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Wall St. Breakfast's Pre-Market Snapshot:

U.S. Futures

As of 8:55 AM ET

S&P 500: +11.25; 1,558.75
NASDAQ 100: +23.00; 2,199.25
Dow: +83; 14,055

International Indexes

Asia
NIKKEI 225: -1.07%; 16,955.31 (-182.61)
HANG SENG: +1.19%; 29,298.71 (+344.16)
SHANGHAI SE COMPOSITE: -0.92%; 6,036.28 (-55.78)
BSE SENSEX 30: -1.76%; 18,715.82 (-336.04)

Europe
FTSE 100: +1.07%; 6,685.40 (+71.10)
CAC 40: +0.87%; 5,824.38 (+50.02)
XETRA-DAX: +0.67%; 8,016.26 (+53.62)

Commodity Futures

(Reuters/Jefferies CRB)

Oil: +0.11%; $87.71 (+$0.10)
Gold: +0.43%; $765.30 (+$3.30)
Natural Gas: -0.05%; $7.363 (-$0.004)
Silver: +0.27%; $13.695 (+$0.037)

U.S. Breaking News

see today's Wall Street Breakfast for earlier news

Housing Starts Fall 10% to Worst Levels Since 1993
The Commerce Department announced housing starts for September dropped 10.2% to a seasonally adjusted rate of 1.19 million, slumping to the lowest level in 14 years. The drop was worse than the 1.28 million economists had expected. Authorized building permits dropped 7.3% last month to an annual rate of 1.23 million, also the lowest in 14 years. Housing starts have dropped 30.8% in the last year. Also, noteworthy was the decrease in apartment building starts, which dropped 34.3%. The housing market has had an excess accumulation of homes with the recent credit crisis, and now foreclosures are pushing even more homes on to the market. Fed Chairman Bernanke noted Monday the bleak housing market was a key factor in lowering interest rates aggressively last month. Still, there seems to be little chance of a bottom soon: the latest forecast from the Mortgage Bankers Association predicts originations decreasing 18% in 2008 and another 6% in 2009.

J.P. Morgan Beats Estimates, Overcoming $1.3B Writedown
J.P. Morgan Chase shares were up 4.3% in pre-market trading after the Wall Street banker posted a 2.3% net income increase Wednesday, overcoming a $1.3 billion writedown to its loan portfolio and growing loan-loss provisions. Net income inched up to $3.37 billion ($0.97/share) from $3.3 billion ($0.92/share) a year ago. Revenue rose 3.6% to $16.11 billion from $15.5 billion. Analysts had forecast EPS of $0.90 and revenue of $16.6 billion. "Jamie Dimon's ace card is his cost cutting," said analyst William Fitzpatrick. "He cuts costs better than anyone and I suspect the other banks will follow." Investment banking profits results plummeted 70%, a result of a $1.3 billion markdown and weaker trading performance. Retail financial services revenue was up 18% to $4.2 billion; asset-management earnings surged 51% to $521 million on a 35% revenue increase; and credit-card profits were up 11% to $786 million on a revenue increase of 6.1%. Commenting on the quarter, CEO Jamie Dimon said, "Our firm performed well overall in the third quarter, despite challenging credit and market conditions... Investment banking is a volatile business, and while we would typically expect lower earnings in the Investment Bank during a difficult market environment, such as this one, we still believe that our performance could have been a bit better" (full earnings call transcript later today). This week, J.P. Morgan, together with Citigroup and Bank of America, spearheaded an effort to create an $80 billion pool to buy mortgage-backed securities and bring a measure of stability to distressed credit markets (full story).

