Futures Lower on Economic Growth and Earnings Jitters. Stocks to Watch: AA, AAPL, EW, FB, FDX, TM, UAL, YUM
Published on Tuesday, 09 October 2012 07:00 Written by Christopher Lynn
New York, October 9th (TradersHuddle.com) – Stock futures were pointing to a lower open as investors were trading cautiously on concern over global growth and ahead of what its expected would be a difficult earnings season in the U.S. The International Monetary Fund added to the jitters over global growth by cutting its growth forecast, including the Chinese economy.
In Asia, stocks closed mixed amid concern over global growth prospects and what is expected to be the weakest earnings season in the U.S. since 2009. The IMF cut its global growth forecast once again, warnings policymakers in both Europe and U.S. that if they fail to fix their respective issues, it could prolong the slump. The Shanghai Composite rebounded from the prior session surging 2% despite the IMF cutting Chinese growth forecast to 7.8%. The rally in Mainland China came amid media reports that regulators pledged they would intensify efforts to allow more Qualified Foreign Institutional Investors access to Chinese markets. Meanwhile, the Nikkei was down, mostly catching up to yesterday’s weakness and impacted by the cut in Chinese growth forecast.
In Europe, markets were trading to the downside amid ongoing concerns over political and economical uncertainty in Spain and Greece and a new possible bailout for Cyprus. Finance ministers meeting in Luxembourg said that a bailout agreement for Cyprus is needed. Moody’s credit ratings agency on Monday downgraded the ratings of Cyprus and three of its banks. Today, German chancellor Angela Merkel visits Athens for the first time since 2009 guarded with very heavy security, while the Troika is projecting Greek debt at 150% of GDP in 2020, which is well above its target of a maximum of 120% debt-to-GDP ratio by 2020; the report came ahead of the approval of the next tranche of aid for Greece.
The euro was sliding against the Dollar, trading above the $1.29 level. Crude oil was climbing 0.53% to $89.80 per barrel. Also in the energy complex, natural gas was sliding 0.09% to $3.40 per MMBtu. Gold was flat at $1773.50 an ounce, and silver was dropping 0.11% to $33.98 an ounce; meanwhile copper was advancing 0.28%.
Today’s Stocks to watch: Alcoa (NYSE: AA), Apple (NASDAQ: AAPL), Edwards Lifesciences (NYSE: EW), Facebook (NASDAQ: FB), FedEx (NYSE: FDX), Toyota Motors (NYSE: TM), United Continental (NYSE: UAL), and Yum! Brands (NYSE: YUM).
Alcoa (NYSE: AA), the aluminum producer, will be in focus a day ahead of the company unofficially kicking off a new earnings season that is expected to be the worst since 2009. Alcoa is scheduled to report its quarterly results after the closing bell. On average analysts expect a profit of $0.01 per share on revenue of $5.57 billion. The highest earnings estimate is a profit of $0.11 per share, while the lowest is a loss of $0.10 per share. Last quarter, Alcoa earned $0.06 per share, 20% above consensus. A Bloomberg report ahead of earnings speculates that the company could be valued 63% more if it breaks apart into 4 different divisions.
Apple (NASDAQ: AAPL), the maker of iPads and iPhones, was falling 0.81% to $633 in pre-market, with the stock under additional pressure following its big slide of more than 2% in the prior session. Apple broke below its 50day moving average at the $655 area amid concern over factory unrest at its manufacturing partner Foxconn, particularly at a critical time with very high demand for its new iPhone 5. The tech giant is scheduled to report its quarterly results on October 25th after the closing bell. On average analysts expect a profit of $8.88 per share on revenue of 36.28 billion, which could represent a 28% and a 26% jump on revenue and earnings, respectively, from a year ago period.
Edwards Lifesciences (NYSE: EW), the maker of tissue replacement heart valves, heart valve repair products, and hemodynamic monitoring devices, tumbled more than 10% in after hours following disappointing guidance. The company said that it sees third quarter sales of $448 million versus consensus of $476.6 million. The guidance shows a revenue growth rate of 9%, or 14% excluding the impact of foreign exchange.
Facebook (NASDAQ: FB), the social media giant, was losing 0.1% to $20.38 after slumping 2.4% in the prior session. On Monday, the company quietly started testing a new feature in its ongoing efforts to continue to monetize its user base. The feature called Collections will help retailers share their products in the social network, with users able to click through a button and Buy products through Facebook. The feature could helped turned Facebook in a retail powerhouse, the company is not yet charging for the feature, but after testing period is completed it will presumably take a cut of the transaction. This follows the introduction of Facebook gifts and a new service that will allow users to pay to promote status updates.
FedEx (NYSE: FDX), the worldwide express package delivery company, will be in focus as the company starts a two-day analyst and investor meeting today. Jim Cramer in its program on CNBC said that FedEx might have something positively to say, amid plenty of negative analyst commentary going into the meeting.
Toyota Motors (NYSE: TM) was falling 0.7% to $76.80 in pre-market after sales of Japanese automakers took a plunge in China amid the rising anti-Japanese sentiment flared over the territorial dispute of a group of islands known as Diaoyu in China and Senkaku in Japan. Toyota sales tumbled 48.9% in September from a year ago, with the automaker selling 44,100 vehicles.
United Continental (NYSE: UAL), the owner of the world’s largest airline, will be in after it reported September 2012 operational results. The airline said that consolidated revenue passenger miles decreased 2.1%, while consolidated capacity decreased 1.3% compared with a year ago period. Its consolidated load factor in September 2012 decreased 0.7 points compared to September 2011. Meanwhile, the company's consolidated passenger revenue per available seat mile decreased an estimated 2.5 to 3.5% from a year ago period.
Yum! Brands (NYSE: YUM), the Pizza Hut, KFC, and Taco Bell restaurant chains owner and operator, will be in focus this session as the company is scheduled to report its quarterly results after the closing bell. On average analysts expect a profit of $0.97 per share on revenue of $3.64 billion. The highest earnings estimate is $1.05 per share, while the lowest is $0.91 per share. Last quarter, Yum earned $0.67 per share, 4.6% below consensus.
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