Stock Futures Flat Ahead of Bank of America Earnings

First Published Thursday, 17th January 2013 11:53 am - © 2013 Dow Jones


Investors looked ahead to results from Bank of America Corp. to help provide a trendless market with direction as U.S. stock index futures pointed Thursday to another flat start for Wall Street, while pressure was expected to build on shares of fellow blue chip Boeing Co. after regulators temporarily grounded its 787 Dreamliner.

Economic data also will be in focus, with weekly jobless claims, housing starts and the Philadelphia Federal Reserve's manufacturing index in the queue.

Futures on the Dow Jones Industrial Average recently fell six points, or less than 0.1%, to 13431, while S&P 500 Index futures rose 0.6 of a point to stand at 1466.20. Nasdaq 100 futures rose 4.75 points, or 0.2%, to 2730.75.

"The earnings are key as the S&P flirts with key resistance," wrote strategists at KBC Bank in Brussels. They pegged this level at 1474, slightly more than a point above where the benchmark ended Wednesday's session.

Recent sessions have seen attempted downside corrections, only for this pattern of intraday losses to be recouped by the close, they noted.

"Today's earnings reports concern financials, which couldn't move markets yesterday, suggesting that investors know what to expect from this sector. This may be different with cyclicals or technology," they said, meaning results from chip maker and Dow component Intel Corp. after the close may carry more weight.

But first, Bank of America is set to report results ahead of the bell, following a round of stellar results Wednesday from Goldman Sachs Group Inc. and J.P. Morgan Chase & Co.

A survey of analysts by FactSet produced a consensus forecast for earnings of two cents a share on revenue of $21.19 billion.

Stocks have struggled for direction all week. The S&P 500 rose less than half a point Wednesday.

The close marked the fourth straight session with a gain or loss of less than 0.15%, noted Jim Reid, strategist at Deutsche Bank in London.

"Nonetheless, the S&P 500 continues to edge higher, closing at a post-financial crisis high of 1,472.63, while volatility moves in the opposite direction as the VIX hovers at close to six-year lows," Mr. Reid said in a note.

Two Sources of Fear

Michael Gavin, head of asset allocation at Barlcays, said Wednesday that the recent sideways market action shows investors are reacting to two separate sources of fear.

"Fear of being caught in a market downdraft is balanced by fear of missing the upward trend that is likely to materialize if prominent "tail risks" do not, in fact, materialize," Mr. Gavin wrote.

Shares of Boeing fell 3.7% in Frankfurt trading. The U.S. Federal Aviation Administration late Wednesday grounded all U.S.-registered Boeing 787 Dreamliners, pending checks on the jets' batteries after a string of recent incidents. Other regulators, including those in Japan and Europe, took similar steps.

Meanwhile, in addition to Bank of America, earnings are expected Thursday from fellow banking heavyweight Citigroup Inc. The bank is projected to report fourth-quarter earnings of 97 cents a share, according to a consensus survey by FactSet.

Online auction house and retailer eBay Inc. also will be in focus.

Late Wednesday, eBay reported that fourth-quarter adjusted earnings rose 17%, beating analyst estimates, on strength in both its Marketplace and PayPal businesses.

Facebook Inc. shares will get an extra look from investors as well.

Analysts at Goldman Sachs raised their price target on the social network's shares to $38 from $35. Revenue strength in news-feed advertising and the new Gifts service probably lifted fourth-quarter earnings, Goldman said in a note. Facebook is due to report for the quarter Jan. 30.

On the data front, U.S. home builders probably started construction on more homes in December and the number of Americans applying for first-time jobless benefits likely inched lower, according to economists polled by MarketWatch. The data on housing starts and weekly jobless claims are set for release at 8:30 a.m. EST.

Also, economists expect the Federal Reserve Bank of Philadelphia's regional manufacturing gauge to remain in positive territory in January but ease back to a reading of 5 from 8.1. The Philly Fed's data are due at 10 a.m.

Write to William L. Watts at bwatts@marketwatch.com

HOT STOCKS TO WATCH

Among companies with shares expected to actively trade in Thursday's session are CBS Corp. (CBS), Columbia Sportswear Co. (COLM) and Nu Skin Enterprises Inc. (NUS).

CBS is taking steps to divest itself of its outdoor advertising business, disclosing Wednesday that it will convert the North and South American operation into a real-estate investment trust and put its European and Asian outdoor businesses up for sale. Shares jumped 8.2% to $41.05 after hours.

