Opening View: DJIA Heads for Modest Gains; Goldman Sachs, Yahoo in Focus

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U.S. stocks are set to continue their upward momentum today, with a bottom-line earnings beat from Goldman Sachs ( GS ) fueling pre-market optimism. Furthermore, an unexpected -- yet seemingly celebrated -- departure at Yahoo ( YHOO ) has the tech sector in the spotlight, while unconfirmed reports of a potentially boosted bailout fund are keeping Europe in the foreground. Meanwhile, a solid debt auction in Germany has tipped the scales in the bulls' favor, helping to negate a bit of anxiety ahead of Greece's latest meeting with creditors. In pre-market action, the Dow Jones Industrial Average (DJIA) is trading about 29 points north of fair value, while the broader S&P 500 Index (SPX) is set to open about 3.5 points in the black.

Dow, S&P and Nasdaq futures

In equities news, Yahoo (YHOO - 15.43) last night announced that co-founder and former CEO Jerry Yang has resigned from its board of directors. Furthermore, Yang also stepped down as board member at Alibaba Group and Yahoo Japan. "My time at Yahoo, from its founding to the present, has encompassed some of the most exciting and rewarding experiences of my life," said Yang. "However, the time has come for me to pursue other interests outside of Yahoo." At last look, the shares of YHOO are pointed 3.6% higher.


In earnings news, Goldman Sachs (GS - 97.68) was the latest banking bigwig to step into the earnings confessional. The company this morning said fourth-quarter profit fell to $1.01 billion, or $1.84 per share, from $2.39 billion, or $3.79 per share, a year earlier. Revenue fell to $6.05 billion from $8.64 billion. The bottom-line results exceeded expectations, as analysts were calling for a per-share profit of $1.28. Sales, however, fell short of the consensus estimate of $6.73 billion. Looking ahead, the firm said it sees "encouraging signs" of economic and market improvement, and deemed itself "very well positioned." Ahead of the bell, GS is up 1.8%.

U.S. Bancorp (USB - 28.77) reported a fourth-quarter income of $1.35 billion, or 69 cents per share -- up 39% from its year-ago earnings of $974 million, or 49 cents per share. Revenue, meanwhile, climbed 8.1% to $5.1 billion. The results exceeded expectations, with analysts calling for a per-share profit of 63 cents on sales of $4.76 billion. In pre-market action, USB is lingering about 0.5% north of breakeven.

Cree (CREE - 23.33) reported a fiscal second-quarter profit of $12.1 million, or 10 cents per share, down 76% from $49.8 million, or 45 cents per share, in the year-ago period. Excluding items, earnings came in at 25 cents per share, compared to 55 cents per share in the previous year. Meanwhile, revenue rose 18% to $304.1 million. Analysts, on average, were expecting an adjusted profit of 26 cents per share on revenue of $309.9 million. Looking ahead, the company is predicting an adjusted third-quarter profit ranging from 18 cents to 25 cents per share on revenue between $290 million and $310 million. However, analysts are predicting earnings of 30 cents per share on revenue of $321.4 million. Ahead of the bell, CREE is bracing for a 7.8% drop.

Finally, BancorpSouth, Inc. (BXS - 12.19) recorded a fourth-quarter profit of $13.3 million, or 16 cents per share, a year-over-year increase from $15.8 million, or 19 cents per share. As a point of comparison, analysts were calling for a fourth-quarter profit of 14 cents per share. Revenue, meanwhile, fell 2.5% to $107.5 million. For fiscal 2011, BXS said earnings arrived at $37.6 million, or 45 cents per share, compared to its year-ago profit of $22.9 million, or 27 cents per share. BXS also announced it will continue with a $100 million stock offering. At last check, BXS is set to open 3.9% lower.

Earnings Preview

Today's earnings docket will also feature reports from Bank of New York Mellon ( BK ), State Street ( STT ), PNC Financial ( PNC ), eBay (EBAY), F5 Networks (FFIV), and Fastenal (FAST). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Wall Street will see the Labor Department's producer price index (PPI) and core PPI today, as well as the Fed's monthly report on industrial production and capacity utilization. The regularly scheduled report on weekly jobless claims will hit the Street on Thursday, as well as the holiday-delayed crude inventories data, the Philly Fed manufacturing index, monthly housing starts and building permits, and December's consumer price index (CPI) and core CPI. Finally, Friday wraps up with the latest data on existing home sales.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,389,107 call contracts traded on Tuesday, compared to 819,312 put contracts. The resultant single-session put/call ratio arrived at 0.59, while the 21-day moving average was 0.66.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Asian markets ended mixed today, with tech stocks helping to lead Tokyo's benchmark index into the black. Yahoo Japan gained ground on news of co-founder Jerry Yang's departure from Yahoo's board, while Elpida Memory rallied after a newspaper report raised the prospect of a partnership with Micron Technology. Elsewhere in the region, Shanghai-listed stocks retreated from Tuesday's sharp gains, as anxious investors took some profits off the table ahead of the upcoming Lunar New Year holiday. By the close, Japan's Nikkei added roughly 1%, Hong Kong's Hang Seng edged up 0.3%, South Korea's Kospi shed 0.02%, and China's Shanghai Composite declined 1.4%.

Meanwhile, European stocks are cautiously higher at midday. Anxiety regarding the Greek government's meeting with bondholders prompted early jitters, but the bulls were encouraged by a successful auction of German debt. Buyers have also been lured off the sidelines by an unconfirmed Bloomberg report that the International Monetary Fund (IMF) is looking to boost the size of its lending facility to $1 trillion. At last look, France's CAC 40 has tacked on nearly 0.1%, the German DAX is 0.2% higher, and London's FTSE has shed about 0.1%.

Overseas markets

Currencies and Commodities

The greenback has softened even more this morning, with the U.S. dollar index down about 0.5%. Meanwhile, crude futures have extended their trek north of the century mark , with the front-month contract up 0.6% at $101.51 per barrel. Gold futures, on the other hand, have pulled back from one-month highs , with the malleable metal last seen fractionally lower at $1,655 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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This article appears in: Investing , Options

Referenced Stocks: BK , GS , PNC , STT , YHOO

Schaeffer's Investment Research

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