Opening View: U.S. Stocks Pointed Higher Ahead of Key Economic Data
U.S. stocks are looking to shake off their three-day drubbing , with futures on all three major indexes pointed higher ahead of the bell. Investors are anxiously awaiting key economic reports in the form of weekly jobless claims, the producer price index (PPI), and manufacturing data, all while keeping an eye on conflicting reports from overseas. Ahead of this economic agenda, the Dow Jones Industrial Average (DJIA) is looking at a 135-point jump out of the gate, while the S&P 500 Index (SPX) is trading six points above breakeven.
Novellus Systems (NVLS - 34.70) is up 24.5% in pre-market trading, as sector peer Lam Research (LRCX - 39.48) agreed to acquire the company for a price of $44.42 per share -- representing a 28% premium to yesterday's close, and placing the total value of the deal near $3.3 billion. Under the terms of the all-stock deal, NVLS investors will receive 1.125 shares of Lam for each Novellus share they own. The transaction is expected to close during the second quarter of 2012, and the acquisition is projected to return approximately $100 million per year in savings beginning in the fourth quarter of 2013, when the merger will be complete. LRCX is down 0.8% ahead of the bell.
On the earnings front, VeriFone Systems (PAY - 40.55) banked a fiscal fourth-quarter profit of $198.8 million, or $1.84 per share, more than quadrupling its year-ago earnings of $49.4 million, or 55 cents per share. On an adjusted basis, PAY earned 53 cents per share, while net revenue improved 49% to $410.7 million. The results were stronger than anticipated, as analysts were looking for a profit of 51 cents per share on $408.1 million in revenue. Looking ahead, PAY predicted a first-quarter profit of 50 cents to 52 cents per share, just shy of Wall Street's consensus estimate of 53 cents per share. PAY is down 0.5% ahead of the open.
Meanwhile, Rick's Cabaret International (RICK - 8.31) recorded a fiscal fourth-quarter profit of $2 million, or 20 cents per share, compared to last year's loss of $12.5 million, or $1.24 per share. On a year-over-year basis, revenue rose to $21.5 million from $19.1 million. The results came in lower than forecast, as analysts, on average, were calling for earnings of 24 cents per share on sales of $22 million. For fiscal 2011, RICK reported a profit of $7.8 million, or 79 cents per share, versus a loss of $8 million, or 82 cents per share in the year prior. Revenue for the now-ended fiscal year jumped 12.7% to $83.5 million.
Today's earnings docket will feature reports from Accenture ( ACN ), Adobe Systems ( ADBE ), Discover Financial Services ( DFS ), FedEx ( FDX ), Hovnanian Enterprises ( HOV ), Research In Motion (RIMM), and Rite Aid (RAD). Keep your browser at SchaeffersResearch.com for more news as it breaks.
A slew of economic reports are due out today, including the producer price index (PPI), the Empire State manufacturing index, the Philadelphia Fed index, industrial production and capacity utilization, and weekly jobless claims. Finally, the week's slate of economic events wraps up on Friday with the release of the consumer price index (CPI).
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 876,281 call contracts traded on Wednesday, compared to 695,591 put contracts. The resultant single-session put/call ratio arrived at 0.79, while the 21-day moving average was 0.71.
Asian markets ended in the red today, bogged down by lingering concerns over the euro-zone debt crisis. In addition to rising Italian bond yields, investors were rattled after Fitch downgraded five major European banks, including France's Credit Agricole, due to "stronger headwinds facing the banking industry as a whole." Meanwhile, a little closer to home, HSBC's flash purchasing managers index for China arrived at 49 in December, revealing an ongoing contraction in the country's manufacturing sector. Against this gloomy backdrop, China's Shanghai Composite and South Korea's Kospi both fell 2.1%, Hong Kong's Hang Seng lost 1.8%, and Japan's Nikkei gave up 1.7%.
Conversely, European stocks are pointed higher at midday, with traders more or less shrugging off the Fitch downgrades. Instead, the bulls are cheering a lucrative unit sale for British insurance issue Old Mutual, as well as rumors of potential government aid for Germany's Commerzbank. However, regional benchmarks pulled back from their intraday highs after Markit's December PMI reports for both Germany and the broader euro zone indicated continued contraction in manufacturing activity. At last check, London's FTSE 100 and the French CAC 40 are 0.8% higher, and Germany's DAX has gained 1.1%.
Currencies and Commodities
The greenback is pointed lower this morning, threatening to break a three-day advance, with the U.S. dollar index down 0.3%. Crude oil, meanwhile, is looking to rebound from yesterday's drop, with the front-month contract last seen 0.6% higher at $95.73 per barrel. Gold futures are pointed higher, as well, with the malleable metal up 0.5% to trade at $1,594.10 an ounce.
Unusual Put and Call Activity:
Unusual Put and Call Activity:
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