Columbia Sportswear lowered its fourth-quarter expectations as the maker of active outdoor apparel's net sales were hurt by mild winter weather in North America during most of the holiday shopping season, lower customer traffic in key markets and a more promotional environment. Shares fell 7.8% to $48.10 in after-hours trading.

Nu Skin Enterprises raised its fourth-quarter earnings and revenue guidance, sending the seller of anti-aging skin-care products shares up 5.3% to $44.75 after hours.

Aveo Pharmaceuticals Inc. (AVEO) said it plans to offer an undisclosed number of shares Wednesday, As of Nov. 1, the drug maker had about 43.7 million shares outstanding. Shares fell 3.2% to $7.86 after hours.

Country Style Cooking Restaurant Chain Co. (CCSC) said it anticipates fourth-quarter revenue to be slightly lower than its previous guidance, as new stores have opened at a slower-than-expected rate. American depositary shares of the China-based fast-food restaurant were down 6.2% at $7.60 in after-hours trading.

Forum Energy Technologies Inc. (FET) lowered its full-year earnings projection, pointing to lower than anticipated customer spending on capital equipment and consumable products especially in its drilling product line, among other factors. The oilfield products company's shares were off 2.2% to $26 after hours.

Northern Tier Energy LP (NTI) is offering nine million units representing limited-partner interests in the partnership held by Northern Tier Holdings LLC. The energy company, which has refining, retail and pipeline operations, said it would have about 91.9 million units outstanding after the offering. Northern Tier won't receive any proceeds from the sale. Units were off 3.1% to $24.70 after hours.

Williams-Sonoma Inc. (WSM) reported a solid 4.4% increase in holiday comparable brand revenue and its 4.8% increase in top-line sales puts the company on course for its fiscal fourth-quarter target, given holiday weeks usually make up about 70% to 75% of total quarter revenue. But the company's fourth-quarter earnings-per-share outlook stayed pat, and analysts were expecting the EPS target to go a couple cents higher. Shares were down 1.9% to $46.22 after hours.

Watchlist:

A.M. Castle & Co. (CAS) unveiled restructuring plans, including plans to cut its workforce by about 10%, that will help the specialty metals and plastics distributor cut costs and improve operating performance.

Bank of the Ozarks Inc.'s (OZRK) fourth-quarter profit jumped 18% as the regional bank's noninterest income strengthened and credit quality improved.

Clarcor Inc.'s (CLC) fiscal fourth-quarter earnings slipped 2.5% as it recorded weaker sales in its engine/mobile filtration and packaging divisions. The filter-and-packaging company also offered guidance for the new year below analyst expectations.

EBay Inc. (EBAY) on Wednesday posted a sharp drop in fourth-quarter profit due to the big gain the e-commerce giant recorded the same period last year from its sale of the Skype Internet phone service. Excluding the Skype comparison and a resulting 62% drop in earnings, eBay turned in quarterly performance that largely met Wall Street expectations and bolstered faith in the ongoing turnaround of its core business.

H.B. Fuller Co.'s (FUL) fiscal fourth-quarter profit fell 4.9% as the paint and adhesive maker's year-ago results included recorded flat margins and higher expenses, though revenue continued to strengthen.

Kinder Morgan Inc.'s (KMI) fourth-quarter earnings more than doubled as the energy company reported strong performances from its affiliates Kinder Morgan Energy Partners LP (KMP) and El Paso Pipeline Partners LP (EPB), driven by strong demand for the transport of natural gas.

Liquidity Services Inc. (LQDT) said its fiscal first-quarter gross merchandise volume missed its expectations, due to several delayed energy equipment sales within the company's capital assets group.

Michael Baker Corp. (BKR) said its chairman, Richard L. Shaw, will retire at the end of the month, and will be succeeded by current board member Robert N. Bontempo.

SLM Corp. (SLM) reported better core earnings than expected in the fourth quarter, but its level of uncollectible loans jumped. The U.S.'s largest education loan company, commonly known as Sallie Mae, has cautioned that its charge-off rate would rise as it steers more of its borrowers into repayment plans rather than forbearance, which is a period of suspended payment. But the jump in uncollectible loans was more grave in the latest period than in the third quarter, when it first warned of the trend.

Recreational-vehicle maker Thor Industries Inc. (THO) has named former IDEX Corp. (IEX) executive Dominic Romeo as its chief financial officer.

Write to Nathalie Tadena at nathalie.tadena@dowjones.com

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