AM EST  | Comments
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In the Headlines

The outlook for Wall Street's open was lower Monday, as traders awaited details about a Greek debt restructuring.

There's plenty of news from Europe today with potential to affect markets. Germany's finance minister said in an interview that Greece must take further steps to bolster its economy or risk losing the next round of European Union bailout money.

The Greek debt story continues to develop, as the nation is believed to be nearing a deal with its creditors. Meanwhile, European Union officials meet Monday in Brussels to discuss the region's debt crisis.

The euro lost ground trading against the dollar Monday.

The Shanghai Composite re-opened for business after a weeklong holiday, and notched a 1.47% decline. Traders fretted despite a statement from China's premier saying the nation's debt is under control. Major indices throughout Asia finished lower on Monday.

Economic Docket

U.S. econ reports include the Commerce Department's data on personal income and spending for December. Income is seen rising 0.4%, an increase from November's gain of 0.1%. Economists expect a spending increase of 0.1%, unchanged from the prior reading. The data are due out at 8:30 a.m. EST.

At 10 a.m., the Dallas Fed releases its January manufacturing index, showing activity in the region. There is no consensus estimate for this report, but a number that's interpreted as either extremely bullish or bearish has potential to affect stocks.

Crude oil was hovering below the $100 mark early Monday, shedding $0.33, to $99.23 per barrel.

Gold remained above $1,700, but slipped by $11.60 an ounce, to $1,720.60.

Merger Monday

Electrical gear manufacturer Thomas & Betts (TNB) will be acquired by Switzerland's ABB for $72 per share in cash, in a deal valued at $3.9 billion.

In early trade, Thomas & Betts shares vaulted $13.30, 22.95%, to $71.25.

In another transaction also pegged at $3.9 billion, Exxon Mobil (XOM) said it would sell a Japanese refining subsidiary to local partner TonenGeneral.

Exxon Mobil was down $0.59, 0.69%, to $85.24 in the premarket.

Earnings

Ahead of today's open, Wendy's (WEN) reported fourth-quarter income of $0.04 per share excluding items, in line with views. Revenue was $615 million, topping expectations of $613.19 million. The company said it would build 20 new restaurants in the U.S. and Canada this year, and remodel 50 more company-owned properties.

Shares fell $0.11 in early trade, 2.11%, to $5.10.

After today's close, health-care info tech specialist McKesson (MCK) reports its third quarter. Analysts are expecting earnings of $1.37 a share on revenue of $30.08 billion. The company beat earnings views in each of the past four quarters.

Market Movers

A huge price mover ahead of the bell was drug maker Amylin (AMLN), jumping $2.25, 18.53%, to $14.39 after the FDA approved the firm's diabetes drug, Bydureon. Amylin's partner in the drug's development, Alkermes (ALKS), bolted $2.90, 15.18%, to $22.

On the downside, Alpha Natural Resources (ANR) fell $0.50, 2.31%, to $21.15. The coal miner's stock has been struggling below previous highs for the past year.

Analyst Actions

Analyst actions Monday include a SunTrust downgrade of Monster Beverage (MNST), the company formerly known as Hansen's Natural. SunTrust demoted the energy-drink maker to Neutral from Buy, citing recent price growth.

The stock rallied to a new high last week. Shares fell $1.65, 1.53%, to $105.88 ahead of the bell.

Goldman Sachs' banking analyst was focusing on some of the company's rivals Monday. Goldman upgraded Citigroup (C) to Buy from Neutral, and Morgan Stanley (MS) to Conviction Buy from Neutral.

However, Goldman's analyst was not so kind to JPMorgan Chase (JPM), which was downgraded to Buy from Conviction Buy, and Bank of America (BAC), demoted to Neutral from Buy.

IPO Corner

On the IPO front, the chatter this week is about Facebook's expected filing. There are a number of small-caps scheduled to price and begin trading this week, although there's nothing set to debut today.

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