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Stocks Stable Ahead of Bernanke Testimony
By: Schaeffer's Investment Research
A bullish bias lingers this morning, as futures on all three major market indexes are pointed north of breakeven. Wall Street is letting yesterday's excitement sink in, after the most recent consumer confidence report guided the Dow Jones Industrial Average (DJIA) to its first daily close above the 13,000 mark in nearly four years. Traders are also digesting the European Central Bank's (ECB) latest effort to boost lending to banks at reduced rates. On the domestic front, a flood of economic data is due out today, including the revised fourth-quarter gross domestic product ( GDP ), the Chicago purchasing managers index (PMI), and the Federal Reserve's Beige Book. If that doesn't leave investors with enough to chew on, Fed Chairman Ben Bernanke is scheduled to testify before the House Financial Services Committee at 10 a.m. Eastern. Against this busy backdrop, the DJIA is trading 22 points higher ahead of the bell, while the broader S&P 500 Index (SPX) is up 3 points.
In earnings news, First Solar (FSLR - 591.54) confessed to a fourth-quarter loss of $413.1 million, or $4.78 per share, marking a steep decline from its year-ago earnings of $155.9 million, or $1.80 per share. Excluding items, FSLR earned $1.26 per share, while net sales edged up 8% to $660 million. Unfortunately, analysts were looking for adjusted earnings of $1.54 per share on $781.5 million in revenue. On a conference call last night, Chief Financial Officer Mark Widmer announced plans to reduce production to 60% to 70% of capacity in response to slackening demand. For the full year, FSLR slashed its net sales forecast to a range between $3.5 billion and $3.8 billion, down from its earlier guidance of $3.7 billion to $4.0 billion. FSLR is looking at a 7% drop right out of the gate.
Elsewhere, STEC Inc. (STEC - 9.32) swung to a fourth-quarter loss of $3.6 million, or 8 cents per share, down from a profit of $17.5 million, or 34 cents per share, in the year-ago period. Excluding items, STEC's loss narrowed to 2 cents per share, while revenue fell by 38.1% to $58.1 million. The results were mixed, as analysts were expecting a loss of 1 penny per share on sales of $56 million. Looking ahead, the company is forecasting a first-quarter loss of 14 cents to 16 cents per share on revenue between $49 million and $51 million, while Wall Street is predicting a loss of just 8 cents per share on sales of $48.4 million. STEC is trading 1.3% lower ahead of the bell.
Costco Wholesale Corporation (COST - 85.27) this morning reported a fiscal second-quarter profit of $394 million, or 90 cents per share, a 13% year-over-year rise from $348 million, or 79 cents per share. Same-store sales rose 7%, while overall revenue jumped 10% to $22.97 billion. The results came in above analysts' expectations for earnings of 87 cents per share on $22.85 billion in revenue. COST is set to open the session with a 2% lead.
Finally, DreamWorks Animation SKG, Inc. (DWA - 19.65) said its fourth-quarter profit fell 72% to $24.3 million, or 29 cents per share, from last year's earnings of $85.2 million, or 99 cents per share, as respectable DVD sales of Kung Fu Panda 2 couldn't quite compete with challenging year-ago comparisons. Revenue was also on the decline, dropping 21% to $219 million. The bottom-line results missed analysts' expectations for earnings of 32 cents per share; however, revenue surpassed Wall Street's forecast of $207.5 million. DWA is down nearly 9% in pre-market trading.
Today's earnings docket will also feature reports from Finisar ( FNSR ), Joy Global ( JOY ), Liz Claiborne ( LIZ ), McDermott International ( MDR ), PetSmart (PETM), SodaStream International (SODA), Staples (SPLS), and Yingli Green Energy (YGE). Keep your browser at SchaeffersResearch.com for more news as it breaks.
The revised fourth-quarter GDP estimate will hit the Street today, along with the Chicago PMI, the regularly scheduled crude inventories report, and the Fed's Beige Book. Thursday's round-up will include weekly jobless claims, personal income and spending data, the ISM manufacturing index, and construction spending. There are no major economic reports scheduled to be released on Friday.
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,258,806 call contracts traded on Tuesday, compared to 719,913 put contracts. The resultant single-session put/call ratio arrived at 0.57, while the 21-day moving average was 0.61.
Stocks in Asia ended mostly higher today, as traders looked eagerly ahead to a planned liquidity-boosting maneuver by the ECB. Additionally, government data showed a stronger-than-forecast 2% rise in Japan's industrial production last month, as well as an upwardly revised outlook for February. However, Shanghai-listed securities finished in the red, after government officials reaffirmed their allegiance to existing property curbs -- effectively dousing cold water on reports of a possible easing move. By the close, South Korea's Kospi added 1.3%, Hong Kong's Hang Seng advanced 0.5%, Japan's Nikkei edged up 0.01%, and China's Shanghai Composite retreated roughly 1%.
It's a wobbly session in Europe at midday, after the ECB doled out a larger-than-anticipated 529.5 billion euros to 800 regional banks during its second round of long-term refinancing. With a healthy amount of optimism over the long-term refinancing operation (LTRO) already priced in, traders are now taking a cautious stance ahead of today's U.S. economic data, which includes a fourth-quarter GDP revision. At last look, London's FTSE 100 is down 0.07%, the French CAC 40 has added 0.4%, and the German DAX is up 0.5%.
Currencies and Commodities
The U.S. dollar index has retreated this morning, with the greenback 0.1% lower at last check to trade at $78.20. Crude oil, however, is on the rebound, with the front-month contract up 0.5% at $107.04 per barrel. Gold futures, meanwhile, are on pace to pare a fraction of yesterday's gains , with the malleable metal down 0.02% at $1,788.00 an ounce.
Unusual Put and Call Activity:
Unusual Put and Call Activity:
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