2010

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26

The market review for January 26

Trading on the U.S. stock market on Monday, January 25, held at the «green» territory. The positive mood of investors seemed to shake the reported sales volume in the secondary housing market in December. Experts expect declining by 9,8%, but sales fell by 16,7%, which proved to be the most significant change over the past 40 years. However, the decline was quickly redeemed, as the main theme of the day still was the news about the likely re-election as head of the Federal Reserve System (FRS) the USA Ben Bernanke, who headed it into the present. Term of office expires next Sunday and the Senate is expected this week to vote for his re-election.

B. Bernanke, impressed investors so that he insisted on lowering a key interest rate to stimulate the economy and, consequently, contributed to the supply of cheap liquidity of banks and the growth of stock markets. In addition, bidders do not want any change, because at present the future and so extremely vague. Senior White House adviser David Axelrod said Monday that U.S. President Barack Obama is absolutely sure of reelection B. Bernanke, than in the largely pacified American traders.

As a result of trades on Monday, the Dow Jones index rose 23.88 points (0.23%) — to 10,196.86 points, NASDAQ — at 5.51 points (0.25%) — to 2,210.80 points, S & P — at 5.02 points (0.46%) — up to 1,096.78 points.

Sure, we grew up on Monday quotes Apple Inc. On Wednesday, January 27, the expected announcement of a tablet computer Apple, sales of which, given the success of the iPhone, investors have high expectations. Chapter Executive Steve Jobs called the new product «the most important thing I have ever done. On Monday, the beginning of the analysis of the company and assign it forecast «above market» declared Bank Hapoalim. Against this background, the capitalization of Apple by the end of trades increased by 2,69%.

Positive looked paper and other manufacturers of computers and accessories: Paper Dell Inc. went up by 1,87%, SanDisk Corp. — On 2,75%, NVIDIA Corp. — By 1,7%. Recommendation to «sell» to «hold» on shares of the latter increased analysts Broadpoint AmTech Research. Statement by experts Barron’s about the expected growth of their stock Intel Corp. at least 25% in the next few years on a wave of renewal of personal computers led to an increase in the capitalization of the manufacturer at 2.06%. At this wave grew and shares Advanced Micro Devices Inc. (2.41%).

Several circumstances be worse for the U.S. corporation Halliburton Co, published on Monday the financial report for the IV quarter of 2009. Net income decreased by 48% and amounted to $ 243 million against $ 468 million for October-December 2008. Revenues decreased by 25% — to 3.67 billion dollars against 4.9 billion dollars a year earlier. Reducing financial performance for the reporting period due, in particular, the effects of the global financial crisis. Against this background, quotes Halliburton left in a minus on 0,26%.

At 0,38% cheaper shares of oil company Exxon Mobil Corp. on Monday after signing a contract with Iraq on oil field development «West Qurna — 1. Talks on participation in development led to the company Total, but they were not crowned with success. Nevertheless, the daily increase in the value of shares Total was 1.23%. Chevron Corp. fell to 0.05%.

Among the steel companies impressive growth of capitalization stood out AK Steel Holding Corp. (5.35%). Net profit of the steel company in the IV quarter of 2009. was 36 cents a share, while industry experts expect about 20 cents. Revenues at the level of $ 1.32 billion also exceeded expectations (1.24 billion dollars). Optimism investors added the statement made by company management that the volume of shipments in the I quarter of 2010. will be at the level of the previous quarter, and the costs will be reduced. Freeport-McMoRan Copper & Gold Inc. went up by 0,5%, Southern Copper Corp. — On 1,35%, United States Steel Corp. — On 2,24%, and Steel Dynamics Inc. fell to 0.61%.

In the banking industry, apparently in connection with the expectation of re B. Bernanke also dominates the positive dynamics of quotes: stocks JPMorgan Chase & Co. the end of trading increased in price by 0,13%, Bank of America Corp. — On 0,54%, Goldman Sachs Group Inc. — On 0,56%, Wells Fargo & Company — on 1,47%. Weaker looked Citigroup Inc, lost up to the day 0,62%.

So, the U.S. stock market after a three-day fall, which flung the quotes to the levels of early November gone, issued a quiet day. A powerful upward rebound did not happen, that is, players are not ready to buy everything. In this light, current levels may be acceptable to most investors. Talking about what happened reassessed the fair value of securities it will be possible only if the quotes will remain in the range of 10100-10300 points for the Dow Jones index for a few more trading sessions, as long as there is a high probability of reducing the U.S. market by 2%, to 10000 points .