Coke Comfortably Tops Earnings, Sales Estimates
The Coca-Cola Company reported Q3 earnings and sales that topped consensus analyst estimates, on strong international growth and a shift away from sugared soft drinks (check back later for KO's latest earnings call transcript). Net income climbed 13% to $1.65 billion, good for EPS of $0.71, versus $0.62 a year earlier. A $0.03 a share restructuring charge was offset by a $0.03 a share gain from the sale of a chunk of its holdings in Coca-Cola Amatil. Revenue grew 19% to $7.69 billion; analysts were, on average, expecting EPS of $0.68 on sales of $7.29 billion. The company said "performance in our Latin America, Africa, Eurasia and Pacific operating groups remained robust." Global unit case volume grew 6%, powered by still (non-carbonated) beverage unit case volume which was up 14%. YTD cash from operations increased 18%. As part of its shift away from sugared soft drink beverages, which health conscious consumers have been avoiding, Coke purchased Glaceau (Vitaminwater) for $4.1 billion in May (full summary). YTD, Coke has repurchased $1.6 billion of its own shares; the company doesn't offer forward guidance. Its shares are up nearly 20% this year.

Altria Higher on Q3 Beat and Raise
Altria reported third-quarter net income declined 8.4% to $2.63 billion, or $1.24/share, but when adjusting for its spinoff of Kraft, net income was up 19%. Adjusted EPS of $1.21 topped the Street's $1.14 estimate. Revenues rose 8.9% to $19.2B. Altria raised its full-year EPS forecast to $4.20 to $4.25, back to what it was earlier this year before lowering it to $4.05 to $4.10 in July. Sales at Philip Morris USA were up 3.2% to $4.0B and grew 9.3% to $5.9B at PM International. Domestic price increases are helping offset declining shipments. Domestic demand for Marlboro pushed the brand's market share up 0.5% to a record 41.1%, giving Altria a record 50.6% (+0.2%) overall retail share. Altria's revised full-year outlook is attributed to +0.08/share reflecting a lower tax rate, +0.04/share positive forex impact and +0.03/share for improved results. Altria said its Board intends to announce details of its planned spinoff of PM International on Jan. 30 at its regularly scheduled meeting. Altria's earnings conference call is at 9:00 A.M. (check later for Altria's earnings call transcript). Shares of Altria gained 0.5% to $70.74 on Tuesday and were last up 1% to $71.45 in thin pre-market trading.

United Technologies Posts Solid Quarter Despite Housing Weakness
United Technologies Corp. shares climbed 1.6% in pre-market trading Wednesday after the conglomerate said Q3 earnings rose 20%, beating analyst estimates. Net income for the maker of Pratt & Whitney jet engines and Otis elevators was $1.2 billion ($1.21/share), up from $996 million ($0.99/share) a year earlier. Revenue was up 14% to $13.9 billion from $12.2 billion, while organic revenue climbed 9%, having grown 10% in each of the company's first two quarters. Net of a $0.04 tax benefit, EPS were $1.17; analysts had expected earnings of $1.16 a share on revenue of $13.5 billion. "While market conditions in Carrier's North American residential business are clearly challenging, its other three global businesses delivered double digit earnings growth," CEO George David said (full earnings call transcript later today). For the full year, UTX tightened its earnings guidance to between $4.22 and $4.25 a share, from a previous $4.15 to $4.25. It pegged full-year revenue at around $54 billion. Analysts had been calling for full-year earnings of $4.24/share on revenue of $53.3 billion. In a post-earnings note, Deutsche Bank analyst Nigel Coe was upbeat on the company's strong performance in the face of ongoing housing market weakness: "We believe the stock could do well today since this was another metronomic-like performance and in stark contrast to the mixed trends seen thus far from industrial companies." On Oct. 10, UTX's Pratt & Whitney unit was chosen by Mitsubishi Heavy Industries Ltd. for use in its Mitsubishi Regional Jet, the first Japanese-manufactured passenger aircraft in 40 years, a move BofA aerospace analyst Robert Stallard called "a considerable boost." The engine burns about 12% less fuel and cuts noise by 50% over traditional engines (full story).

