Market Analysis

The major U.S. index futures are pointing to a higher opening on Wednesday, with sentiment still optimistic over Greece crossing the dual hurdle of successfully negotiating a deal with its PSI creditors and also internally agreeing on the proposed austerity measures to avail financing from the Troika. Earnings news has been mostly positive. Optimism over Greece has set in motion buying in risky bets and commodities, including oil, and the euro. However, in the absence of any compelling catalysts, markets could go about in a lackluster fashion, given the overbought levels at which they are trading.

After seeing some weakness in early trading on Tuesday, the major U.S. averages had recovered by late afternoon trading. Thereafter, amid expectations that Greece will clinch a deal, the averages stayed mostly afloat before closing modestly higher.

The Dow Industrials ended up 33.07 points or 0.26 percent at 12,878 and the S&P 500 Index added 2.72 points or 0.20 percent before closing at 1,347. Meanwhile, the Nasdaq Composite ended at 2,904, up 2.09 points or 0.07 percent.

Twenty of the thirty Dow components closed higher, with McDonald’s (MCD) and Disney (DIS) leading the advance. On the other hand, Bank of America (BAC) fell over 1.50 percent.

Among the major sectors, oil stocks advanced, while biotechnology stocks came under selling pressure.

On the economic front, the Federal Reserve’s consumer credit report showed that outstanding consumer credit rose at a healthy pace for a second straight month. Consumer credit rose by $19.3 billion or at a seasonally adjusted annual rate of 9.3 percent, with non-revolving credit rising by 11.8 percent compared to a more modest 4.1 percent increase in revolving credit.

Commodity, Currency Focus

Crude oil futures are rising $1.23 to $99.64 after climbing $1.50 to $98.41 a barrel on Tuesday. A report released by the American Petroleum Institute showed that crude oil stockpiles fell by 4.5 million barrels in the week ended February 3rd.

An ounce of gold is currently valued at $1,746.80, down $1.60 from the previous session’s close of $1,748.40 an ounce. In the previous session, the precious metal added $23.50.

Among currencies, the U.S. dollar is trading at 76.89 yen compared to the 76.7645 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.3267 compared to yesterday’s $1.3260.

Asia

The major Asian markets advanced solidly, with the Chinese Shanghai Composite once again leading the gains with a nearly 2.50 percent advance. The overnight gains on Wall Street spurred the rally in the region. Resource stocks were the best performers in the region.

Japan's Nikkei 225 average rose 98.07 points or 1.10 percent before closing at 9,016. Meanwhile, Australia's All Ordinaries ended at 4,364, up 18.80 points or 0.43 percent, with energy stocks leading the gains.

Europe

European stocks are advancing, although the gains are more modest than in Asia. Germany auctioned 5-year bonds at relatively lower yields but it could not sell all of the target it had set itself. The earnings news from the region has been mixed.

Household and personal care products company Reckitt Benckiser reported an increase in its fourth quarter profits. Meanwhile, the company cautioned of a tough environment going forward.

Roche expressed disappointment over Illumina’s (ILMN) decision to recommend that its shareholders reject Roche’s $44.50 per share cash offer. Roche also said it would put up a new slate of directors at Illumina’s 2012 AGM.

Nokia (NOK) announced the elimination of 4,000 jobs in Hungary, Mexico and Finland as it has decided to shift device assemblies to factories in Asia.

French pharma giant Sanofi-Aventis (SNY) reported strong fourth quarter earnings and revenues. That said, the company sees a 12-15 percent drop in adjusted earnings for 2012, as it gets hit by the patent expiration of its blood thinner Plavix and hypertension drug Avapro.

BHP Billiton (BHP) reported a 5.5 percent decline in first-half profits despite sales rising year-over-year. The company blamed the softness on the bottom line to higher costs, production disruptions and decline in commodity prices.

In economic news, the German trade surplus fell to 13.9 billion euros in December from 14.9 billion euros in November. The narrower surplus came as exports fell at a faster pace than imports.

A report released by the British Retail Consortium showed that shop price inflation in the U.K. eased to its lowest level since March 2010. The annual shop price inflation fell to 1.4 percent in January compared to 1.7 percent in December, with almost stagnant prices for non-food items responsible for the slowdown.

U.S. Economic Reports

The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ended February 3rd at 10:30 am ET.



