The Day Ahead: Amazon Earnings No Sale

 | Jan 31, 2014 | 8:32 AM EST  | Comments
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Hopes that Thursday's market rally would carry into the final trading day of the month appeared dim Friday morning as U.S. stock futures were trending negative before the bell.

Overseas, deflation fears in the eurozone have weighed on European bourses. Meanwhile, Japan's Nikkei 225 Index finished modestly higher overnight as most Asian markets were closed to observe the Chinese Lunar New Year.

In company news, Microsoft (MSFT) has reportedly found a new CEO to replace the departing Steve Ballmer. According to published reports, the board is prepared to name Satya Nadella, the head of the software giant's cloud-computing unit, as its new chief executive and co-founder Bill Gates will step down as chairman.

In earnings news, a disappointing report from Amazon (AMZN) late Thursday sank the previous session's feel-good finish, with the e-commerce giant posting quarterly earnings far short of estimates, offering weak guidance, and indicating it may raise the price of its popular Amazon Prime subscription. Investors discounted the shares by 7% in recent premarket trading.

Shares of Action Alerts PLUS holding Google (GOOG) were up slightly in trading before the bell despite missing bottom-line estimates last night. But investors focused on the top-line beat and on the Internet search giant's increased net income and sales in the fourth quarter. Charitable Trust portfolio Co-Manager Stephanie Link said in an Alert that the conference call was "upbeat" and management was "bullish about its strong momentum globally."

Another stock to watch today is Chipotle (CMG), which served up quarterly profit in line with Wall Street expectations last night, but sales results surprised to the upside, giving shares an extra dollop of flavor in early trading.

Friday morning, toymaker Mattel's (MAT) holiday-quarter earnings results missed consensus views by a wide margin and fell short of sales estimates. Investors were in no mood to play, sending the shares more than 10% lower. And MasterCard (MA) fell short of consensus estimates, prompting a 7% premarket slide in the credit-card company's stock.

Several economic reports are due this morning, starting with personal income and outlays from the Bureau of Economic Analysis and the employment cost index from the Bureau of Labor Statistics at 8:30 a.m. ET. At 9:45 a.m. the Institute for Supply Management releases its Chicago Purchasing Managers' Index, followed closely by the Reuters/University of Michigan consumer sentiment index at 9:55 a.m.

For Fed followers, Dallas Fed chief Richard Fisher will discuss the central bank's inner workings in a speech at 1:15 p.m. ET in Texas.

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