Stock Futures Jump on Bank Reserves Move in China. Stocks to Watch: ARO, AAPL, BAC, C, FCX, SDRL, RIG, YHOO

Published on Wednesday, 30 November 2011 07:45 Written by Christopher Lynn

New York, November 30^th (TradersHuddle.com) – Stock futures were pointing to a higher open ahead of economic data, including employment figures. China announced that it had cut its bank reserve requirements for the first time in nearly three years, signaling the possible end of its tightening policy. Futures had been under pressure earlier on after S&P downgraded several large U.S. and European banks, while participants turned cautious following the euro zone finance ministers meeting, yielding not new big measures to contain the crisis.

In Asia, stocks closed mostly lower, as participants turned cautious on the prospects of the EU debt crisis being contained after policymakers agreed to strengthen the European bailout fund and seek additional aid from the IMF. Finance ministers in Europe left doubts on the bailout fund, as they agreed on a plan to insure the first 20 to 30% of bonds issues, but failed to provide additional details on how much leverage the fund would use. In China, the Shanghai composite tumble 3.3%, the biggest single session drop in more than 3 months, amid new forecasts from investment banks that trim the country’s 2012 GDP growth to 8.5%; while in Japan, the Nikkei fell 0.5%.

In Europe, equity markets turned higher, with miners leading the advance, after China cut its banks reserve requirements by 50 basis points. Stocks had been lower, pressured by banking shares, which were falling following an S&P downgrade of several large banks. Barclays (NYSE:BCS), one of the banks downgraded by a notch, was jumping 2.57% in London trading after it was trading with more than a 1.3% loss. The debt crisis remains in focus, after finance ministers agreed on financial aid to Greece, boost the European Financial Stability Facility, and ask the IMF for additional help.

The euro was reversing, trading lower below the 1.33 level. Crude oil was higher by 0.24% to $100.03 per barrel. Gold was adding 0.2% to $1722.5 an ounce, while silver was falling 0.91% to $31.66 an ounce. Meanwhile, copper was dropping 0.32%.

On economic news, at 8:15 am, payroll firm ADP releases its November jobs report, with economists expecting private employers adding 125,000 jobs. At 8:30 am, third quarter revised productivity and unit labor costs will be available. At 9:45 am, the November Chicago PMI will be available, with consensus calling for 57.5 versus 58.4 in October. At 10 am, the September Pending Home Sales data will be available, while at 10:30 am crude oil weekly inventory data will be released. Finally at 2pm, the Fed will release its November Beige Book.

Today’s Stocks to watch: Aeropostale (NYSE:ARO), Apple (NASDAQ:AAPL), Bank of America (NYSE:BAC), Citigroup (NYSE:C), Freeport McMoRan (NYSE:FCX), Seadrill (NASDAQ:SDRL), Transocean (NYSE:RIG), and Yahoo! (NASDAQ:YHOO).

Aeropostale (NYSE:ARO), the casual apparel retailer, will be in focus, as the company will present at JPMorgan’s SMid Cap Conference ahead of its quarterly results after the closing bell. On average analysts expect a profit of $0.28 per share on revenues of $576.35 million. Last quarter, the company posted an upside earnings surprise of 33%, as it lost $0.02 per share.

Apple (NASDAQ:AAPL), the maker of iPads and iPhones, was climbing 0.88% to $376.50 in pre-market, rebounding from the prior session loss. Yesterday, analysts weighed in on the stock, with Barclay’s reiterating its Overweight rating and $555 target price, citing strong Black Friday and Cyber Monday sales largely in line with the firm’s expectations. Barclays believes Macs have momentum overseas in the Apple's December quarter, as it expects unit growth of 22% year over year. Meanwhile, Rodham & Renshaw reiterated its Market Outperform rating and target price of $450 on the stock, however it sounded more cautious, saying that it sees limited near-term upside for the iPhone in the current quarter, as production for the 4S model s likely to be constrained in the current quarter due to low yields on a key component. Overall iPhone shipments in the Holiday quarter could come in around 30 million units or below Wall Street expectations. The firm added that the iPhone share of the high-end smartphone market has likely peak, amid increased competition. Earlier in the week, according to commScore data, Apple climbed to the fifth more visited website on Black Friday, as it had one of its biggest selling days, as consumers snatched the new iPhone, iPads, and Macs. Piper Jaffray also said that according to its sales checks for the day, iPads sales jumped 68% year over year and Mac sales climbed 25% year over year. The firm added that it expects Apple to ship 13.5 million iPads this quarter. On the global patent war with Samsung, the Korean company scored a rare legal victory in Australia. Samsung won an appeal case overturning a temporary ban on the sale of its Galaxy 10.1 tablet in the country, which had been imposed by a lower court on grounds it copied from Apple’s iPad. However, Apple was granted a stay on the ruling until Friday’s Sydney time, to provide the company for time for a possible appeal.

