The Day Ahead: Cheered by Overseas Action

 | Feb 01, 2012 | 8:11 AM EST  | Comments
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In the Headlines

Futures indicated a higher open on Wall Street Wednesday, getting a new month under way. The upside trade comes ahead of another round of closely watched earnings reports, and the eagerly anticipated IPO filing from Facebook, expected to happen today.

Overseas, European stocks traded higher on the heels of some strong economic data from the eurozone, as well as the U.K. and Germany. Financials were among Europe's best gainers Wednesday.

In Asia, indices finished mixed. Chinese manufacturing data came in better than expected, but still low enough to dampen expectations that Beijing may institute monetary easing in the near term. However, the numbers also raised hopes that China may avoid a "hard landing" in its economic slowdown.

The Shanghai Composite closed with a 1.07% loss. Japan's Nikkei eked out a fractional gain, as financials showed strength.

Economic Docket

Today brings the ADP employment report for January, due out at 8:15 a.m. EST. It's expected to show a gain of 170,000 private-sector jobs.

At 10, the Institute for Supply Management releases its January manufacturing index. Economists expect a reading of 54.5, up from December's level of 53.9.

Also at 10, the Commerce Department issues data on December construction spending, expected to show a gain of 0.5%.

Throughout the day, auto manufacturers release January sales figures. Analysts expect pent-up demand for new cars and trucks to drive strong growth, as consumers have held off on new purchases for longer than normal.

Crude oil rose $0.63 per barrel, to $99.11, remaining below the $100 mark early Wednesday.

Gold rose $9.20 per ounce, to $1,747 in electronic trade.

Company News

Facebook is expected to file for a $5 billion initial public offering today, less than investment bankers were said to be looking for. Some analysts are pointing out that the number in the original filing often grows as a company does its "road show," pitching the deal to institutional investors. The lead underwriter is Morgan Stanley.

In an ongoing deal story, European regulators are blocking the proposed merger of NYSE Euronext (NYX) and Frankfurt's Deutsche Boerse, saying it would create a quasi-monopoly in the derivatives trading market.

Earnings

In earnings news before the bell, Hershey (HSY), which has been trading at 6½ -year highs, said fourth-quarter earnings came in at $0.70 a share, in line with views. Revenue was $1.57 billion, slightly ahead of expectations. The lower end of its full-year earnings guidance was below views, which are calling for $3.12 per share.

Hershey melted a little in early trade, losing $0.11, 0.18%, to $60.97.

After the bell, erstwhile growth stock Green Mountain Coffee Roasters (GMCR) brews up fiscal first-quarter earnings. Analysts are eyeing income of $0.36 a share on sales of $1.06 billion. Results will be closely watched, because the stock has become a popular short among traders who question the company's business model and accounting practices.

Chipotle Mexican Grill (CMG), which has been trading near all-time highs, is also due out after the bell. It's expected to earn $1.83 a share in the fourth quarter, on revenue of $591.23 million.

Las Vegas Sands (LVS), whose stock has been trading in a channel between $36 and $56 since November 2010, reports after the close. Wall Street expects the casino operator to earn $0.57 a share on revenue of $2.47 billion. Those would mark year-over-year gains.

Shares advanced $0.58, 1.18%, to $49.69 in the premarket.

Also reporting late today is Qualcomm (QCOM). The maker of wireless and networking hardware and software is seen earning $0.90 per share, with revenue of $4.58 billion. Shares have been struggling to clear resistance at around $60.

Qualcomm was up $0.92 in early trade, 1.56%, to $59.74.

Market Movers

An early decliner Wednesday was Amazon (AMZN), shedding $17.74, 9.12%, to $176.70. When it delivered quarterly results after Tuesday's close, the company warned of a first-quarter operating loss. It's expected to spend heavily on expansion, putting a dent in earnings. Adding to the pessimism about the stock, Amazon's fourth-quarter revenue fell below analysts' views.

Disk-drive maker Seagate Technology (STX) jumped $1.91, 9.04%, to $23.05 in early trade. On Tuesday, the company raised its third-quarter revenue view above Wall Street's expectations.

Analyst Actions

Stifel Nicolaus upgraded Seagate stock to Buy from Hold. FBN Securities, Needham and RW Baird all raised their price targets on the stock.

Meanwhile, Wells Fargo boosted its rating on fellow financial Citigroup (C) to Outperform from Market Perform. The analyst cited valuation and better operating leverage, among other factors. Citigroup rose $0.45, 1.46%, to $31.17 ahead of the open.

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