The Day Ahead: Another Busy Day for Earnings

 | Jan 31, 2012 | 8:30 AM EST  | Comments
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In the Headlines

European headlines are once again spurring sentiment when it comes to U.S. trade.

Stocks were headed for a higher open Tuesday, following news that Greece appears to be making progress toward a debt restructuring deal. Also moving stocks was a pact among European Union nations to toughen up the region's budget policies.

It's a busy day for earnings news, with a couple of DJIA components and other widely held and closely watched names, including Amazon (AMZN), due out with reports.

European markets were trading higher after 25 of 27 EU countries signed onto a deal that would enforce tighter spending limits. Holdouts were the U.K. and the Czech Republic, neither of which is a eurozone country.

Asian indices finished mostly higher Tuesday, given a boost by better-than-expected economic data from Japan, and some good corporate earnings reports. The news from Europe was also a factor in the upside action.

Economic Docket

In the U.S., Tuesday's economic releases include the S&P/Case-Shiller home-price index for November. Economists expect a decline of 3.2%. The report is due out at 9 a.m. EST.

At 9:45 a.m., Kingsbury International is scheduled to issue the Chicago Purchasing Managers Index for January. It's seen coming in with a reading of 62.8, up slightly from the prior level of 62.5.

Fifteen minutes later, another consulting firm, the Conference Board, is set to release data on January consumer confidence. Analysts expect the reading to jump to 67 from December's 64.5.

Commodities Corner

West Texas Intermediate crude rose by $1.37 per barrel to $100.15.

Gold, meanwhile, continued holding above $1,700. In early Comex trade, the yellow metal gained $6.60, to $1,737.60 per ounce.

Earnings News

DJIA component Pfizer (PFE) said fourth-quarter earnings were $0.50 a share, ex-items, topping views of $0.47 a share. Revenue of $16.7 billion topped views of $16.61 billion.

However, the drug maker slashed its full-year profit outlook by a nickel, citing currency exchange rates. That didn't stop shares from traveling higher ahead of the bell, gaining $0.06, 0.28%, to $21.64. Analysts have been eyeing Pfizer closely for effects of key products going generic.

Exxon Mobil (XOM), which has been dethroned by Apple (AAPL) as the largest company, by market cap, was expected to report fourth-quarter profit of $1.96 per share on revenue of $119.7 billion. XOM earned $1.97 in the fourth quarter, a penny ahead of views. The shares rose $0.19, or 0.22%, to $85.68, in early trading. The shares have been unable to clear resistance above $88, but are holding above their 10-week line.

UPS (UPS), which along with FedEx (FDX) is viewed as a bellwether for business and consumer spending, also delivered its fourth quarter before the open. It earned $1.28 per share, topping analysts' views by $0.02. Revenue was $14.2 billion, a bit lower than the $14.45 billion Wall Street had expected. The company said it sees mixed growth around the world. Shares rose $0.70, or 0.92%, to $76.85 in the premarket.

After the bell is an eagerly anticipated report from Amazon.com. The retailer and Kindle maker is expected to show earnings of $0.19 a share and revenue of $18.21 billion. Analysts expect the latest version of Amazon's popular e-reader, the Kindle Fire, to be a key revenue driver. The shares were trading $2.15 higher ahead of Tuesday's open, a gain of 1.12%, to $194.30.

Another big gainer was Eli Lilly (LLY), advancing $0.45, 1.15%, to $39.70 following an earnings beat early Tuesday.

Analyst Actions

Needham upgraded Athletic clothing maker Under Armour (UA) to Buy from Hold. The shares have been consolidating since pulling back from October's all-time high of $87.40. The stock closed Monday at 77.06, just above its 10-week average.

Natural grocer The Fresh Market (TFM), which went public in November, 2010, was initiated with a Neutral at Northcoast. The company is expected to more than double its earnings growth this year. The stock, like that of many younger and smaller companies, tends to trade in a somewhat volatile fashion.

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