Crude oil inventories rose by 4.2 million barrels in the week ended January 27th to 338.9 million barrels, with inventories remaining in the upper limit of the average range. Gasoline stockpiled increased by 3 million barrel and were in the upper limit of the average range.

Meanwhile, distillate stockpiles edged down 0.1 million barrels and remained in the middle of the average range. Refinery capacity utilization averaged 83.3 percent over the four weeks ended January 27th compared to 84.1 percent over the previous four weeks.

San Francisco Federal Reserve Bank President John Williams is due to speak to the Bishop Ranch Forum on "The Federal Reserve and the Economic Recovery," in San Ramon, California, at 10:40 am ET.

Stocks in Focus

Disney (DIS) said its first quarter earnings rose to 80 cents per share from 68 cents per share in the year-ago period. Revenues were up 1 percent to $10.78 billion. While earnings exceeded estimates, revenues missed estimates.

Time Warner (TWX) reported better than expected fourth quarter results.

Sprint Nextel’s (S) fourth quarter net loss widened from the previous year. On the othwer hand, operating revenues increased from the year-ago quarter and were above analysts' estimate.

Panera Bread’s (PNRA) fourth quarter adjusted net income climbed to $1.42 per share from the year-ago quarter’s $1.21 per share. Revenues rose 16 percent to $495.77 million. The earnings were in line, while revenues trailed estimate. The company raised its 2012 earnings guidance to $5.50-$5.55 per share from $5.38-$5.48 per share, with the latest guidance surrounding the consensus estimate.

L-3 Communications (LLL) announced an 11 percent increase in its quarterly cash dividend to 50 cents per share. 3M Co. (MMM) also raised its dividend by 7 percent to 59 cents per share.

Healthcare Services Group (HCSG) reported fourth quarter earnings of 16 cents per share on revenues of $250.24 million. The earnings met estimates, while revenues were more than what analysts expected.

Waste Connections’ (WCN) fourth quarter adjusted earnings came in at 35 cents per share on revenues of $379.8 million. The earnings were in line, while revenues exceeded estimates. The company also said it expects 2012 revenues of $1.615 billion, about in line with estimates.

ValueClick (VCLK) reported fourth quarter non-GAAP earnings of 47 cents per share on revenues of $182.6 million. The results were better than expected. For the first quarter, the company expects non-GAAP earnings of 34-35 cents per share on revenues of $155 million to $160 million.

Western Union’s (WU) fourth quarter adjusted earnings rose by 2 cents to 40 cents per share, while revenues climbed 5 percent to $1.4 billion. The earnings were in line, while revenues were slightly shy of estimates The company also announced a 25 percent increase in its quarterly dividend to 10 cents per share. The company expects 2012 adjusted earnings of $1.70-$1.75 per share on revenue growth of 6-8 percent. The earnings guidance was below estimates.

CBRE (CBG) reported fourth quarter earnings of 46 cents per share on revenues of $1.8 billion. While the earnings beat estimated by 2 cents, the revenues were below estimates. For 2012, the company expects adjusted earnings of $1.20-$1.25 per share, which is mostly below the consensus estimate of $1.25 per share.

USANA Health’s (USNA) fourth quarter earnings increased 16 percent to 87 cents per share on revenues of $145.9 million. For 2012, the company expects earnings of $3.35-$3.45 on revenues of $600 million to $615 million.

Hartford Financial (HIG) reported fourth quarter core earnings of 69 cents per share, lower than $1.24 per share in the year-ago period. Peer Lincoln Financial (LNC) reported fourth quarter operating income of $1 per share, higher than 82 cents per share last year. Hartford’s earnings beat estimates, while Lincoln’s met estimates.

CSC (CSC) announced the appointment of Mike Lawrie as its president and CEO following a decision by its current CEO Michael Laphen to retire, which was disclosed earlier.
Some of the companies scheduled to release their earnings scorecard after the markets close include Akamai Technology (AKAM), Cisco Systems (CSCO), Everest Re (RE), Exelixis (EXEL), Fidelity National (FNF), Groupon (GPRN), Ingram Micro (IM), Kimco Realty (KIM), News Corp. (NWS), O’Reilly Auto (ORLY), Prudential (PRU), RailAmerica (RA), Triquint Semiconductor (TQNT), Visa (V) and Whole Foods (WFM).