The Day Ahead: Volume Should Remain Light

 | Dec 28, 2011 | 8:30 AM EST  | Comments
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Wall Street futures pointed higher Wednesday. The S&P 500 and the DJIA showed gains for the year heading into today's session. The Nasdaq Composite is down 1.04% for 2011.

As expected, Tuesday's session brought trading volume well below normal; that trend will likely continue all week.

Global Glance

The same light turnover was also occurring on European indices. Advancers outpaced decliners in Europe, and trade in London resumed after an extra-long holiday weekend.

Traders' spirits were buoyed by a successful bond auction in Italy. Borrowing costs were significantly lower than in previous offerings. There is an auction of longer-term debt in Italy tomorrow, and many traders and analysts will be monitoring demand from international buyers.

Asian markets closed lower on Wednesday, although the beaten-down Shanghai Composite managed a gain of 0.17%. Volume on Asian exchanges was also lighter than normal.

Commodities Corner

The economic calendar is light today, although there are several government-issued reports due out on Thursday.

The Energy Department's regular report on crude inventories has been pushed back to Thursday this week because of Monday's holiday. The same will be true next week.

Crude oil was back above the century mark this morning but had shed $0.27, to $101.07 per barrel. Iran has threatened to block oil shipments through the Strait of Hormuz, which is a passageway for one-sixth of the world's oil. Supplies from Saudi Arabia, the United Arab Emirates, Kuwait and Iraq travel through the strait.

Gold, which has been under selling pressure, continued its slide early Wednesday. The metal fell $3.70, to $1,591.80 per ounce.

Business Banner

There are no significant earnings reports due out today.

In company news, Morgan Stanley (MS) said it would cut 850 jobs in New York, citing the overall economy along with a drop in investment banking and trading revenue.

Morgan Stanley shares are down 44% this year.

Medicis Pharmaceutical (MRX) slashed its fourth-quarter earnings view, saying it now expects profit in a range of $0.51 to $0.57 per share. Analysts had expected $0.61 per share.

The maker of dermatological treatments skidded more than 14% in November, although before today's session, it had regained some of that ground this month.

Nike (NKE) shares put on their Air Jordans and jumped $0.18, 0.18%, to $97.95 in the premarket. Bad publicity over fights and arrests after last week's release of its new line of shoes was overshadowed by the product's strong sales. The stock also leapt last week on a better-than-expected second-quarter report.

Amazon (AMZN) was another consumer-focused gainer ahead of the bell. The company reportedly has hired new employees from Quorus, a Seattle company specializing in social media marketing and technologies. Amazon shares were up $0.75, 0.43%, to $177.02 in early trade.

Bargain-hunters grabbed shares of Oracle (ORCL), which gapped down 11.7% last week after missing earnings views. The stock climbed $0.16, 0.64%, to $25.79 in early trade Wednesday.

Even before last week's plunge, Oracle shares were trading beneath key moving averages.

S&P 500 component Sempra Energy (SRE) backed off in the premarket, after Tuesday's low-volume gain. The stock was down $0.99, 1.80%, to $54. It's been consolidating below its 52-week high of $55.97, reached in May.

Analyst Actions

In analyst actions, Texas-based retailer Mattress Firm (MFRM) was initiated at three shops. KeyBanc and UBS started coverage with ratings of Buy. Barclays awarded a rating of Overweight.

Mattress Firm is a small-cap. It went public at $19 on Nov. 18. Shares closed Tuesday at $22.22, after gapping down at the open.

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