The Day Ahead: All Eyes (Still) on Europe

 | Oct 26, 2011 | 8:16 AM EDT  | Comments
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In the Headlines

It's a busy day for European officials. This morning, the German parliament votes on the euro bailout fund. Later today, politicians meet in Brussels in an attempt to finalize a plan to address the regional debt crisis.

U.S. equity futures suggested a higher open Wednesday, ahead of these developments. However, futures had also pointed to positive open early Tuesday, and the indices ended with steep losses.

NYSE volume Tuesday was heavier than the prior session. Downside trade in DJIA component 3M (MMM) was more than double average levels, contributing to the heavy index volume.

Prices in some commodities and precious metals climbed early Wednesday. Many analysts have surmised that hope for a third round of quantitative easing is behind some of the buying.

Light crude rose $0.24 per barrel in electronic trade, to $93.41. Gold was up $9.20 per ounce, to $1,709.60.

Global View

European stocks showed moderate gains Tuesday, and the euro was trading higher vs. the dollar.

Asian stocks closed mostly higher after a rocky start. Hope that China would begin easing monetary policy boosted equities in the region. China has tightened its monetary policy in the past several months.

Japan's Nikkei was one of the few major indices in Asia to end lower, as a stronger yen dragged down exporters.

Economic Docket

In U.S. economic news, the Mortgage Bankers Association said loan applications rose last week, as demand for new purchases and refinancings picked up.

At 8:30 a.m. EDT, the Commerce Department issues its September durable goods report. These data measure demand for items with an intended life of three years or longer. Analysts expect the headline number to show a decline of 1% for the month.

The Commerce Department is back at 10 a.m. with its new-home sales data. Economists see a rise to 300,000 units in September, which would be poor growth, compared to levels in a healthier housing market.

Earnings

In before-the-bell earnings news, Ford (F) said third-quarter earnings came in at $0.46 per share, beating views of $0.44. Revenue of $33.1 billion also topped expectations, which called for $29.9 billion.

Before today's open, the stock was up 28.5% for the month. On the conference call, analysts and investors will be listening for discussion of the European outlook, as well as the possibility of reinstating a dividend.

Ford shares slowed on the news, dropping $0.25, 2.01%, to $12.18 in early trade.

Also out early today was the third-quarter report from DJIA component Boeing (BA), which beat earnings views, reporting $1.46 per share vs. expectations of $1.10. Revenue, however, was slightly on the low side, at $17.7 billion. Analysts had expected $17.82 billion.

Boeing shares have rallied this month, but closed Tuesday nearly 21% off their 52-week high, reached in May.

The company raised its yearly earnings guidance.

Boeing shares flew $3.78 higher after the earnings news, a gain of 5.93%, to $67.50.

Market Movers

Premarket movers included, predictably, Amazon (AMZN), which missed third-quarter views late Wednesday despite posting a 44% year-over-year revenue gain. Shares tumbled $26.65, 12.61%, to $198.50 in early trade.

On the plus side, Sprint Nextel (S) bolted $0.20, 7.41%, to $2.90 after reporting a narrower-than-expected quarterly loss. The company added more customers than analysts had anticipated, and it made optimistic comments about demand for Apple's (AAPL) iPhone, which Sprint launched earlier this month.

Analyst Actions

Analyst moves Wednesday included a JPMorgan downgrade of for-profit educational firm DeVry (DV), which was demoted to Neutral from Overweight. The analyst cited a disappointing quarterly report, which included news of a decline in enrollments.

DeVry shares have rallied in each of the past four weeks, although weekly volume has been below average.

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