Stock Futures Fluctuate; Europe in Focus. Stocks to Watch: AAPL, BAC, CIEN, COST, HAL, PTR, SFD, TSLA

Published on Thursday, 08 December 2011 07:36 Written by Christopher Lynn

New York, December 8^th (TradersHuddle.com) – Stock futures were pointing to a slightly lower open, with participants trading cautiously ahead of the European Central Bank interest rate decision and a key EU summit in Brussels tomorrow. Weekly jobless claims will be the big economic data point in the U.S.; however once again the news flow from Europe will dominate trade.

In Asia, stocks fell, as participants were jittery ahead of the ECB decision on interest rates and the EU Summit. Growing Doubts over EU leaders ability to come up with a bold plan or framework that will tackle the crisis weighed on the markets. The Nikkei fell from a 4-week high after machine tools orders missed estimates and the yen strengthened, while in China, the Shanghai Composite closed at a 1 year low. An unexpected uptick in Australian unemployment pressured stocks in that country, falling 0.03%.

In Europe, markets were turning lower ahead of the ECB decision on interest rates and after the Bank of England left its key interest rate unchanged at 0.5%. Participants expect the ECB to cut at least 25 basis points to its interest rate, leaving it at 1%, while unveiling a new package of bank aid. Some are also looking for some hints from the ECB if it’s going to intensify its bond-buying program. Later today, the European Banking Authority will say how much more capital the region’s banks will need to cope with the crisis environment, leaving banking shares in investor focus.

The euro was lower against the Dollar, trading below the 1.34 level. Crude oil was rebounding 0.49% to $100.98 per barrel following yesterday’s bearish weekly inventory report. Gold was little changed at $1744.6 an ounce, while silver was climbing 0.36% to $32.745 an ounce. Meanwhile, copper was adding 0.49%.

On economic data, at 8:30 am, the Labor Department will release its weekly jobless claims report, with economists expecting initial claims to come in at 395,000. And at 10 am, the October Wholesale Inventories figures will be released.

Today’s Stocks to watch: Apple (NASDAQ:AAPL), Bank of America (NYSE:BAC), Ciena (NASDAQ:CIEN), Costco Wholesale (NASDAQ:COST), Halliburton (NYSE:HAL), PetroChina (NYSE:PTR), Smithfield Foods (NYSE:SFD), and Tesla Motors (NASDAQ:TSLA).

Apple (NASDAQ:AAPL), the maker of iPads and iPhones, was little change at $388.60 in pre-market. The stock closed yesterday below its 50day moving average unable to follow on a breakout above it earlier in the week. Fortune Magazine revealed its best 10 stocks for 2012, including Apple in the list; earlier in the week, Apple was also named as one of Bank of America Merrill favorite stocks for 2012. The firm has a price target of $515 per share, as it remains positive on Apple’s growth potential given its potential to add share on both the PC and smartphone markets. Bank of America Merrill said that the valuation is compelling, particularly with the upside potential in revenues and earnings growth in the Mac and iPhone segments. Analysts continue to cite strong iPhone figures for the quarter on the back of strong demand for the new iPhone 4S, particularly after AT&T presented at a UBS conference, saying that the company has almost broken its quarterly smartphone sales record in part due to the iPhone 4S. The presentation prompted Ticonderoga to reiterate its Buy rating and 29.9 million units forecast for the device. Meanwhile, UBS reiterated its 28-million iPhone shipment forecast, with 6 million sold at AT&T. UBS has a Buy rating and a target price on Apple of $510 per share. Earlier in the week, Cannnacord Genuity reiterated its Buy rating on Apple after the firm bumped its iPhone shipment estimates to 30.5 million units, as its checks indicate strong global iPhone sales with Apple gaining share against Android in both the U.S. and Western Europe. Cannacord however cut its view of the iPad, saying it expects 13 million units to be sold in the holiday quarter, down from 14 million it previously expected. Apple has calculated support at $363.32 and resistance at $396.41.

