Despite Moody's Downgrades, Futures Flat Ahead of Retail Sales

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U.S. stock futures are flat this morning, shrugging off euro-zone ratings cuts from Moody's, and conversely, positive investor sentiment data out of Germany. It seems investors have brought their focus back to the domestic front ahead of January's retail sales report, slated for release at 8:30 a.m. Eastern. Economists are expecting a 0.9% rise. Furthermore, anticipation precedes the windfall of earnings that begins to hit the Street today. However, the major market indexes are set to continue yesterday's advance , with all three last seen hovering just above breakeven.

Dow, S&P and Nasdaq futures

In earnings news, Rackspace Hosting, Inc. (RAX - 49.23) banked a fourth-quarter profit of $25 million, or 18 cents per share, soaring 85% from last year's profit of $13.5 million, or 10 cents per share. Thanks to a 23% bump in dedicated cloud revenue and an 86% rise in public cloud sales, overall revenue jumped 32% to $283.3 million. The results easily bested analysts' expectations for earnings of 15 cents per share on $281 million in sales. Ahead of the bell, RAX is trading 8.9% higher.

Elsewhere, Seattle Genetics (SGEN - 18.96) said its fourth-quarter loss narrowed to $27.2 million, or 24 cents per share, from a loss of $34.5 million, or 34 cents per share, in the year-ago period. Meanwhile, revenue rose by 504% to $48.9 million. The results exceeded expectations, as analysts, on average, were expecting a loss of 31 cents per share on sales of $39.1 million. Looking ahead, the company is expecting 2012 revenue from collaboration and license deals to range between $55 million and $65 million, but said it's not providing guidance on expected Adcetris sales at this time. SGEN is looking at a 6.7% drop right out of the gate.

Finally, Avon Products (AVP - 17.53) swung to a fourth-quarter loss of $400,000, or less than one penny per share, from its year-ago profit of $229.5 million, or 53 cents per share. The recently concluded quarter's results were impacted by a $263-million goodwill charge related to the purchase of Silpada Designs. On an adjusted basis, AVP earned 39 cents per share from continuing operations, while revenue for the period declined 4.2% to $3.04 billion. Analysts, on average, were expecting AVP to bank a profit of 51 cents per share on $3.11 billion in revenue. In a statement, Chairman and CEO Andrea Jung noted that "2012 is a year of transition and we are not planning for margin recovery." However, the cosmetics company maintained its annual dividend of 92 cents per share. In pre-market trading, AVP is off 5.8%.

Earnings Preview

Today's earnings docket will also feature reports from American Capital ( ACAS ), BorgWarner ( BWA ), comScore ( SCOR ), Fossil ( FOSL ), Goodyear Tire & Rubber ( GT ), Hospira (HSP), Host Hotels and Resorts (HST), LCA Vision (LCAV), MetLife (MET), Michael Kors (KORS), Peet's Coffee & Tea (PEET), United Therapeutics (UTHR), Weight Watchers International (WTW), Zipcar (ZIP), and Zynga (ZNGA). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic calendar kicks off today with retail sales figures and business inventories, along with the latest data on import and export prices. The Empire State manufacturing index hits the Street on Wednesday. Also on the day's docket are the NAHB's housing market index, industrial production and capacity utilization, weekly crude inventories, and the minutes from the latest meeting of the Federal Open Market Committee (FOMC). Thursday brings us housing starts, the producer price index (PPI), the Philadelphia Fed manufacturing index, and the weekly report on jobless claims. The Fed also remains in focus, with Chairman Ben Bernanke slated to speak at an FDIC conference. Finally, we wrap up on Friday with the consumer price index (CPI) and the Conference Board's index of leading indicators.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,363,211 call contracts traded on Monday, compared to 727,597 put contracts. The resultant single-session put/call ratio arrived at 0.53, while the 21-day moving average was 0.60.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended mixed today, as traders weighed some conflicting developments on the macroeconomic front. Last night, Moody's downgraded its credit ratings for a handful of European nations, and issued warnings to several other countries. This negative note kept many buyers on the sidelines, but some optimists cheered the Bank of Japan's surprise decision to ramp up its asset purchase plan. By the close, Japan's Nikkei rose 0.6%, Hong Kong's Hang Seng added 0.2%, South Korea's Kospi slipped 0.2%, and China's Shanghai Composite shed 0.3%.

Meanwhile, the major European benchmarks are mostly higher at midday. Traders were initially rattled by that Moody's note, with the ratings agency downgrading the likes of Spain, Italy, and Portugal, and cautioning of potential cuts for France, the U.K., and Austria. However, Moody's also reiterated its triple-A recommendations for Germany and the European Financial Stability Facility (EFSF), which helped to soften the blow. Plus, bulls were encouraged after the ZEW economic sentiment index unexpectedly surged into positive territory for January. At last look, London's FTSE 100 is 0.03% lower, the French CAC 40 is up 0.1%, and the German DAX has tacked on 0.3%.

Overseas markets

Currencies and Commodities

The greenback is slightly higher this morning, with the U.S. dollar index up 0.2% at $79.07. Crude oil is set to extend its stay above the century mark , with the front-month contract trading 0.5% higher at $101.80 per barrel. Gold futures, meanwhile, are continuing to trade lower, as the malleable metal was last seen 0.2% lower at $1,722.00 an ounce.

Currencies and commodities

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This article appears in: Investing , Options

Referenced Stocks: ACAS , BWA , FOSL , GT , SCOR

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