What’s the Story?

by CC January 31, 2012 8:53 am • Commentary


S&P futures vs fair value: +5.50. Nasdaq futures vs fair value: +10.50. Stock futures continue to trade with moderate strength. The morning’s first dose of data has had little impact on sentiment. The Employment Cost Index increased by 0.4% during the fourth quarter, just as had been broadly expected. That marks an incremental increase over the 0.3% increase posted in the prior quarter. Still on the economic calendar for today are the S&P/Case-Shiller Home Price Index (9:00 AM ET), the latest Chicago PMI (9:45 AM ET), and the Conference Board’s Consumer Confidence Index (10:00 AM ET).


European Union leaders on Monday endorsed a treaty aimed at strengthening accountability and keeping a closer eye on member nations’ efforts to rein in overspending and resolve the region’s debt crisis.

“The treaty is all about more responsibility and better surveillance. Every country that signs it commits to bringing in a ‘debt brake’ or ‘golden rule’ into its own legislation, and will do so at constitutional or equivalent level,” European Council President Herman Van Rompuy said in a statement following the meeting.

“New voting rules and an automatic correction mechanism will enforce compliance more effectively,” he added.

Twenty-five member states, including 17 euro-zone countries, are expected to sign the fiscal compact when the leaders next gather in March. Only the United Kingdom and Czech Republic will not be signatories. The treaty will take effect once at least 12 euro nations have ratified it.

Meanwhile European Union leaders attending the Brussels summit also endorsed an agreement on the European Stability Mechanism, a more permanent rescue fund that seeks to prevent the crippling debt crisis from spreading further through Europe. The 500-billion euro ($661 billion) ESM could be put in place as early as July pending its approval by the group’s respective finance ministers when they gather at the next Eurogroup meeting.

As expected, the summit did not produce sweeping measures to bolster the size and the scope of the region’s rescue funds, a thorny topic they vowed to return to in March.


Exxon Mobil XOM -1.25%  reported earnings rose by $150 million to $9.4 billion, or $1.97 a share, up from a net profit of $9.25 billion, or $1.85 a share, generated in the final three months of 2010.

Analysts, on average, had expected Exxon Mobil to earn $1.97 a share, according to a survey of estimates by FactSet Research.


Stocks to Watch

Among the companies whose shares are expected to actively trade in Tuesday’s session are RadioShack Corp. (RSH), Hologic Inc. (HOLX) and Align Technology Inc. (ALGN).

RadioShack warned its fourth-quarter profit will plunge far more than expected, blaming much of the softness on sales of phones with Sprint Nextel Corp. (S) contracts. Shares slid 20% to $8.21 in after-hours trading.

Hologic’s fiscal first-quarter earnings rose 90% as the company reported broad revenue growth. Shares rose 7.1% to $20.56 in after-hours trading, as the results were better-than-expected and the company boosted its full-year earnings view.

Align Technology’s fourth-quarter profit more than doubled as shipments of its trademark Invisalign teeth aligners continued to climb. Shares still dropped 6.6% to $23.70 after-hours despite stronger-than-expected results as the orthodontic-product maker projected a cautious adjusted current-quarter profit.


Overnight Headlines (Links)


Apple Hires Dixons Chief to Run Retail

Europe Tightens Fiscal Ties

Florida Vote Sets Stage for Final Push


401(k) Plans Step Into the Sunshine

Brouhaha Over Bonus Stirs Waters at RBS

Survey: Banks Still Cautious to Lend


EU Opens Samsung Antitrust Probe

Santander Profit Tumbles 98%

Groupon CEO Takes on Critics



– 9:00 a.m. ET: S&P/Case-Shiller home-price index

-9:45 a.m: Chicago PMI

– 10:00 a.m.: Consumer Confidence

Key Earnings

Here are some of the companies expected to report before the opening bell:

– Affiliated Managers

– Acher Daniels Midland

– Biogen

– CIT Group

– Eli Lilly

– Entergy

– Exxon Mobil

– Lexmark

– Mattel

– McGraw-Hill

– Oshkosh

– Pfizer

– Tellabs

– Tyco International

– United Parcel Service

– U.S. Steel

– Waddel & Reed

After the close, these companies will likely announce quarterly results:

– Aflac

– Amazon.com

– Arthur Gallagher

– Boston Properties

– Broadcom

– Illumina

– JDA Software

– Seagate Tech