The Day Ahead: IPO? What IPO?

 | Feb 02, 2012 | 8:30 AM EST  | Comments
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In the Headlines

Giddiness about Facebook's $5 billion IPO filing late Wednesday was shoved to the background Thursday morning, with traders awaiting the weekly jobs data, Fed chief's Ben Bernanke's testimony before Congress, further news from Greece, and today's round of corporate earnings reports.

Wall Street futures were pointing to a moderately lower open Thursday.

European markets were trading mixed early Thursday. The action followed an auction of Spanish bonds, which met with solid demand and resulted in lower yields. A Greek spokesman said progress is being made in talks with the nation's creditors.

The euro slipped vs. the dollar before Wall Street's opening bell.

In Asia, markets finished mostly higher, with financials and resources-related stocks setting the pace. Stronger-than-expected manufacturing data from Asia, Europe lifted expectations for higher commodities demand.

Commodities Corner

That sentiment was not being expressed in electronic trade Thursday. On the Nymex, crude oil fell $1.02 per barrel to $96.59.

Industrial metal copper shed $0.048 to $3.79 per pound.

Economic Docket

Executive outplacement firm Challenger, Grey & Christmas said employers slashed 53,486 jobs in January, representing both month-over-month and year-over-year increases. Financial and retail were among sectors showing the biggest cuts.

More jobs data arrives at 8:30 a.m. EST, as the Labor Department issues its weekly data on unemployment claims. Economists expect 375,000 new filings, down slightly from last week's level. The numbers will likely be viewed as a precursor to Friday's January employment report from the Labor Department.

At 10 a.m., Fed chief Ben Bernanke begins his regular testimony before the House Budget Committee. Economists and investors will listen for discussion of more Fed action to aid the hobbling economy. Bernanke's comments have potential to move equities.

Retail Sales

Throughout the morning, retailers report their January same-store sales. As usual, Costco (COST) released results early. The warehouse discounter saw an 8% increase in sales at stores open a year or more, better than analysts had expected. Costco was up $0.72, or 0.87%, to $83.94 in early trade.

Earnings News

In earnings news, DJIA component Merck (MRK) said fourth-quarter earnings were $0.97 a share, two cents ahead of views. Revenue at the pharmaceutical was $12.3 billion; analysts had expected $12.5 billion. Full-year guidance was in-line with analysts' views. Merck shares were down $0.43, or 1.11%, to $38.20 in premarket trade.

Insurer Cigna (CI) reported fourth-quarter income of $1.11 per share, excluding items, which were well below expectations of $1.19 per share. Its full-year earnings outlook also fell short of expectations.

MasterCard (MA) is also due out before the open. The transaction processor is seen earning $3.91 per share on revenue of $1.73 billion. Shares have been consolidating in recent weeks, after pulling back from December's all-time high of $384.99.

Early Movers

Premarket movers included Green Mountain Coffee Roasters (GMCR), advancing $11.37, 21.20%, to $65. Much of the move can likely be attributed to a short squeeze. Many investors had become negative on the company's prospects, but it surprised with a better-than-anticipated report after Wednesday's close.

Qualcomm (QCOM) also leapt after reporting late yesterday. The stock was up $3.19, 5.36%, to $62.75 in early trade. The maker of smartphone and networking chips raised its outlook for the current quarter.

Analyst Actions

In analyst actions, fiber optic gear maker JDS Uniphase (JDSU) was downgraded to Neutral from Buy at UBS, which cited valuation. On Wednesday, the company reported a quarterly loss, but results were not as bad as Wall Street had expected. Shares were up $0.54 in the premarket, a gain of 4.11%, to $13.67.

Clothing retailer Men's Wearhouse (MW), whose stock has been trading in a potentially bullish pattern lately, was initiated at Sterne Agee with a rating of Buy.

IPO Events

Nobody will confuse them with Facebook, but two small companies begin trading on the public markets today. AVG Technologies, which makes Internet security software, sold 8 million shares at $16 apiece, the low end of its planned range. The stock will list on the NYSE under the symbol AVG.

Also launching today is Greenway Medical Technologies, which makes software for doctors' offices. The company priced 6.7 million shares at $10, below its proposed range. It begins trading on the NYSE today using the ticker GWAY.

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