The Day Ahead: Building on the Rally

 | Mar 14, 2012 | 8:30 AM EDT
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In the Headlines

U.S. futures built on yesterday's rally ahead of Wednesday's open, with NYSE and Nasdaq stocks poised for further gains. That was an improvement over earlier levels, when futures had struggled to get a foothold in positive territory.

After passing the Federal Reserve's bank stress tests, Bank of America (BAC) was among S&P 500 leaders in the premarket. The stock advanced $0.11, or 1.30%, to $8.60 in early trading.

Citigroup (C) continues to get beaten up after failing to meet some of the tests' metrics. Despite that news, the shares rallied along with the sector and the broader market yesterday. However, the shares retreated $1.11, or 3.05%, to $35.34 in the premarket.

JPMorgan Chase (JPM), which spurred a late-session rally Tuesday after releasing stress test results, was taking a breather this morning. The shares pulled back $0.27, or 0.62%, to $43.12.

Elsewhere, European banks led a rally on the other side of the Atlantic. The major bourses were showing gains across the board.  

The euro moved slightly higher vs. the dollar. The greenback had strengthened in Tuesday's session, after the Fed's comments that the U.S. economy was showing some modest improvement.

In Asia, indices finished mixed. Stocks in Shanghai and Hong Kong traded lower after China's premier made remarks indicating that Beijing was unlikely to loosen real estate rules anytime soon. In Japan, the Nikkei finished with a gain of 1.53%, boosted by exporters, which rose as the yen weakened vs. the dollar.

Economic Docket

Today's economic reports in the U.S. include February import/export prices from the Labor Department. Last month, the export level was unchanged, while import prices edged up by 0.1%.  The report, which generally doesn't have much impact on equities trade, is due out at 8:30 a.m. EDT.

Commodities Corner

Gold skidded $34.30 following equities' gains, to $1659.90 per ounce in electronic trade.


Crude oil slipped by $0.08 per barrel, to $106.63 on the Nymex.

Natural gas, meanwhile, was trading above its recent lows, but shed $0.013, to $2.29 BTUs.

Earnings News

The earnings calendar is, once again, fairly sparse. After the bell, Vera Bradley (VRA), a fairly recent IPO, is scheduled to release its fourth-quarter results. Analysts have pegged income at $0.47 a share on sales of $130.04 million.

The clothing and accessories retailer made its Nasdaq debut in October 2010, at $16. The shares have been unable to regain their May 2011 high of $52.36. The stock closed at $37.49 on Tuesday.

Also due out with quarterly results later today is another recently public clothing retailer. Rue21 (RUE) is seen delivering fourth-quarter earnings of $0.49 a share and revenue of $225.80 million.

The stock had a strong rally following its November 2009 debut, but was a mediocre technical performer in 2011. It's been in rally mode this year, showing gains in each of the past three months. However, it has a long way to travel to regain its 52-week high of $37.33, from July.


Early Movers

In addition to the financials, premarket movers include Lowe's (LOW), which is continuing to bask in the glow of Monday's upgrade from Nomura. The analyst cited the home-improvement chain's cost-cutting measures. Lowe's shares climbed $0.96, or 3.18%, to $31.19 ahead of the open. 

Apple AAPL did what it's known for -- traded higher -- advancing $4.90, 0.86%, to a new peak of $573 in the premarket. Morgan Stanley raised its price target on Apple to $720 from $515.

Analyst Actions

Other analyst moves early Wednesday included JPMorgan and Goldman Sachs downgrades of wireless tower operator Crown Castle (CCI). The company is replacing Constellation Energy in the S&P 500. Constellation has been acquired by Exelon (EXC). Constellation's shares are no longer trading.

JPMorgan downgraded Crown Castle to Neutral from Overweight, while Goldman cut its rating to Neutral from Conviction Buy. Both analysts cited valuation.

Crown Castle shares rallied to an all-time high of $55.99 on Monday, but missed the market rally on Monday, posting a decline.

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