U.S. stocks are poised to extend
today, thanks to uninspiring gross domestic product (
) data out of China and a few lackluster big-cap earnings reports.
Among the notable pre-market decliners are blue chips IBM Corp. (
) and Bank of America (
), which are both set to start the session in the red. Meanwhile,
lingering concerns about the fiscal health of Europe have also
fueled the bears ahead of the bell, with Moody's warning that
France's triple-A credit rating could be in danger. Against this
pessimistic backdrop -- and ahead of an afternoon speech from
Federal Reserve Chairman Ben Bernanke -- the Dow Jones Industrial
Average (DJIA) is flirting with a
second straight triple-digit drop
In earnings news, IBM (IBM - 186.59) banked a third-quarter
profit of $3.84 billion, or $3.19 per share -- up 7% from its
year-ago earnings of $3.59 billion, or $2.82 per share. Operating
earnings improved to $3.28 per share, while revenue rose 7.8% to
$26.16 billion. The results were mixed, as Wall Street was looking
for a profit of just $3.22 per share on a slightly more robust
$26.26 billion in revenue. Big Blue also hiked its full-year
forecast, with the tech giant now predicting at least $13.35 per
share in operating earnings -- just north of the average analyst
estimate of $13.32 per share. At last check, IBM is bracing for a
Meanwhile, VMware (VMW - 89.52) reported a third-quarter profit
of $177.5 million, or 41 cents per share, compared to $84.6
million, or 20 cents per share, a year ago. On an adjusted basis,
VMW earned 53 cents per share, while revenue jumped 32%
year-over-year to $941.9 million. Analysts were projecting earnings
of 50 cents per share on revenue of $929.4 million. "Demand was
especially strong in the Asia-Pacific markets and we also
experienced the seasonal impact of sales to the U.S. Federal
Government," explained Chief Financial Officer Mark Peek. As a
result of the strong third-quarter results, VMW is now predicting
its fourth-quarter revenue to range between $1.03 billion and $1.06
billion, compared to the average analyst estimate of $1.03 billion.
In pre-market trading, VMW is poised to open 1.5% lower.
EMC Corp. (EMC - 22.68) said third-quarter earnings rose 28% to
$605.6 million, or 27 cents per share. Excluding items, earnings
increased to 37 cents per share, compared to 30 cents per share a
year earlier. Revenue, meanwhile, jumped 18% to $4.98 billion - a
company record. The results topped expectations, with Wall Street
calling for an adjusted per-share profit of 36 cents on sales of
$4.91 billion. Furthermore, EMC said it's still on track to beat
its full-year profit projections, thanks to solid demand. Ahead of
the bell, EMC is on track for a 0.8% gain.
Finally, Bank of America (BAC - 6.03) swung to a third-quarter
profit of $6.2 billion, or 56 cents per share, from its year-ago
loss of $7.3 billion, or 77 cents per share. Net revenue for the
quarter edged up 6% to $28.7 billion. The quarterly results were
impacted by "a number of significant items," including a pre-tax
gain of $3.6 billion from the sale of BAC's stake in China
Construction Bank. Analysts, on average, were looking for the
Charlotte-based financial firm to bank a profit of 20 cents per
share on $25.95 billion in revenue. At last look, BAC is headed for
a 1% drop out of the gate.
Today's earnings docket will also feature reports from Apple (
), Coca-Cola (
), Cree (CREE), Domino's Pizza (DPZ), Goldman Sachs (GS), Harley
Davidson (HOG), Intel (INTC), Intuitive Surgical (ISRG), Johnson
& Johnson (JNJ), Juniper Networks (JNPR), State Street (STT),
UnitedHealth Group (UNH), and Yahoo (YHOO). Keep your browser at
for more news as it breaks.
Inflation data starts to roll in today, with the release of the
producer price index (PPI) and core PPI for September.
Additionally, Fed Chairman Ben Bernanke is scheduled to speak at a
conference in Boston. Wednesday's docket features the consumer
price index (CPI) and core CPI for September, along with last
month's housing starts, weekly crude inventories, and the Fed's
Beige Book report for October. The usual report on weekly jobless
claims is due out Thursday, as well as existing home sales for
September, the October Philadelphia Fed index, and the Conference
Board's index of leading economic indicators. There are no major
economic reports scheduled for Friday.
Equity option activity on the Chicago Board Options Exchange
(CBOE) saw 844,008 call contracts traded on Monday, compared to
598,331 put contracts. The resultant single-session put/call ratio
arrived at 0.71, while the 21-day moving average was 0.71.
Asian markets ended lower across the board today, following suit
with Wall Street's Monday decline. Traders priced in some anxiety
after German Finance Minister Wolfgang Schaeuble warned that "we
won't have a definitive solution" to Europe's debt crisis anytime
soon. Even more troubling, China's GDP slowed to a 9.1% growth rate
during the third quarter, falling short of consensus expectations
for a 9.2% rise. By the close, Hong Kong's Hang Seng tumbled 4.2%,
China's Shanghai Composite fell 2.3%, Japan's Nikkei dropped 1.6%,
and South Korea's Kospi slipped 1.4%.
Downbeat GDP data from China is also dragging on Europe at
midday, with miners taking the brunt of the impact. Meanwhile,
banking stocks came under pressure in Paris, after Moody's warned
that France's triple-A credit rating could be in jeopardy.
Elsewhere, Royal Bank of Scotland backpedaled after a downgrade to
"underweight" at Morgan Stanley, while Dexia declined amid concerns
that stakeholder Holding Communal could be forced to declare
bankruptcy. At last check, the French CAC 40 is off 2.1%, London's
FTSE 100 is 1.5% lower, and the German DAX has declined 0.9%.
Currencies and Commodities
The greenback is trading higher this morning, with the U.S.
dollar index up 0.3% at last look. Elsewhere, crude futures have
extended their retreat, with the front-month contract down 0.6% at
$86.44 per barrel. Similarly, gold futures have also continued
their decline, with the precious metal down $17.30, or 1%, at
$1,659.30 an ounce.
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