The Day Ahead: Monday Hangover

 | Dec 12, 2011 | 8:24 AM EST
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In the Headlines

Worries about the eurozone rescue plan sent U.S. stock futures lower Monday, following downside trade on European indices.

After Friday's rally, traders returned to work today with fresh doubts about European politicians' ability to follow through on plans to curb the region's debt crisis.

Italian bonds have been closely watched lately. A successful auction today failed to send yields lower, as investors continued to fret about Italy's ability to cut spending and service its debt.

Meanwhile, bond rater Moody's reiterated its earlier plan to review its ratings of European nations.

The euro slipped vs. the dollar early Monday.

In Asia, stocks finished mixed. Japan's Nikkei closed with a gain of 1.38% as exporters led the way higher. However, traders in Shanghai and Hong Kong sent stocks to the downside on concerns about a slowing Chinese economy.

Economic Docket

It's a busy week for U.S. econ news -- including an interest-rate decision from the Federal Reserve's Open Market Committee on Tuesday -- but today brings only the Treasury budget, due at 2 p.m. EST. Economists expect a deficit of $139.5 billion in November. A larger deficit means the Treasury Department must issue more debt to make up the difference.

This week brings some significant earnings reports, but none of them are due today.

Commodity Corner

As world markets were selling off, gold was also trading lower. It fell $32.60 to $1,684.20 per ounce.

Industrial metal copper was also on the decline, falling $0.08 per pound, to $3.48.

West Texas Intermediate was also under selling pressure, dropping by $1.20 per barrel, to $98.21.

Market Movers

Early price movers Monday included financials. Bank of America (BAC) shed $0.12, 2.10%, to $5.60 ahead of the bell. Going into today's session, shares were up 5.1% for the month.

Another financial-sector decliner was Goldman Sachs (GS), dropping $2.05, 2.02%, to $99.40. The company's head of Asian investment banking reportedly is resigning, the second high-level departure from that unit in the past month.

A couple of energy-sector names were also trading to the downside early Monday. Chesapeake Energy (CHK) fell $0.36, 1.46%, to $24.30. Shares have been trading below their 40-week line since September. Analysts expect earnings declines in 2011 and 2012.

Also on the losing side in the premarket was Schlumberger (SLB). The oil services firm dropped $1.05, 1.42%, to $73.10.

The Environmental Protection Agency issued a report saying natural-gas fracking was linked to contamination of groundwater in Wyoming. Analysts believe the findings will result in new regulations on Schlumberger, which supplies materials used in the fracking process.

Analyst Actions

S&P 500 component (CRM) was downgraded to Underperform from Neutral at Cowen on a slowdown in billings growth. Shares of the enterprise software maker are down 6.15% for the year after retreating from July's all-time high of $160.12. The stock closed at $123.88 on Friday.

Another analyst move came from BMO Capital, which boosted chip designer Altera (ALTR) to Outperform from Market Perform. Despite Altera's move last week to slash revenue guidance, BMO's analyst saw bright spots, including growth in non-communications chips, and carriers' network upgrades.

Altera skidded 3.4% last week following its reduced outlook.

Mattress maker Tempur-Pedic (TPX) was upgraded to Outperform from Perform at Oppenheimer, which cited the recent price pullback as a buying opportunity. Shares tumbled nearly 20% last month in above-average volume.



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