Abbott Labs Q3 Net Flat, Beats By a Penny
Abbott Laboratories reported third-quarter net income increased less than a quarter of a percent to $717 million, or $0.46/share. EPS totaled $0.67 on an adjusted basis related to the unsuccessful sale of its diagnostics unit to GE in July (see full story). Analysts were expecting $0.66/share. Abbott recorded a 14.4% increase in revenues to $6.38B, boosted by a 49% jump (to $803M) in sales of its rheumatoid arthritis drug Humira. Abbott said it had a positive forex impact of 2.8%. Overseas sales grew double-digits across its businesses. In a statement, CEO Miles D. White commented, "We expect this momentum to continue in the fourth quarter and into 2008, when the strength of our diversity will drive an accelerating rate of earnings-per-share growth compared to 2007." Abbott confirmed its 2007 and 2008 EPS outlook and raised the low-end of its range to $0.91 to $0.93 for Q4 and $2.82 to $2.84 for FY2007. Analysts had expected $0.92 and $2.82, respectively, according to Reuters Estimates. Abbott Laboratories' earnings conference call is at 9:00 A.M. (check later for Abbott's earnings call transcript). Shares of Abbott Labs rose 0.1% to $51.97 on Tuesday.

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Additional Earnings

• Largest U.S. newspaper publisher Gannett Co. (NYSE:GCI) saw its Q3 earnings fall 11%, on weaker revenue. EPS was $1.01 vs. $1.11 a year earlier, while revenue was $1.81 billion, down from $1.88 billion. Consensus estimates were for EPS of $1.00 on revenue of $1.82 billion. Newspaper ad sales fell 6% to $1.19 billion. (source: AP)

Illinois Tool Works (NYSE:ITW) reported a 10% increase in Q3 net to $0.89 a share, vs. EPS of $0.78 a year earlier. Revenue climbed 16% to $4.1 billion. Consensus estimates were for EPS of $0.87 on revenue of $4.13 billion. (source: Dow Jones Newswires)

Today's Market

(via Sam Collins, ChangeWave.com)

Recap of Yesterday's Action

It's amazing the Dow only lost 70 points yesterday.

Crude oil prices reached another record high, the Fed chief warned that trouble in the housing market will likely slow economic growth and credit problems plagued banks' earnings. The Treasury Department reported that capital flows to the United States fell sharply in August, Ericsson (the largest wireless networks manufacturer in the world) reported sharply lower demand, and on top of all of that the Turks threatened to invade our allies in Iraq, the Kurds.

Zounds! It's a wonder that the market didn't halt trading until after the election, given yesterday's developments. Oh, and don't forget the uncertainty of the U.S. presidential election!

Fortunately, the bad news ended with the closing bell. After the close, IBM (NYSE:IBM) reported better-than-expected earnings, Intel (NASDAQ:INTC) beat forecasts and Yahoo (NASDAQ:YHOO) did the same. So even if we had to delve into the after-market to get upbeat news, at least today's tech sector may receive the benefit of good earnings from three of its important members.

But at the close, the Dow Industrials had lost 72 points to close at 13,913. The S&P 500 was off 10 points at 1,539, and the Nasdaq fell 16 points closing at 2,764. Volume on the Big Board totaled 1.3 billion shares and the Nasdaq traded just over 2 billion; breadth was negative on both exchanges by just over 2-to-1.

Crude oil (November contract) briefly traded over $88 a barrel yesterday and closed at $87.61, up $1.48. That's a gain of over 8% in just one week due to what floor traders said was a threat of the possible invasion of the Kurdish region of Iraq and the cutting off of oil from a major pipeline there.

The Amex Energy SPDR (NYSEARCA:XLE) gained just 29 cents but set another new closing high of $78.14. The December gold contract was up 20 cents closing at $762 per troy ounce, and the Gold/Silver Index [XAU] fell $3.62 to $176.20.

What the Markets Are Saying

The confluence of extended internal indicators, overly bullish sentiment, and a rush to buy high P/E tech stocks has led to a new turn away from a new market high and resulted in a "failed breakout" similar to the July 20 reversal.

