The Day Ahead: Still in D.C.'s Thrall

 | Jul 28, 2011 | 7:00 AM EDT  | Comments
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In the Headlines

Traders sent U.S. stock futures higher Thursday, following Wednesday's big selloff on Wall Street.

The upside moves came ahead of a congressional vote on a debt bill from House Speaker John Boehner. Meanwhile, Senate leader Harry Reid is saying that the Boehner bill could be modified enough to gain Senate support. These developments are giving investors some hope that the politicians will strike a deal in the next few days.

The optimism did not reach Asia, where shares traded mostly to the downside on continued fears about a possible U.S. default. A Standard & Poor's downgrade of Greece's debt sent a new ripple of fear throughout the markets, as did some disappointing U.S. economic data from the Federal Reserve's Beige Book yesterday.

Techs were among some of the biggest decliners in Asia. However, Hong Kong's Hang Seng finished higher on positive sentiment about stocks in the real estate space.

European stocks were headed lower early Thursday. The U.S. debt worries affected trade in the region, as did disappointing earnings reports from some big manufacturers in Europe. Financials and energy-sector names were some of the biggest losers in the region.

Economic Docket

Turning to econ data, the weekly data on jobless claims are due out from the Labor Department. This number has been coming in above the 400,000 level, and analysts don't see a change this time around.

At 10 a.m., the National Association of Realtors releases data on June pending home sales. Here, too, economists expect poor numbers.

Gold rose $0.60 early Thursday, to $1,615.70 per ounce. Crude oil was up a dime, to $97.50 per barrel in early Nymex trade.

Earnings

DJIA component Exxon Mobil (XOM) reported its second quarter before the opening bell. The company earned $2.18 per share, short of expectations of $2.34. Analysts were looking for revenue of $123.86 billion.

The company has beaten Wall Street's views in the past four quarters.

S&P 500 component Bristol-Myers Squibb (BMY) said second-quarter earnings were $0.52 a share on revenue of $5.43 billion. Wall Street had expected earnings of $0.55 a share and revenue of $5.04 billion.

The company also raised its full-year profit view.

Growth leader Carbo Ceramics (CRR), which makes products used in the extraction of natural gas, said second-quarter net income was $1.29 per share on revenue of $149.7 million. Those numbers beat Wall Street views.

The stock is up 6.1% so far in July.

After the close Thursday is a quarterly report from Starbucks (SBUX). Wall Street expects earnings of $0.34 a share on sales of $2.85 billion. Analysts believe the longer-term growth prospects remain strong overseas, but have some concerns about the health of U.S. sales, due to increased competition.

Starbucks shares cleared a 3.5-month price consolidation in late June, and have held most of those gains, despite a 3.4% decline this week.

Market Movers

Premarket movers Thursday included DuPont (DD), which shed $0.20, 0.38%, to $52.08. The company beat sales and earnings views for the second quarter, and raised its guidance.

Sprint Nextel (S) also dropped after reporting its quarterly results. The stock was down $0.16, 3.1%, to $5 in early trade. The company said its second-quarter loss was wider than analysts had expected.

Analyst Actions

As usual, analysts' actions drove much some of the premarket movement. Cisco (CSCO) jumped $0.34, 2.17%, to $16.03 following a Goldman Sachs upgrade to Buy from Neutral. Goldman said it believes sales and margins will bottom in the current quarter, and that Cisco's cost cuts will spur bottom-line growth.

IPO Corner

While there is nothing to capture the kind of market euphoria seen in yesterday's Dunkin' Brands (DNKN) IPO, three new stocks were priced last night and are set to begin trading today.

If a coffee IPO was good enough for investors, why not also try tea? Specialty tea retailer Teavana priced 7.14 million shares at $17, above the company's proposed range. Teavana runs 161 retail locations, and plans to expand to 500 by the end of 2015.

Its ticker symbol will be, of course, TEA.

Wesco Aircraft Holdings, a private-equity-backed provider of services to the aerospace industry, raised $315 million in an offering of 21 million shares priced at $15. That was below the company's planned range. The stock will begin trading on the NYSE today using the ticker WAIR.

Also pricing yesterday was The Chef's Warehouse, a Connecticut company that sells specialty foods to upscale restaurants. It raised $135 million by selling 9 million shares at $15. That was the midpoint of its planned range, but the company raised the number of shares it expected to offer by 1 million.

It will list on the Nasdaq using the symbol CHEF.

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