The major market indexes are set to bounce back from Monday's drubbing , with investors celebrating a round of encouraging data out of Germany. Specifically, the Ifo Institute's index of German business confidence improved in December, which has translated into a small beacon of hope amid the euro-zone debt drama . On the home front, meanwhile, AT&T ( T ) is hogging the headlines, after the telecom titan succumbed to regulatory pressure and dropped its bid for T-Mobile USA. However, while the blue chip is bracing for a drop out of the gate, the Dow Jones Industrial Average (DJIA) is on a mission to erase yesterday's triple-digit deficit .
As alluded to earlier, AT&T (T - 28.74) announced late yesterday that it's dropping its $39-billion bid to acquire T-Mobile USA, thanks to pressure from federal regulatory opposition. The blue chip said it will take a pre-tax charge of $4 billion in the fourth quarter -- most of which will go to T-Mobile owner Deutsche Telekom AG. The duo also said they'll enter a seven-year roaming agreement. In pre-market action, T is trading 1.1% lower. Meanwhile, rival Sprint Nextel (S - 2.16) -- which strongly opposed an AT&T/T-Mobile tie-up -- is set to open with a 6% lead.
On the earnings front, Red Hat (RHT - 46.05) banked a third-quarter profit of $38.2 million, or 19 cents per share, up 47% from $26.0 million, or 13 cents per share, in the year-ago period. Excluding items, earnings arrived at 28 cents per share. Meanwhile, sales rose 23% to $290.0 million -- boosted by a 24% climb in subscription revenue -- and operating margin expanded to 18.5% from 16.1%. Analysts, on average, were expecting an adjusted profit of 26 cents per share on revenue of $289.6 million. For the current quarter, RHT is anticipating revenue of $289 million to $292 million, just shy of Wall Street's forecast for $292.5 million. At last look, RHT is bracing for a 7% drop.
General Mills (GIS - 39.59) reported a fiscal second-quarter profit of $444.8 million, or 67 cents per share, down 28% from its year-ago earnings of $613.9 million, or 92 cents per share. On an adjusted basis, GIS raked in 76 cents per share, while revenue for the quarter improved 14% to $4.62 billion. Wall Street was looking for a profit of 79 cents per share on $4.6 billion in revenue. In a statement accompanying the results, Chairman and CEO Ken Powell confessed, "Significantly higher input costs pressured our margins, as expected." However, GIS backed its fiscal 2012 forecast for adjusted earnings of $2.59 to $2.61 per share. Ahead of the bell, the stock is down 1.9%.
Today's earnings docket will feature reports from Nike ( NKE ), Oracle ( ORCL ), Jabil Circuit ( JBL ), Jefferies Group ( JEF ), ConAgra Foods (CAG), Carnival Corp. (CCL), Navistar International (NAV), and Sanderson Farms (SAFM). Keep your browser at SchaeffersResearch.com for more news as it breaks.
Today's economic calendar features the government's latest figures on housing starts and building permits. It's essentially more of the same on Wednesday, when November's existing home sales data, along with the regularly scheduled crude inventories report, hits the Street. On Thursday, the economic calendar heats up with the release of the weekly jobless figures, the Thomson Reuters/University of Michigan consumer sentiment index, the Conference Board's index of leading economic indicators, and the government's latest estimate on third-quarter gross domestic product (GDP). Finally, we head into the long holiday weekend with data on durable goods, personal income and spending, and new home sales for November.
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 957,159 call contracts traded on Monday, compared to 583,056 put contracts. The resultant single-session put/call ratio arrived at 0.61, while the 21-day moving average was 0.72.
Stocks in Asia ended mostly higher today, recovering from Monday's North Korea-related jitters. Following the death of Kim Jong-il , defense issues continued to gain ground -- particularly after Lockheed Martin scored a lucrative F-35 contract from Japan's Defense Ministry. However, the regional action was fairly choppy, with trading volume already drying up ahead of the Christmas holiday. By the close, South Korea's Kospi added 0.9%, Japan's Nikkei rose 0.5%, Hong Kong's Hang Seng edged up 0.06%, and China's Shanghai Composite diverged from the pack to finish 0.1% lower.
The major European benchmarks are mixed at midday. Deutsche Telekom is a notable laggard in Frankfurt, after AT&T officially abandoned its bid to acquire T-Mobile, while AstraZeneca is weighing on British stocks amid news that its earnings will be impacted by a $381.5-million pre-tax charge. But, despite a weak start to the session, the bulls have since been bolstered by a successful Spanish debt auction and a stronger-than-forecast report on German business sentiment. At last check, the French CAC 40 is up 1.1%, the German DAX has added about 1%, and London's FTSE 100 is off 0.1%.
Currencies and Commodities
The greenback is paring its recent gains this morning, with the U.S. dollar index down 0.4%. Crude oil, meanwhile, has extended its rebound, with the front-month contract last seen 1.1% higher at $95.04 per barrel. Likewise, gold futures are on the rise, with the malleable metal up 0.6% to trade at $1,605.50 an ounce.
Unusual Put and Call Activity:
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