Market Analysis

The major U.S. index futures are pointing to a mixed opening on Friday, although optimism that Greek travails may soon be settled with the release of a fresh stimulus package has triggered a rally in Europe. The positive sentiment may latch on to Wall Street, although the overbought levels pose some downside risk. A report released earlier in the day showed that consumer prices rose almost in line with expectations.

A few economic numbers provided the much-needed thrust for the markets on Thursday, sending stocks higher despite lingering anxieties concerning Greece. The Dow Industrials closed near 4-year highs.

The major averages opened amid nervousness even after the release of a report showing a sharp retreat in jobless claims and another showing an increase in housing starts. However, the release of the results of the Philadelphia Federal Reserve’s survey sparked a steady climb by the averages that continued for the rest of the session.

The Dow Industrials added 123.13 points or 0.96 percent before closing at 12,904 and the S&P 500 Index ended up 14.81 points or 1.10 percent at 1,358, while the Nasdaq Composite closed at 2,960, up 44.02 points or 1.51 percent.

Twenty-nine of the Dow components closed higher, with Microsoft (MSFT), Bank of America (BAC), American Express (AXP), DuPont (DD) and Hewlett-Packard (HPQ) advancing strongly.

Transportation, resource, financial, semiconductor and computer hardware stocks were among the best performers in the session.

On the economic front, initial claims for unemployment benefits fell by 13,000 to 348,000 in the week ended February 11, with the claims dipping to the lowest level since March 2008. The four-week average also dropped to 365,250. Continuing claims calculated with a week’s lag slipped to 3.43 million in the week ended February 4th from 3.53 million in the previous week.

Reflecting the impact of warmer weather, housing starts climbed 1.5 percent to a seasonally adjusted annual rate of 699,000 units. However, on a sore note, single-family starts slipped 1 percent, marking the first drop in September, while multi-family starts rose 8.5 percent in January. Building permits, considered an indicator of future housing activity rose a less than expected 0.7 percent, although permits are now at their highest level in 3-1/2 years.

The results of the Philadelphia’s survey showed that its manufacturing index rose to 10.2 in February from 9 in January. The internal details were, however, mixed. The new orders index rose about points and the order backlogs index climbed 6 points. The employment indexes were mixed, with the number of employees index dropping 10.5 points to 1, while the average workweek index rose to 5.1 points to 10.1. The 6-month outlook index declined to a 4-month low of 33.3.

Commodity, Currency Focus

Crude oil futures are trading up $0.69 at $103 a barrel after advancing $0.51 to $102.31 a barrel on Thursday. Gold futures are currently rising $2.70 to $1,731.10 an ounce. In the previous session, gold added $7.20 to $1,735.60 an ounce.

The U.S. dollar is currently trading at 79.33 yen compared to the 78.94 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3178 compared to yesterday’s $1.3130.

Asia

The major Asian markets rebounded on Friday, as Wall Street’s positive performance overnight triggered a wave of buying interest. Reports that the ECB is considering exchanging its Greek bond holdings with new bonds in a bid to reduce losses before a deal is negotiated with private sector creditors also offered encouragement.

Japan’s Nikkei 225 average opened notably higher and moved sideways for the rest of the session, ending up 146.07 points or 1.58 percent at 9,384. Australia’s All Ordinaries added 16.10 points or 0.38 percent before closing at 4,273. Meanwhile, Hong Kong’s Hang Seng Index rose 214.34 points or 1.01 percent to 21,492.

Europe

The major European markets are also advancing on Greek deal hopes, with three of the major indexes in the region trading with notable gains.

Anglo American reported 23 percent growth in its full year underlying profit, which exceeded estimates. French cement marker Lafarge reported a loss for its fourth quarter, although operating income, excluding one-time items, was above estimates. The company also announced the halving of its dividend. Dutch insurer Aegon reported a sharp decline in fourth quarter profits.

In economic news, a report released by the U.K. Office for National Statistics showed that U.K. retail sales rose unexpectedly in January, as demand for household goods surged up.

U.S. Economic Reports

U.S. consumer prices rose by less than expected, according to figures released by the Labor Department. The Consumer Price Index increased by 0.2 percent in January, following a 0 percent change in December. Most economists had forecast a slightly higher, 0.3 percent, increase for January.



The price increases were broadly spread across the economy, with "core" prices - excluding the volatile food and energy sectors, also rising 0.2 percent in January. Similarly the price indexes for both food and energy increased 0.2 percent. The market consensus correctly forecast the 0.2 percent in core price increases.

The Conference Board is scheduled to release a report on its U.S. leading index for January at 10 am ET. The consensus estimate calls for a 0.5 percent increase by the leading indicators index for the month.



The leading indicators index rose 0.4 percent month-over-month in December. The lagging and coincident indicator indexes rose 0.3 percent each. The Treasury yield curve, initial jobless claims and average workweek made positive contributions to the leading indicators index, while consumer expectations served as a drag.

Stocks in Focus

EOG Resources (EOG) reported fourth quarter adjusted earnings of $1.15 per share compared to 36 cents per share last year, as net operating revenues rose to $2.77 billion from $1.79 billion last year. The earnings exceeded estimates. The company also announced an increase in its quarterly dividend.

Scripps Networks (SNI) announced an increase in its quarterly dividend to 12 cents per share from 10 cents per share.

DDR (DDR) reported fourth quarter operating funds from operation of 26 cents per share on revenues of $194.54 million. The earnings were in line, while the revenues exceeded estimates. For 2012, the company continues to expect operating funds from operation of 98 cents to $1.04 per share.

Baidu (BIDU) reported fourth quarter adjusted earnings of 95 cents per share on revenues of $710.9 million. The results were ahead of estimates. For the first quarter, the company expects revenues of $666.5 million to $688 million, which surrounded the consensus estimate.

Prologis (PLD) announced the retirement of its CFO William Sullivan, effective upon the filing of its 10-Q for the fourth quarter, which is expected to be on or about May 4th, 2012. The company also said chief integration officer Thomas Olinger will succeed Sullivan as the CFO.

SunPower (SPWR) said its fourth quarter non-GAAP earnings fell to 16 cents per share from $1.36 per share in the year-ago period. The earnings beat estimates. The company’s revenues fell to $563.4 million from the year-ago quarter’s $937.1 million. The company issued first quarter bottom line guidance surrounding the consensus estimate, while its full year revenue guidance was also in line with estimates.

Nordstrom (JWN) reported fourth quarter earnings that exceeded estimates by a penny, while revenues were in line with estimates. However, the full year 2012 earnings guidance was below estimates.

H.J. Heinz’s (HNZ) third quarter profit improved from the year-ago period. Sales also rose from the year-ago quarter and were above consensus. The company narrowed its fiscal 2012 earnings per share outlook to the middle of its original range on a reported basis, excluding charges for productivity initiatives.

Campbell Soup (CPB) reported second quarter profit that declined from last year. However, earnings per share were above Wall Street view. The company confirmed its fiscal 2012 guidance, still expecting net sales growth to be between 0 and 2 percent and a decline in adjusted earnings per share of 7 to 5 percent.

Applied Materials (AMAT) reported better than expected first quarter results. The company’s second quarter guidance was also above consensus estimates.