Bank of America (NYSE:BAC), the largest U.S. lender, was jumping 2.17% to $5.18 in pre-market, rebounding from its prior session decline and despite S&P downgrading its credit rating by a notch, along with many other U.S. large banks. The stock tumbled to a new multiyear low of $5.03 in the prior session and bulls will likely make a stand on the stock and prevent from it to trade with a 4 handle, as Bank of America has not traded with a 4 handle since the height of the credit crisis in March 2009. The downgrade came from a change in criteria at the credit rating firm and was expected by the market with credit defaults showing little reaction to the news. According to the Fast Money traders on CNBC, the market will not revalue the stocks at these levels because of the downgrade. Jon Najarian added that he is seeing call buying activity in Bank of America, suggesting the stock could move up. He said that the S&P downgrade could be a sign of a bottom. Bank of America has closed with a 5 handle in 13 sessions this year. The stock will likely react to the economic data later this morning, particularly the private employment figures.

Rival Citigroup (NYSE:C) was climbing 1.15% to $25.53 in pre-market despite S&P downgrading its credit rating also by one notch. Oppenheimer said that Citigroup along with Capital One, Morgan Stanley, JPMorgan, US Bancorp, and Wells Fargo offer outstanding value. The firm believes that the S&P is way late with the downgrade and it views it as a lagging indicator. The firm points to capital ratios at banks that are 3 to 5 percentage points higher than in December 2008.

Freeport McMoRan (NYSE:FCX), the world’s largest publicly traded copper producer, was jumping 1.45% to $37.01 in pre-market, as copper prices cut their overnight losses following the news that China cut its bank reserve requirements for the first time in nearly three years. China is the largest consumer of copper and the move from government officials is viewed as a signal that the monetary tightening policy in the country is coming to an end, as economic growth has moderated a tad. Freeport has calculated support at $33.77 and resistance at $42.10.

Transocean (NYSE:RIG), the largest offshore drilling contractor in the world, was falling 0.46% to $41.44 in pre-market after pricing 26 million share offering at $40.50 per share. The stock tumbled more than 9% yesterday and logged a new yearly low at $41.28 after it said that it will issue new shares, as it plans to use the proceeds to repurchase the $1.7 billion in senior convertible notes due 2037 and replenish its cash balance after its payment for Akers. Transocean weakness also came after it disclosed additional impacts from fleet downtime issues.

Rival Seadrill (NASDAQ:SDRL), the offshore drilling contractor, was jumping 1.5% to $33.25 in pre-market on reaction to its quarterly results. The company posted earnings of $0.07 per share on revenues that jumped 3.4% to $1.02 billion, which is inline with consensus. Seadrill also raised its quarterly dividend by $0.01 per share. The stock has calculated support at $31.02 and resistance at $35.11 and has fell 3.4% year to date.

Yahoo! (NASDAQ:YHOO), the Internet media company that owns the second largest search engine, was climbing 0.76% to $15.82 in pre-market on reaction to a Bloomberg report stating that Silver Lake Partners has offered to buy a minority stake on Yahoo for approximately $16.60 per share. According to Bloomberg, the offer is lower than another bid by TPG Capital. The Silver Lake offer values Yahoo at about 6% higher that the prior session close, with a market cap of $20.6 billion. Silver Lake is working with Microsoft and venture capital firm Adreessen Horowitz to get a stake in Yahoo’s business.