DJIA Set to Rally on Hopes for Greek Bailout Resolution

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Wall Street is riding yesterday's domestic-data driven wave of euphoria , with futures on all three major market indexes trading modestly higher today. While this week's economic activity wraps up with January's consumer price index ( CPI ), traders are more focused on news from across the pond, where hope is emerging once again that a bailout plan for debt-laden Greece will be finalized by Monday. With optimism emanating from all corners of the globe, the Dow Jones Industrial Average (DJIA) is set to extend its stay above the 12,900 mark , while the broader S&P 500 Index (SPX) is trading north of breakeven.

Dow, S&P and Nasdaq futures

In equities news, Gilead Sciences, Inc. (GILD - 54.81) is facing a 20% drop in pre-market trading, as the pharma concern released an early morning statement that the bulk of patients being tested with the company's highly-anticipated hepatitis C drug, GS-7977, relapsed after just one month of completing the prescribed 12-week trial period. Today's slide comes on the heels of GILD's recent trek into annual-high territory .


In earnings news, Nordstrom (JWN - 52.18) reported fourth-quarter net income of $236 million, or $1.11 per share, up 1.7% from $232 million, or $1.04 per share, in the year-ago period. Meanwhile, retail sales rose by 12.5% to $3.17 billion, boosted by a 7.1% increase in same-store sales. These figures fell roughly in line with analysts' predictions for earnings of $1.09 per share on revenue of $3.17 billion. Looking ahead, JWN is expecting a fiscal 2012 profit of $3.30 to $3.45 per share, while Wall Street is forecasting full-year earnings of $3.59 per share. JWN is trading fractionally lower ahead of the bell.

Elsewhere, Applied Materials (AMAT - 13.21) saw its fiscal first-quarter profit contract 77% to $117 million, or 9 cents per share, from last year's earnings of $506 million, or 38 cents per share. Excluding items, AMAT earned 18 cents per share, while revenue retreated 19% to $2.2 billion. Analysts, on average, were expecting a profit of 12 cents per share on $1.9 billion in revenue. For the second quarter, AMAT is targeting earnings of 20 cents to 28 cents per share, with revenue projected to range between $2.3 billion and $2.52 billion. That forecast is sunnier than the Street's view, which is calling for a current-quarter profit of 15 cents per share on $2.08 billion in revenue. AMAT is up more than 5% in pre-market trading.

Finally, Frontier Communications Corporation (FTR - 4.46) said its fourth-quarter earnings fell 8.1% to $42.2 million or 4 cents per share, from last year's profit of $46 million, or 5 cents per share, on a 9.9% contraction in its subscriber base. Excluding items, earnings landed at 7 cents per share. Revenue was also on the decline, dropping 5.6% to $1.28 billion. The results beat analysts' expectations for a per-share profit of 5 cents on $1.27 billion in sales. FTR also announced it will scale back its dividend payment by 47% to 10 cents per share, in a move expected to save the company $87.1 million each quarter. So far this morning, FTR has been hit with price-target cuts from Citigroup and Jefferies, but Macquarie raised its rating on the stock to "neutral." The stock is set to add about 1% right out of the gate.

Earnings Preview

Today's earnings docket will also feature reports from Campbell Soup ( CPB ), EOG Resources ( EOG ), H.J. Heinz ( HNZ ), Lincoln Electric ( LECO ), and Pilgrim's Pride (PPC). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

We wrap up the week with the CPI and the Conference Board's index of leading indicators.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,659,764 call contracts traded on Thursday, compared to 1,053,088 put contracts. The resultant single-session put/call ratio arrived at 0.63, while the 21-day moving average was 0.60.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended solidly higher, thanks in part to a batch of well-received U.S. economic data. Traders also seemed optimistic that Greece will be able to secure bailout funds, with reports late Thursday indicating that the European Central Bank (ECB) would conduct a Greek bond swap to facilitate such a deal. Meanwhile, a softening yen was supportive of Japanese exporters -- but resource issues weighed on equities in mainland China amid news of industry-wide tax hikes. By the close, Japan's Nikkei rose 1.6%, South Korea's Kospi advanced 1.3%, Hong Kong's Hang Seng added 1%, and China's Shanghai Composite edged up 0.01%.

The major European benchmarks are also pointed north at mid-session. Speculation now suggests that Greece could be in line to receive bailout funds as early as Monday, when euro-zone finance ministers are scheduled to convene in Brussels. Ahead of the summit, Greece outlined the spending cuts requested by international lenders, clearing one obstacle on the path to receiving additional aid. Sentiment has also been lifted by reports of the ECB's planned bond maneuvers, as well as another round of stronger-than-forecast U.S. jobs data. At last check, the German DAX and French CAC 40 are both 1.3% higher, while London's FTSE 100 is up 0.5%.

Overseas markets

Currencies and Commodities

The U.S. dollar index is trading fractionally lower this morning, last seen at $79.32. Crude oil, meanwhile, continues to march higher , with the front-month contract up 0.5% at $103.19 per barrel. Gold futures are also pointed north, with the malleable metal up 0.3% at $1,733.20 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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Unusual options activity - puts

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This article appears in: Investing , Options

Referenced Stocks: CPB , CPI , EOG , HNZ , LECO

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