Ahead of Wall Street - January 26, 2012 - Ahead of Wall Street
26 Gennaio 2012 - 10:20AM
Zacks
Thursday, January 26, 2012
The deluge of this morning’s favorable economic and earnings
reports should help stocks sustain Wednesday’s Fed-inspired gains.
We got positive weekly initial Jobless Claims numbers and a better
than expected Durable Goods Orders reading. On the earnings front,
Caterpillar’s (CAT) blowout results will likely
ease some of the lingering concerns about weakness in China and
other emerging markets.
Of this morning’s economic releases, the most important number
was the roughly in-line Jobless Claims reading, showing a gain of
21K to 377K. Please recall that we saw an unusually big drop last
week, likely resulting from complications in seasonally adjusting
the data at this time of the year. Today’s reading goes some way
towards correcting that. The four-week average, which smoothes out
the week-to-week fluctuation, dropped by 2.5K to 377.5K,
maintaining its downtrend of recent weeks.
In other economic releases, the December Durable Goods Orders
report came in better than expected, highlighting that corporate
capital expenditures will remain a growth driver for the economy
despite the expiration of accelerated depreciation expense.
Headline Durable Goods Orders increased 3% in December, above the
2% consensus expectation, while the November headline gain of 3.9%
was revised upwards to 4.3%. The ‘core’ Durable Goods Orders
reading, which strips out defense and aircraft orders given their
inherent ‘lumpiness’ on a month-to-month basis, also came in better
than expected at a gain of 2.1%. This compares to the weak ‘core’
reading in November of a 1.2% drop.
On the earnings front, Caterpillar beat big,
blowing past expectations and coming out with Apple-like numbers.
Driving Caterpillar’s record quarterly results was continued
resilient demand for the company’s products in international
markets, which should help ease some of the concerns about slowing
demand in key emerging markets. Importantly, the company guided
higher, both for revenue as well earnings, which should help cause
positive estimate revisions in the coming days. 3M beat on
EPS and revenue, with strong demand in industrial and
transportation end-markets offsetting weakness in consumer
electronics. Eaton Corp (ETN), another diversified
industrial operator, missed both EPS and revenue expectations.
AT&T (T) missed consensus EPS by a penny,
though its revenue came out ahead of expectations. The company had
a number of one-off items, including termination fees for the
failed T-Mobile deal. The EPS miss notwithstanding, the company had
an overall good report in terms of new smart-phone subscribers,
cash flows, and share buyback plans. Netflix
(NFLX) came out ahead of expectations after the close on Wednesday
as the company was able to reverse the impact of its recent
mis-steps by making strong subscriber gains.
Starbucks (SBUX) reports after the close
today.
Sheraz Mian
Director of Research
CATERPILLAR INC (CAT): Free Stock Analysis Report
EATON CORP (ETN): Free Stock Analysis Report
NETFLIX INC (NFLX): Free Stock Analysis Report
STARBUCKS CORP (SBUX): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
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