Key earnings/guidance since yesterday’s close:
-There was some confusion with Apple’s fiscal first quarter (December) figures due to the company’s new accounting method, which recognizes substantially all of the revenue and product cost for iPhone and Apple TV when these products are delivered to customers, leading to an acceleration in revenue. So the top line handily beat expectations — $15.7 bln vs. $12.1 bln First Call consensus — while it looked like a $1.60 beat on the bottom line. But reports indicate that using the old accounting standard would result in a beat of $0.17. Metrics were mixed, as 8.7 mln iPhones were sold (9 mln Street expectation), 3.36 mln Macs were sold (3 mln Street expectation) and 21 mln iPods were sold (22 mln Street expectation). The new accounting standard also made the company’s guidance better than expected, where historically it had been very conservative — EPS $2.06-$2.18 (consensus $1.77) and revenue $11.0-11.4 bln (consensus $10.4 bln). Piper Jaffray analyst Gene Munster said yesterday that using the old accounting standard, the revenue guidance is still above expectations. Shares of AAPL initially spiked lower on the confusion, trading down as much as 3.9%, but are now 1.9% higher premarket.
-Texas Instruments (TXN) beat by $0.03 in the fourth quarter on in line revenue of $3.0 bln and slightly better-than-expected gross margin of 52.8% (consensus 52.6%). The company issued upside first quarter guidance, seeing EPS of $0.44-$0.52 (consensus $0.43) and revenue of $2.95-$3.19 bln (consensus $2.83 bln). Despite the guidance, shares of TXN are 1.1% lower premarket.
-Amgen (AMGN) missed by $0.08, ex items, in the fourth quarter on modestly weaker-than-expected revenue of $3.81 bln (consensus $3.85 bln). The top line miss was due to weak drug sales, as Aranesp ($648.0 mln vs. $680.7 consensus), Enbrel ($912.0 mln vs. $934.7 mln consensus), Neulesta ($876.0 mln vs. $892.4 mln consensus) and Neupogen ($326.0 mln vs. $340.1 mln consensus) all missed expectations. The downside was capped by Epogen ($703.0 mln vs. $658.0 mln consensus). The company issued in line 2010 guidance, seeing EPS, ex items, of $5.05-$5.25 (consensus $5.12) and revenue of $15.1-$15.5 bln (consensus $15.3 bln). Shares of AMGN are unchanged premarket.
-Johnson & Johnson (JNJ) beat by a nickel, ex items, in the fourth quarter on better-than-expected revenue of $16.6 bln (consensus $15.7 bln). The company issued in line EPS guidance for 2010, expecting $4.85-$49.5, ex items, versus the $4.94 consensus estimate. Shares of JNJ are unchanged premarket.
-Verizon (VZ) reported in line EPS, ex items, in the fourth quarter on slightly weaker-than-expected revenue of $27.1 bln (consensus $27.3 bln). The company reported total net wireless customer additions of 2.2 mln in the quarter, with 1.2 mln of those retail additions. But shares of VZ are down 1.3% premarket, most likely on the top line miss.

Technical Perspective: The small- and mid-cap indices were the last to reach their 50-day averages, and Monday they formed loss-of-downside momentum patterns after stabilizing near this support. A breach close above the highs is needed to bolster the bounce scenario. The S&P has support at the lows of the last two sessions (1093/1090), followed by the November-December range floor (1085/1083). Initial resistance beyond the high (1102) is in the 1104/1105 area prior to the 50 ema/sma (1112/1114).

CALENDARS
Key economic data:
-November S&P/Case-Shiller Home Price Index y/y at 9:00ET (consensus -5.0%; prior -7.3%)
-January Consumer Confidence at 10:00ET (consensus 53.5; prior 52.9)
-November House Price Index m/m at 10:00ET (consensus 0.2%; prior 0.6%)

Federal Reserve/Treasury:
-None (Note: Members of the Fed are in a one-week quiet period ahead of the FOMC meeting on Jan. 26-27)

Key Note/Bond auction results:
-$44 bln in 2-year Notes at 13:00ET

Earnings:
-37 companies are confirmed to report today after the close, including Yahoo! (YHOO)

Key industry conferences:
-None

Apple Inc. (AAPL:US): The maker of the iPhone and Macintosh computers reported fiscal first-quarter earnings excluding some items of $3.67 a share, or 6.1 percent more than the average analyst forecast in a Bloomberg survey. That’s the smallest beat since the final three months of 2005.

Packaging Corp. of America (PKG:US) lost 1.6 percent to $21.20. The maker of corrugated packaging forecast profit excluding some items of 12 cents a share in the first quarter. That trailed the average analyst estimate by 29 percent, according to Bloomberg data.

PLX Technology Inc. (PLXT:US) climbed 5.3 percent to $4.20. The chipmaker said fourth-quarter profit excluding some items was 9 cents a share, beating the 1-cent average estimate from analysts in a Bloomberg survey.

VMware Inc. (VMW:US) jumped 18 percent to $49.60. The biggest maker of programs that let computers run multiple operating systems forecast first-quarter sales of $580 million at least, topping the average analyst estimate of $528.4 million, according to Bloomberg data.

EMC Corp. (EMC:US), majority owner of VMware, advanced 4.3 percent to $17.66.

Zions Bancorporation (ZION:US) climbed 4.4 percent to $18.70. The lender that operates in 10 Western U.S. states reported a narrower fourth-quarter loss and said it expects improved performance in its loan portfolio.

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