The Day Ahead: Looking for Direction

 | Mar 12, 2012 | 8:30 AM EDT
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In the Headlines

Monday brought mixed futures trade to Wall Street, as overseas markets also showed no clear direction. There are no major U.S. econ reports today, so traders may have time to ponder Friday's jobs number, the Greek debt deal and this week's interest-rate decision from the Federal Reserve.

Early Monday, the Nasdaq Composite and S&P 500 were poised for a lower open, while DJIA futures were trading in positive territory.

In Europe, banks and resource-related stocks were among the biggest decliners. Major indices were trading mixed, with most showing moderate declines early Monday. Germany's DAX was trading in positive territory.

In Asia, stocks in Hong Kong and India closed higher, while other indices ended Monday's session to the downside. A bigger-than-anticipated Chinese trade deficit was among factors sending stocks lower. The numbers showed that China's export rate was slowing, raising concerns of global economic malaise.

Commodity Corner

Crude oil was on the decline in early Nymex trade, shedding $1.01 per barrel, to $106.39.

Meanwhile, an American Automobile Association survey showed gasoline prices at the pump rising to $3.80 a gallon, on average. The uptrend took a break last week but appears to have resumed.

Natural gas futures fell to a new low in Nymex trade, dropping $0.062 to $2.26.

Merger Monday

In Monday deal news, Japan's Asahi Kasei said Monday it would acquire Massachusetts-based Zoll Medical (ZOLL) in a cash deal worth $2.2 billion, or $93 per share. Zoll makes cardiac resuscitation gear. The move allows Asahi Kasei to expand into other global markets.

Zoll had been a small-cap price leader already, having gained nearly 19% so far this year.


After the bell, traders will be thinking about phone service for $19.95 a year -- and the earnings and revenue implications thereof. MagicJack provider VocalTech (CALL) reports its fourth quarter, with Wall Street expecting a loss of $0.17 a share on revenue of $27.72 million.

The small-cap is working on its eighth month in a row of gains. The stock was up $0.58, 2.42%, to $24.50 in the premarket.

Market Movers

Early price movers included DJIA component McDonald's (MCD), attempting a rebound after last week's heavy-volume 2.71% decline on disappointing sales data.

Mickey D's shares bounced $0.44 higher before the bell, a gain of 0.45%, to $97.28. It will take more than that, however, to close last week's downside gap.

PepsiCo (PEP) advanced $0.45, 0.71%, to $63.60 in the premarket. The company hired Brian Cornell, former CEO of Wal-Mart's (WMT) Sam's Club unit, to run Pepsi Americas Foods. That business includes North American operations for Quaker and Frito-Lay.

Analyst Actions

Oracle (ORCL) fell $0.50, 1.66%, to $29.63 ahead of the bell. Jefferies cut the enterprise software maker to Hold from Buy, citing increased competition for Oracle's engineered systems products.

General Mills (GIS) also fell on a downgrade. Goldman Sachs demoted the cereal maker to Neutral from Conviction Buy. The analyst said share price valuation, as well as weakness in the company's packaged-foods business, were behind the move.

General Mills fell $0.37, 0.96%, to $38.21 in the premarket.

Goldman wasn't kind to breakfast-foods makers Monday. It downgraded J.M. Smucker (SJM) to Neutral from Buy, citing valuation.

Columnist Conversations

We will take off some more risk, bank some winners SOLD PG OCT 90 CALL AT 3.3 (in at 2.90) ...
After a very calm and sedate period of volatility which saw the VIX fall not only to all time lows but had a r...
today is a good day to lighten the load and take some positions off the table. SOLD WB OCT 85 CALL AT 11 (i...
I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...



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