Opening View: DJIA Cautiously Higher Ahead of Data Deluge; CAT, NFLX in Focus

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U.S. stocks are set to extend yesterday's Fed-induced climb , with the bulls still celebrating the policymakers' extended low-rate pledge. In addition, traders are applauding a few notable earnings reports, with Caterpillar ( CAT ) bolstering the blue chips, and Netflix ( NFLX ) providing the latest halo lift for the Internet sector. Elsewhere, speculation that Greece could be close to striking a deal with private creditors has also fueled pre-market optimism. However, Wall Street appears to be curbing its collective enthusiasm ahead of an onslaught of economic data, including reports on jobless claims, durable goods, housing, and leading indicators. Against this backdrop, the Dow Jones Industrial Average (DJIA) and its peers are poised to continue their quest for multi-month highs .

Dow, S&P and Nasdaq futures

In earnings news, Netflix (NFLX - 95.04) reported a fourth-quarter profit of $40.7 million, or 73 cents per share - down 13% from $47.1 million, or 87 cents per share, a year earlier. Revenue, meanwhile, soared 47% to $875.6 million. Analysts, on average, were expecting a per-share profit of 54 cents on sales of $857.3 million. Furthermore, the company said the number of streaming subscribers "grew faster than expected," increasing by 220,000 to 21.67 million. Looking ahead, NFLX predicted a first-quarter loss of 16 cents to 49 cents per share on revenue of $842 million to $917 million. For comparison, Wall Street is calling for a quarterly loss of 30 cents per share on sales of $848 million. Ahead of the bell, NFLX is set to soar about 20.5%.

On the blue-chip front, Caterpillar (CAT - 109.05) was among the notable Dow components in the earnings spotlight. This morning, the industrial equipment maker reported a fourth-quarter profit of $1.55 billion, or $2.25 per share -- up 60% from $968 million, or $1.47 per share, a year earlier. Excluding items, CAT earned $2.32 per share, while sales for the quarter soared 35% to a record $17.24 billion. The results surpassed Wall Street's expectations for an adjusted per-share profit of $1.76 on revenue of $15.95 billion. Looking ahead, CAT predicted 2012 earnings of about $9.25 per share on sales of $68 billion to $72 billion. Analysts, on average, are calling for a full-year profit of $9.06 per share on revenue of $67.33 billion. In pre-market trading, CAT is headed 2.6% higher.

Finally, E*Trade Financial Corporation (ETFC - 9.36) last night reported a fourth-quarter loss of $6.3 million, or 2 cents per share, compared to last year's loss of $24 million, or 11 cents per share. ETFC's bottom-line results were negatively affected by a $10.8-million class action settlement against the firm. Revenue for the online finance issue fell 8.3% to $475 million. The results fell far short of analysts' expectations for earnings of 20 cents per share on $489 million in revenue. E*Trade said its loan loss provision climbed by one-fourth sequentially to $123 million, though it was down 36% from a year earlier. However, as CEO Steven Freiberg told Dow Jones Newswires, ETFC's loan loss provision was actually $87 million, "stripping out the noisy items." At last look, ETFC is poised to open with a 6.5% drop.

Earnings Preview

Today's earnings docket will also feature reports from 3M Company ( MMM ), AT&T ( T ), Under Armour ( UA ), Starbucks (SBUX), Time Warner Cable (TWC), JetBlue Airways (JBLU), United Continental (UAL), Juniper Networks (JNPR), and Cirrus Logic (CRUS). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Today's economic agenda heats up with reports on jobless claims, durable goods, new home sales, and the Conference Board's index of leading indicators. Finally, Friday wraps up with the government's fourth-quarter gross domestic product (GDP) estimate, as well as the final Thomson Reuters/University of Michigan consumer sentiment figures for January.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,513,011 call contracts traded on Wednesday, compared to 857,009 put contracts. The resultant single-session put/call ratio arrived at 0.57, while the 21-day moving average was 0.61.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended mostly higher today, following suit with Wall Street's late gains after the U.S. central bank extended its forecast for rock-bottom interest rates . In Seoul, a weaker-than-expected report on gross domestic product (GDP) was taken in stride, with equities managing to eke out a modestly positive finish. Meanwhile, traders in Hong Kong returned from their Lunar New Year break in a buying mood, although the gains came amid relatively low volume. However, Tokyo-listed issues finished in the red, as exporters pared some of their recent advances. By the close, Hong Kong's Hang Seng added 1.6%, South Korea's Kospi edged up 0.3%, and Japan's Nikkei dipped 0.4%. Markets in mainland China remain closed for holiday.

European equities are pointed north at midday, despite a disappointing earnings report from retail giant Hennes & Mauritz. The bulls are taking their cues from the Federal Reserve's accommodative tone, as well as speculation that Greece may be closer to striking a favorable debt restructuring deal with its private bondholders. At last check, the German DAX is up 1.5%, London's FTSE 100 has added 1.2%, and the French CAC 40 has climbed 1.1%.

Overseas markets

Currencies and Commodities

The greenback has extended its retreat this morning, with the U.S. dollar index down 0.4% at last check. Crude oil, meanwhile, is set to reclaim a perch atop the century mark , with the front-month contract up 1.2% to linger near $100.60 per barrel. Likewise, gold futures are still capitalizing on their status as an inflationary hedge , with the precious metal last seen 1.1% higher at $1,718.60 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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This article appears in: Investing , Options

Referenced Stocks: CAT , MMM , NFLX , T , UA

Schaeffer's Investment Research

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