Stock Futures Lower amid European and Chinese PMI Data. Stocks to Watch: AAPL, BAC, C, DELL, GRMN, HPQ, TOL

Published on Wednesday, 22 February 2012 07:41 Written by Christopher Lynn

New York, February 22^nd (TradersHuddle.com) – Stock futures were pointing to lower open amid mixed performance overseas. Weaker than expected PMI data in the euro zone, reignited recessionary fears, while Chinese flash PMI showed contraction for the fourth straight month, however it hit its highest level in four months.

In Asia, stocks gained after starting the session on the red helped by news that Chinese manufacturing climbed to a 4-month high. Concern over the rising price of crude oil and its impact on the economic recovery weighed on sentiment. In Japan, the Nikkei gained close to 1%, with automakers advancing around 2%, as the yen weakened. Meanwhile, in China, the Shanghai Composite gained 0.93%.

In Europe, equity markets were falling on reaction to weak PMI data out of Germany and the euro zone, which reignited recessionary worries for the region. Chinese flash PMI at a 4-month high failed to inspire participants, as the data also came below 50 (a level that shows contraction) for the fourth straight month. Banks were among the biggest losers in the session so far. Commodity related stocks were also on the losing end, amid weakness in the underlying commodities amid risk aversion.

The euro was sliding 0.06% against the Dollar, trading above the $1.32 level. Crude oil was falling 0.32% to $105.91 per barrel. Also in the energy complex, natural gas was losing 0.84%, trading at $2.604 per MMBtu. Gold was slumping 0.20% to $1755 an ounce and silver was slumping 1.04% to $34.07 an ounce. Meanwhile, copper was dropping 0.55%.

On economic news, at 10 am, January Existing Home Sales figures will be available, with consensus calling for 4.63 million units.

Today’s Stocks to watch: Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), Citigroup (NYSE: C), Dell (NASDAQ:DELL), Garmin (NASDAQ: GRMN), Hewlett Packard (NYSE:HPQ), and Toll Brothers (NYSE: TOL).

Apple (NASDAQ: AAPL), the maker of iPads and iPhones, was falling 0.17% to $514 in pre-market, just giving up a little of its 2.5% rally in the prior session. Yesterday gains came on a report that the company signed a deal with China Telecom that will allow the third largest wireless carrier in China to start selling the iPhone in early March. China Telecom joins China Unicom as the two carriers carrying the popular smartphone in that country. The trademark dispute with Shenzen Proview continued amid reports that the Chinese company claiming it owns the iPad name in China sought to halt the sale of iPads in Shanghai, filing suit in a local court. Apple said that the company violated the sales contract by failing to transfer the trademark rights in mainland China and that it has not marketed or sold its own IPAD device for years, possibly invalidating its claim to the trademark. Credit Suisse said it raised its target price on Apple to $600 from $550. Last week, Oppenheimer bumped its target price to $570 from $510, reflecting increases to both their iPhone and iPad estimates.

Bank of America (NYSE: BAC) was falling 0.37% to $8.08 in pre-market, amid weakness in European banks on recessionary concerns in the region. The stock was able to close above its 200day moving average last Friday, despite the increased volatility during the week. Year to date, BofA is the best Dow component following a dismal performance in 2011, posting the biggest decline in the blue chip index and the financial sector. The stock has calculated support at $7.66 and resistance at $8.35. According to reports Bank of America’s Merrill unit has launched an aggressive recruiting campaign for top-tier brokers. The firm is looking to attract top brokers from other firms by paying a bonus upfront of up to 150% the fees and commissions generated during the prior 12 months. The Charlotte, NC based bank has been benefited from the Merrill acquisition and its one of the main earnings drivers.

Citigroup (NYSE: C), the diversified financial services firm, will be in focus following a report on the New York Post that discussed the possibility of Citi having a multibillion write down on its holding of Smith Barney. According to the article, Morgan Stanley has the right to start buying Citi’s stake on the brokerage, with price negotiations likely starting this spring.

Dell (NASDAQ: DELL), the third largest PC maker, will be in focus in the session, as it took a 5% hit in afterhours following an earnings report that fell short of expectations with inline revenues and lackluster guidance. Dell said that it earned $0.51 per share, excluding items, $0.01 worse than consensus, on revenues that climbed 2.2% year over year to $16.03 billion. The company also issued downside revenue guidance for the current quarter, saying that it expects a 7% sequential decline in revenues. Meanwhile, Citigroup added to the stock woes, as it downgraded it to a Neutral from Buy. Needham also downgraded Dell to a Hold from Buy.

Hewlett Packard (NYSE:HPQ), the world’s largest PC maker, was flat in pre-market following reaction to the lackluster results and guidance from rival Dell and ahead of its own quarterly results due out after the closing bell. On average analysts expect a profit of $0.87 per share on revenues of $30.72 billion. Las quarter, the company posted a 3.5% upside earnings surprise, as it earned $1.17 per share. Earlier in the month, Mizuho initiated coverage with a Neutral and a target price of $30.

Garmin (NASDAQ: GRMN), the maker of global positioning system (GPS)-enabled products, was surging 13.58% to $50.76 after handily beating earnings expectations and issuing upside earnings and revenue guidance for 2012. The company said it earned $0.96 per share, excluding items, $0.31 better than consensus, on revenues that climbed 8.6% year over year to $910 million versus consensus of $769.94 million. According to Garmin, the automotive/mobile segment revenues increased 4% on a year-over-year basis in the fourth quarter as Personal Navigational Devices (PND) unit declines were offset by improved pricing related to mix and growth in mobile applications and auto OEM. While the PND market size continued to decline in 2011, Garmin emerged from the year with increased market share, stabilizing average selling price and strong profitability.

Toll Brothers (NYSE: TOL), the luxury homebuilder, will be in focus in the session, as participants react to its quarterly results that fell short of expectations and to existing housing sales data due out later this morning. Toll Brothers reported an unexpected loss of $0.02 per share, excluding non-recurring items, $0.06 worse than the average analyst estimated, on revenues that fell 3.6% year over year to $322 million versus consensus of $360.8 million. According to the company, it delivered 564 units, while its contract cancellation climbed to 6.2% versus 5.7% in a year ago period. The stock has calculated support at $21.69 and resistance at $24.12.