What’s the Story?

by CC February 28, 2012 8:30 am • Commentary


U.S. stock index futures pointed to a higher open on Wall Street on Tuesday, ahead of this week’s liquidity injection by the European Central Bank, which market participants hope will alleviate tensions in the European banking sector.

On the home economic front, the S&P Case/Shiller Home Price Index for December is due at 9:00 a.m. New York Time. Analysts polled by Briefing.com predict a 3.6 percent decline in prices, after a 3.7 percent slide in November.

Federal Reserve Governor Elizabeth Duke, in testimony prepared for a congressional hearing on Tuesday, laid out the central bank’s case for more action to bolster the U.S. housing market, saying it was a “significant drag” on economic recovery.

Durable goods orders data is due at 8:30 a.m., with analysts polled by Briefing.com expecting a 1.4 percent drop in orders in January, after a 3 percent rise in December.

February’s consumer confidence data will be released at 10:00 a.m. Analyst polled by Briefing.com forecast the index will rise from 61.1 in January to 62.5.


AutoZone – The auto parts retailer reported fiscal second quarter profit of $4.15 per share, 11 cents above estimates. AutoZone saw a same store sales increase of 8.6% compared to a year earlier, and also saw its profit margins increase.

Office Depot  – The office products retailer earned three cents per share, excluding certain items, for the fourth quarter, better than analyst estimates of a breakeven quarter. Results were boosted by lower costs and fewer discounts.

Tenet Healthcare  – Tenet earned 10 cents per share, excluding certain items, four cents below estimates, with revenues also falling short.

Domino’s Pizza  – The company earned 52 cents per share for the fourth quarter, three cents above estimates, but revenues were less than Wall Street consensus. Domestic same store sales were up 6.8 percent for the quarter, but results were impacted by higher commodity costs.

Priceline.com – Priceline reported fourth quarter profit of $5.37 per share, 32 cents above estimates, with revenues also beating consensus. And its current quarter guidance of $3.80 – $3.90 per share exceeds current consensus of $3.72. Priceline’s earnings growth was driven in large part by a rise in international bookings.

Callaway Golf  – The company has named Chip Brewer as president and chief executive officer, replacing interim president and CEO Tony Thornley, who had served in that job since last June. Brewer had been chief executive officer of Adams Golf since 2002.

Sina  – The China internet services provider is projecting first quarter revenues below current Street estimates.

Cooper Tire  – Cooper, whose shares surged almost 14% during the Monday session, could get another boost today as workers in Ohio approved a new contract, ending a 3-month lockout. More than 1,000 workers will return to work under a new 5-year deal that increases wages but allows the company to trim its workforce.

Procter & Gamble The Dow component’s stock has been upgraded to a “buy” rating from “neutral” at Bank of America/Merrill Lynch. The price target was increased to $75 from $69. The firm says it’s encouraged by P&G’s renewed focus on cost savings.

Rambus  – The chipmaker has begun a search for a successor to CEO Harold Hughes, who is planning to retire in April.

Nokia – The maker of mobile phone handsets has been downgraded to “underpeform” from “perform” at Oppenheimer, on concerns about the pace of transitioning to the Windows phone platform.


With the strong rally in equities that closed out 2011 and rang in 2012, the S&P 500 is currently up more than 15% over the last three months.  Going all the way back to the late 1920s, the current period marks the 36th time that the S&P 500 has gained more than 15% in a three month period after not having done so for at least six months.  The table below highlights each of these periods.  We also show the index’s performance in the three months following the first day of each period where the S&P 500 reached the 15%+ rally threshold.

….following most of these periods the S&P 500 continued to see gains going forward.  Of the 35 prior periods shown, the S&P 500 has been positive over the next three months 27 times (77%) for an overall average gain of 3.21%.  This is considerably better than the overall average for all three month periods of 1.76% (positive returns 62% of the time).


With two trading days left in the month, the S&P 500 is on pace for its best February performance since 1998 and biggest year-to-date gain since 1991. Not too shabby, especially since February is typically one of the weakest months of the year for stocks.

In the 25 times since 1945 when the S&P 500 rose in both January and February, the market has finished the year higher all but once, according to Sam Stovall, chief equity strategist at S&P Capital IQ. The S&P 500 has averaged a 20% annual increase over those 25 years cited by Mr. Stovall.

The lone outlier? Last year, when the S&P 500 finished down 0.003%.

Overnight Headlines (Links)

ECB Readies New Loans

S&P Declares Greece in Default

For the Costliest Homes, Foreclosure Comes Slowly

‘Senior’ Debt’s New Appeal

U.S. Economy Looks to Keep on Trucking

Apollo, Blackstone Offer Private Member Benefits for Natural Gas

Hot Item: Pre-IPO Facebook Shares

Court Leaves BofA in New York Frame of Mind

Insider Targets Expanding