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Opening View: Stocks Set to Soar Ahead of Facebook's Rumored IPO
By: Schaeffer's Investment Research
U.S. stock futures are soaring this morning, as Wall Street is cheering increased speculation about a long-awaited initial public offering (IPO) from social media site Facebook. Investors are also eagerly anticipating a number of domestic economic reports, including the ADP private-sector payrolls data and the ISM's manufacturing index. Despite a gloomy backdrop of economic data already released this week, the Street seems hopeful that today's reports will paint a more optimistic picture of the economy ahead of Friday's highly-anticipated nonfarm payrolls data. On course to repeat January's positive momentum , all three major market indexes are looking at a big jump right out of the gate.
As mentioned earlier, Facebook is purportedly set to file paperwork for its much-anticipated IPO today. As expected, Morgan Stanley will serve as the lead underwriter for the massive IPO, sources told IFR, a unit of Thomson Reuters. Although final pricing will not be determined for several months, the initial estimates range between $5 billion and $10 billion.
In earnings news, Amazon.com (AMZN - 194.44) unveiled fourth-quarter earnings of $177 million, or 38 cents per share, down 57% from $416 million, or 91 cents per share, in the year-ago period. Meanwhile, revenue rose 35% to $17.43 billion. Analysts, on average, were expecting a profit of 17 cents per share on revenue of $18.23 billion. Looking ahead, AMZN is forecasting fiscal first-quarter revenue of $12 billion to $13.4 billion, compared to analysts' prediction for $13.41 billion in sales. However, the firm projected first-quarter operating results ranging from a loss of $200 million to a profit of $100 million. AMZN is down 9% in pre-market trading.
Elsewhere, Broadcom Corporation (BRCM - 34.35) last night said fourth-quarter profit fell 4.5% to $254 million, or 45 cents per share, compared to last year's profit of $266 million, or 47 cents per share. Excluding items, earnings arrived at 68 cents per share. Revenue, meanwhile, dropped 6.4% to $1.82 billion. The results came in better than expected, as analysts, on average, were calling for adjusted earnings of 65 cents per share on $1.80 billion in revenue. For the current quarter, BRCM is expecting revenue to range between $1.7 billion and $1.8 billion, with analysts forecasting $1.73 billion in sales. The chip maker also lifted its quarterly cash dividend by 11% to 10 cents per share. BRCM is looking at a 2.7% jump right out of the gate.
Insurance provider Aflac, Inc. (AFL - 48.23) banked fourth-quarter earnings of $546 million, or $1.17 per share, up 25% from $437 million, or 92 cents per share, in the year-ago quarter. Excluding items, AFL earned $1.48 per share. Revenue increased 12.9% to $6 billion. However, AFL's results failed to meet expectations, as Wall Street was calling for a bottom line of $1.51 per share on $6.06 billion in revenue. For 2012, AFL affirmed its operating earnings growth outlook of 2% to 5%, and predicted that U.S. sales will increase 3% to 8%, while sales in Japan will fall 2% to 5%. The Columbus, Ga.-based company also declared a first-quarter dividend. AFL is down fractionally ahead of the bell.
Finally, Whirlpool (WHR - 54.32) reported fourth-quarter net income of $205 million, or $2.62 per share, up 20% on a year-over-year basis. Excluding items, WHR earned 32 cents per share, while sales slipped 2% to $4.9 billion. For comparison, analysts were looking for a profit of $1.96 per share on $4.98 billion in revenue. WHR predicted adjusted earnings of $6.50 to $7 per share for fiscal 2012, comfortably surpassing the average analyst estimate of $5.85 per share. Traders seem to be focusing on WHR's upbeat outlook, rather than its quarterly earnings miss, as the stock has jumped nearly 10% ahead of the bell.
Today's earnings docket will also feature reports from Marathon Oil ( MRO ), Marathon Petroleum ( MPC ), Aetna ( AET ), Allstate ( ALL ), AOL ( AOL ), Chipotle Mexican Grill (CMG), Qualcomm (QCOM), Radware (RDWR), Electronic Arts (EA), Green Mountain Coffee Roasters (GMCR), Hershey (HSY), JDS Uniphase (JDSU), Las Vegas Sands (LVS), AvalonBay Communities (AVB), BE Aerospace (BEAV), BMC Software (BMC), CommVault Systems (CVLT), Concur Technologies (CNQR), Corinthian Colleges (COCO), and Shutterfly (SFLY). Keep your browser at SchaeffersResearch.com for more news as it breaks.
Employment data starts to trickle in today, with the release of ADP's private-sector payrolls report. Also on tap are the ISM's manufacturing index, construction spending, motor vehicle sales, and the usual weekly update on crude inventories. Thursday's docket is relatively light, featuring the regularly scheduled data on weekly jobless claims. Finally, the Labor Department's marquee report on nonfarm payrolls will dominate headlines on Friday, and traders will also digest the latest data on factory orders and the ISM's services index.
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,164,089 call contracts traded on Tuesday, compared to 714,290 put contracts. The resultant single-session put/call ratio arrived at 0.61, while the 21-day moving average was 0.60.
Asia's major equity benchmarks ended mixed today, as poorly received U.S. economic data kept many buyers on the sidelines. Plus, traders were left to parse a pair of less-than-stellar manufacturing reports out of China. The country's official purchasing managers index (PMI) edged up to 50.5 in January, pointing to modest expansion in factory activity -- but HSBC's private-sector PMI remained stuck at a disappointing 48.8. The dueling reports weren't strong enough to spark economic optimism, nor were they weak enough to raise hopes for a policy-easing move from Beijing. Elsewhere, Seoul-listed securities shrugged off news of a surprise South Korean trade deficit for January. By the close, China's Shanghai Composite fell 1.1%, Hong Kong's Hang Seng lost 0.3%, Japan's Nikkei inched 0.08% higher, and South Korea's Kospi tacked on 0.2%.
Conversely, stocks in Europe are broadly higher at midday. Banking issues are among the notable outperformers, with traders pricing in some optimism over a seemingly imminent Greek debt restructuring deal. Meanwhile, Germany's PMI improved to 51.0 in January, while the broader euro-zone's PMI crept up to 48.8. Both figures surpassed expectations, helping the bulls to overlook a few uninspiring reports on factory activity from around the globe. At last check, London's FTSE 100 has gained 1.3%, the French CAC 40 is up 1.6%, and the German DAX has surged 2.3%.
Currencies and Commodities
The U.S. dollar index is down this morning, trading 0.3% lower at $79.04. Meanwhile, crude oil is looking to break its losing streak , with the front-month contract 0.7% higher at $99.15 per barrel. Gold futures are up as well, on track to extend January's upward momentum, with the malleable metal last seen 0.5% higher at $1,749.60 an ounce.
Unusual Put and Call Activity:
Unusual Put and Call Activity:
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