The Day Ahead: A Slow Start

 | Dec 27, 2011 | 8:33 AM EST  | Comments
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In the Headlines

It's back to work on Wall Street, although plenty of traders opted for a vacation this week. Typically, the final week of trading every year brings very low volume. NYSE and Nasdaq futures were showing moderate losses early Tuesday.

European stocks traded to the upside, although post-holiday volume there, too, was well below normal levels. London markets remained shuttered for the holiday.

The euro edged higher vs. the U.S. dollar, but the euro/dollar pair was bouncing along near January's 11-year lows.

In Asia, the already-weakened Shanghai Composite slipped to new lows. Japan's Nikkei closed down 0.5%, while markets in Hong Kong, Australia and New Zealand were closed Tuesday.

Economic Docket

There are a couple of U.S. economic reports due today. The S&P/Case-Shiller home price index for October is set for a 9 a.m. EST release. Economists expect to see property values dropping 3.2% from October 2010. That would be the slowest pace of decline since January.

At 10 a.m. is the Conference Board's consumer confidence data for December. Analysts are eyeing a reading of 59, up from November's 56.

Commodities Corner

Gold slipped below the $1600 mark, shedding $10.60 per ounce, to $1595.40 in early electronic trade. Crude oil lost a penny, to $99.67 per barrel.

Earnings

Egg producer Cal-Maine (CALM) foods cracked open its second-quarter results ahead of the bell. Income was $0.97 a share, a 54% jump from a year ago. Year-over-year revenue also rose, coming in at $290.4 million. The company, a major supplier to Wal-Mart (WMT), beat top- and bottom-line views.

Cal-Maine shares got their sunny side up on the news, advancing $1.75, 5.1%, to $36. The stock has a market cap of just $817 million and trades only 71,000 shares a day, on average.

The upbeat consumer confidence numbers that are expected would be consistent with data showing that U.S. shoppers are happy to open their wallets. Retail tracker ShopperTrak expects sales figures to show that Monday was the third-busiest shopping day of the season. Purchases at stores and retail Web sites are seen coming in at healthy levels.

However, Sears Holdings (SHLD) is not a beneficiary of the spending, reporting that quarter-to-date sales have dropped 5.2% from a year ago. The company plans to close 100 to 120 Sears and Kmart stores.

Market Movers

A retail gainer early Monday was Amazon (AMZN), advancing $1.02 to $178.30 in the premarket. Shares have been consolidating below key moving averages since pulling back from October's all-time high of $246.71.

Apple (AAPL) added $1.37 in early trade, a fractional increase, to $404.89. Sources say the company plans to release its iPad3 on February 24, Steve Jobs' birthday. Shares leapt above their 50-day line last week, albeit in light volume.

Bank of America (BAC) slipped $0.04, 0.71%, to $5.56 ahead of the bell. The company is reportedly considering more asset sales to raise cash. It may sell off an Indiana-based back-office processing operation, along with some real estate holdings and private equity investments. 

Semiconductor name Micron Technologies (MU) added to last week's rally, advancing as much as $1.55 before the open, a gain of 2.42%, to $6.55. Traders are optimistic that demand for the company's memory chips will grow in 2012.

Analyst Actions

Recent initial public offering Delphi Automotive (DLPH) was initiated by several researchers. The company began life as a General Motors (GM) subsidiary, but was acquired by private equity investors in 2009. The stock began NYSE trade last month.

Bank of America/Merrill Lynch started the stock with a rating of Buy. Barclays, J.P. Morgan, Robert W. Baird and Morgan Stanley awarded Overweight ratings. Credit Suisse started the firm with an Outperform, Goldman Sachs with a Buy and Citigroup with a Neutral.

Delphi, which closed at $21.33 on its first day of trade, closed Friday at $21.94.

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