Bank of America (NYSE:BAC), the largest U.S. lender, was falling 0.17% to $5.86 in pre-market ahead of the ECB rate decision and weekly jobless claims data following news that the Bank of England left its interest rates unchanged. The stock will be in focus and will likely react to news coming out of Europe ahead of tomorrow’s summit and after regulators in Europe will indicate how much more capital European banks will need to cope with the region’s debt crisis. Earlier in the week CEO Brian Moynihan said that the company’s investment banking results have improved from the third quarter, in which trading revenue dropped to $1.07 billion. Bank of America has rebounded 16.9% from its yearly low of $5.03 logged last week on the back of improved U.S. economic data, the coordinated central bank action designed to boost liquidity, and optimism ahead of the EU summit. BofA has calculated resistance at $5.95 and support at $5.03.

Ciena (NASDAQ:CIEN), the communications network platforms provider, will be in focus, as participants react to its quarterly results that missed on the earnings front, but beat on the revenue side. The company said it earned $0.03 per share, $0.04 worse than consensus, on revenues that climbed 9.1% year over year to $455.5 million versus consensus of $450.17 million. Ciena also provided inline revenue guidance for its fiscal first quarter, saying it expects sales of $435 to $455 million. The company said that despite macroeconomic uncertainty, Ciena is taking market share away from competitors.

Costco Wholesale (NASDAQ:COST), the owner and operator of wholesale membership warehouses, was falling 0.48% to $87.05 on initial reaction to its quarterly results that missed earnings expectations on revenues that were inline with consensus. The company said it earned $0.73 per share, $0.07 worse than consensus, on revenues that climbed 12.5% year over year to $21.18 billion. Costco said that its total comparable sales for its fiscal first quarter of 2012 climbed 10%, with U.S. stores increasing sales by 10% and international stores growing sales by 11%. Yesterday, UBS initiated its coverage on the stock with a Neutral and a target price of $87. Last week, Costco reported November same store sales jumped 9%, well above consensus of a gain of 6.6%, saying net revenues for the month were $7.51 billion.

Halliburton (NYSE:HAL), the provider of oilfield technologies and services to upstream oil and gas customers, was climbing 0.78% to $33.66 in pre-market after the stock was named a long Research Tactical Idea at Morgan Stanley. Halliburton has been under pressure this week, tumbling 8.7% so far this week after BP accused the company of destroying evidence that showed inadequate cement work on the Gulf of Mexico Macondo oil well that blew out in 2010, causing the biggest oil spill in U.S. history.

PetroChina (NYSE:PTR), the integrated energy producer, will be in focus after it announced that its JV with Royal Dutch Shell (NYSE:RDS.A) discovered shale gas in China's Sichuan province, confirming that China is sitting on potentially vast reserves of this unconventional fuel, with the U.S. Energy Information Administration, estimating that the country have estimated reserves of as much as 1,275 trillion cubic feet of shale gas.

Smithfield Foods (NYSE:SFD), the fresh meat and packaged meat products maker, will be in focus in the session, as participants react to better than expected quarterly results. The company said it earned $0.76 per share, excluding non-recurring items, $0.06 better than consensus, on revenues that jumped 10.5% year over year to $3.31 billion versus consensus of $3.22 billion. Smithfield said that it expects for global demand for pork to remain robust in the coming quarters, helping lift pork profitability. The company remains focused in achieving its targeted 3% volume growth by increasing customer-focused marketing and strengthening the innovation pipeline.

Tesla Motors (NASDAQ:TSLA), the maker of electric vehicles and advanced electric vehicle power train components, was tumbling 7.55% to $31.61 on reaction to a downgrade to Underweight from Overweight at Morgan Stanley. Earlier in the week, Jim Cramer host of CNBC’s Mad Money show said that it couldn’t recommend buying the stock, as he doesn’t know what is driving the business. Tesla has calculated support at $31.05.