The Day Ahead: Pulling Back

 | Feb 10, 2012 | 8:37 AM EST  | Comments
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In the Headlines

Markets around the world pulled back Friday after eurozone finance ministers said Greece would need further austerity measures to get more bailout money.

Wall Street futures trade worsened in the past couple of hours, with NYSE and Nasdaq stocks poised for significantly lower opens.

Most European indices were showing declines greater than 1%, with losses accelerating from earlier levels. The FTSE 100 was showing less damage than its continental counterparts.

The euro slipped relative to the dollar early Friday.

Asian stocks also fell on the latest round of Greek news. The Shanghai Composite bucked the regional trend, gaining 0.10%. Data showed a wider-than-expected Chinese trade surplus last month. However, many economists say holiday-season activity may have been responsible, rather than a major trend reversal.

Economic Docket

Friday's U.S. economic reports include the Commerce Department's data on the U.S. trade deficit, which is slated for 8:30 a.m. EST. Economists expect to see the deficit growing to $48.5 billion in January from December's $47.8 billion.

At 9:55 a.m., the University of Michigan is set to release its consumer sentiment index, which typically attracts media attention and can sometimes move stocks. Analysts expect February's preliminary reading to come in at 74, down from January's final reading of from 75.

At 2 p.m., the Treasury Department releases its January budget figures. Economists expect a deficit of $40 billion. These numbers do not generally affect the equity markets.

Commodities Corner

Crude oil slipped $1.31 per barrel, to $98.53 in electronic trade. The International Energy Agency cut its growth forecast for oil this year.

Gold slipped $18.70 to $1,722.50 per ounce in early Comex trade.

Copper shed $0.041to $3.94 per pound ahead of Wall Street's open.

Earnings News

The pace of earnings reports usually slows down on Friday, and today is no exception. Arch Coal (ACI), expected to deliver income of $0.32 per share on revenue of $1.3 billion. The pace of earnings has slowed in the past couple of quarters. The stock is trading well below 52-week highs.

Market Movers

Premarket movers included LinkedIn (LNKD), which bolted $6.11, 8%, to $82.50. Late Thursday the social media company issued better-than-anticipated quarterly results, and said the number of active users was growing.

Video game maker Activision Blizzard (ATVI) advanced $0.18, 1.42%, to $12.84 ahead of the open. This company, too, reported Thursday, beating views. It also announced a $1 billion share buyback program.

Analyst Actions

Goldman Sachs upgraded Activision to Conviction Buy from Buy, citing positive trends in game momentum and earnings growth, among other factors.

Upscale accessories retailer Coach (COH), which has been trading at new highs, was initiated at Citigroup with a rating of Buy. Shares fell $0.93, 1.26%, to $73.11 in early trade.

From an altogether different retail category, O'Reilly Automotive (ORLY) was downgraded to Neutral from Outperform at RW Baird. The analyst cited valuation, as well as disappointing guidance and same-store sales.

O'Reilly shares skidded $1.22, 1.45%, to $83.12 in the premarket.

In other moves from Baird, the analyst shop upgraded high-flier Alexion Pharmaceuticals (ALXN), which makes treatments for rare diseases. Baird cited Alexion's better-than-expected guidance and quarterly results, which were reported on Thursday. Alexion shares rallied to a new intraday high of $83.10 on Thursday.

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