Opening View: DJIA Looks to Extend Rally After Bank of America Earnings

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It looks like the bulls could remain in power today, with Wall Street applauding the first batch of big-cap earnings reports. Most notably, the latest figures from financial concerns Bank of America ( BAC ) and Morgan Stanley ( MS ) were well-received, as was eBay's ( EBAY ) turn in the earnings limelight. Across the pond, meanwhile, the International Monetary Fund ( IMF ) confirmed reports that it's looking to bolster its lending ability by $500 billion, which is also adding fuel to the bullish fire. Against this backdrop -- and ahead of a slew of domestic economic reports, including jobless claims, consumer prices, and housing starts -- the Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) are poised to extend their journeys north of psychological benchmarks .

Dow, S&P and Nasdaq futures

In earnings news, Bank of America (BAC - 6.80) said it swung to a fourth-quarter profit of $1.58 billion, or 15 cents per share, from a loss of $1.57 billion, or 16 cents per share, in the year-ago quarter. Revenue, meanwhile, increased 11% to $24.89 billion. Analysts, on average, were expecting BAC to record a fourth-quarter profit of 22 cents per share, though the firm topped the consensus revenue forecast of $23.74 billion. Furthermore, the bank said it set aside $2.9 billion for loan losses, down from $5.1 billion a year earlier. Ahead of the bell, BAC is pointed 5.4% higher.

Meanwhile, sector peer Morgan Stanley (MS - 17.35) said it swung to a fourth-quarter loss of $227 million, or 15 cents per share, from a year-ago profit of $600 million, or 42 cents per share. Sales fell 26% to $5.71 billion. Wall Street was calling for a steeper quarterly loss of 57 cents per share on sales of $5.57 billion. In pre-market trading, MS is headed for a 5.1% gain.

Online auctioneer eBay (EBAY - 30.34) banked a fourth-quarter profit of $1.98 billion, or $1.51 per share -- representing quite a jump from its year-ago earnings of $559.2 million, or 42 cents per share. Adjusting out a substantial gain from the sale of its remaining Skype stake, EBAY's earnings improved 15% to 60 cents per share, while revenue rose 35% to $3.38 billion. The results were stronger than expected, with analysts looking for a profit of 57 cents per share on revenue of $3.32 billion. For the current quarter, the Internet issue is anticipating a profit of 50 cents to 51 cents per share on revenue of $3.05 billion to $3.15 billion, just shy of Wall Street's forecast for earnings of 54 cents per share on $3.16 billion in revenue. On the other hand, EBAY is now anticipating fiscal 2012 revenue of $13.7 billion to $14 billion, besting the average analyst estimate of $13.63 billion. At last look, EBAY is pointed 2.8% higher.

F5 Networks (FFIV - 108.46) reported a fiscal first-quarter profit of $66.5 million, or 83 cents per share, up from $55.7 million, or 68 cents per share, in the year-ago period. Excluding items, earnings came in at $1.03 per share, compared to 88 cents per share in the previous year. Meanwhile, revenue rose 19.9% to $322.4 million. Analysts, on average, were expecting earnings of $1.01 per share on revenue of $319.2 million. Looking ahead, the company is forecasting an adjusted second-quarter profit between $1.05 and $1.07 per share on sales ranging from $332 million to $337 million. This represents a slightly bolder view than Wall Street's prediction for a profit of $1.05 per share on revenue of $330.5 million. Ahead of the open, FFIV is poised to gain 8.7% out of the gate.

Finally, Xilinx (XLNX - 35.30) unveiled fiscal third-quarter earnings of $127 million, or 47 cents per share, down 17% from $152.3 million, or 58 cents per share, in the year-ago quarter. Meanwhile, revenue decreased 10% to $511.1 million. The tech company's results were stronger than forecast, however, as analysts were calling for a profit of 37 cents per share on $499.3 million in revenue. For its fourth quarter, XLNX is expecting a sequential increase of 2% to 6% in sales, bringing quarterly revenue to between $521.3 million and $541.8 million. Analysts, on average, are anticipating current-quarter sales of $511 million. At last check, XLNX is headed for a 6.4% lead.

Earnings Preview

Today's earnings docket will also feature reports from American Express ( AXP ), IBM Corp. (IBM), Microsoft (MSFT), Intel (INTC), Google (GOOG), Southwest Airlines (LUV), Intuitive Surgical (ISRG), and BlackRock (BLK). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The regularly scheduled report on weekly jobless claims will hit the Street today, 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 1,614,985 call contracts traded on Wednesday, compared to 888,794 put contracts. The resultant single-session put/call ratio arrived at 0.55, while the 21-day moving average was 0.64.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended higher today, after the IMF confirmed plans to increase its lending ability. Traders are also cheering some monetary maneuvers out of Beijing, with the People's Bank of China launching an offering of 183 billion yuan in order to boost liquidity. Meanwhile, financial firms caught a tailwind from Goldman Sachs' stronger-than-forecast quarterly earnings . By the close, Hong Kong's Hang Seng and China's Shanghai Composite each gained 1.3%, South Korea's Kospi added 1.2%, and Japan's Nikkei rose 1%.

The major European indexes are also in the black at midday. In addition to the IMF news, the bulls were encouraged by declining bond yields at France's first post-downgrade debt auction. Likewise, embattled Spain garnered healthy demand for its own bond sale. As in Asia, banking stocks helped set the tone for the day's rally, with Commerzbank spiking in Frankfurt after confirming that it won't need any state assistance to address its capital shortfall. At last look, the French CAC 40 is up 1.3%, London's FTSE 100 has added 0.5%, and the German DAX is 0.6% higher.

Overseas markets

Currencies and Commodities

The greenback is trading lower this morning, with the U.S. dollar index down about 0.3%. Meanwhile, crude futures are recovering from yesterday's pipeline drama , with the front-month contract up 1.1% at $101.85 per barrel. Likewise, gold futures have extended their trek into the black, with the malleable metal last seen 0.2% higher at $1,663.80 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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This article appears in: Investing , Options

Referenced Stocks: AXP , BAC , EBAY , IMF , MS

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