The overall chart picture is one of a double-top on the Dow Industrials with the first support at 13,740, just 172 points under yesterday's close. The S&P 500 barely penetrated its support yesterday by just 1.45 points, but the NYSE Composite broke through its support by over 80 points.

With the two major indices now below initial support, it is likely that the trading zones established during April through August will re-assert themselves. For the Dow, that zone is 13,207 to 13,740. For the S&P 500, it is 1,490-1,540, and for the NYSE Composite it is 9,740 to 10,205. Because the Nasdaq had the biggest recent percentage move, its initial support of 2,720 has yet to be violated.

Today's Trading Landscape

Today is a big one for both economics and earnings. First the economics: We'll get the Consumer Price Index (the consensus expects 0.2%), September building permits and housing starts and the Fed's Beige Book.

On the earnings front, we'll get reports from: Abbott Labs (read above), Altria (read above), Noble Corp, Coca-Cola (read above), Alliance Data, AMR, Amylin Pharma, ASML, BlackRock, CIT Group, Citrix, Comerica, Downey Financial, E*Trade, eBay, First Cash, Gannett, Healthways, Illinois Tool Works, IMS Health, Intersil, Knight Capital, Knoll, Labor Ready, LaSalle Hotel, Manpower, Marshall & Ilsley, MGIC, MoneyGram, Northern Trust, Packaging Corp., Piper Jaffray, Ploycom, Sovereign Bancorp, Stryker, Teradyne, Allstate, Votorantim Celulose, Washington Mutual and WD-40.

Positive earnings from IBM, Yahoo, and Intel should help the tech sector, following several days of selling. But those earnings will be quickly overshadowed when the results of others start rolling in. Early this morning, United Technologies (NYSE:UTX) (read above) and JPMorgan Chase (NYSE:JPM) (read above) both beat estimates by a penny.

Asian Headlines

(via Bloomberg.com)

Asian Shares Decline on U.S. Housing Concern; ICICI Leads India Lower Asian stocks fell after UBS AG cut its share-price estimates on Japanese banks and India said it will regulate foreign investment.

Indian Stocks Pare Declines After Trading Halt on Investment Restrictions India's stocks recovered from an almost 10 percent slump that had shut down exchanges for an hour after the capital market regulator said restrictions on overseas investment won't lead to a complete ban.

Sanyo Electric Scraps Plan to Sell Chip Operations, Triggering Share Slump Sanyo Electric Co., the recipient of a $2.6 billion bailout by creditors including Goldman Sachs Group Inc., scrapped plans to sell its chip unit, undermining efforts to rebound from three years of losses.

China Studies Plan to Allow Arbitrage in Shares of Dual-Listed Companies China is studying a plan to allow arbitrage in shares of companies traded on domestic and Hong Kong exchanges, the nation's securities regulator said.

Japan's Economy May Falter as Housing Slides, Say Credit Suisse, Macquarie Japan's economic growth may falter because changes to building rules requiring stricter inspections will cause housing starts to slump, analysts said.

ICBC to Open International Branches, Seek Acquisitions as Stock Surges Industrial & Commercial Bank of China Ltd., the world's largest bank by market value, will set up branches in cities including New York and Moscow and make acquisitions to speed up its overseas expansion.

European Headlines

(via Bloomberg.com)

European Stocks Advance, Led by Infineon, ST; Danone, Carrefour, ASML Rise European stocks rose after France's Groupe Danone SA and Carrefour SA said sales increased and Intel Corp. of the U.S. forecast faster revenue growth.

Carlsberg, Heineken May Acquire Scottish & Newcastle, Break Up U.K. Brewer Carlsberg A/S and Heineken NV, two of Europe's largest brewers, said they may jointly bid for Scottish & Newcastle Plc and split up the U.K. company's assets.

Liebscher Says ECB Sees Inflation Risks Growing, Suggesting Rates May Rise European Central Bank council member Klaus Liebscher said the bank remains focused on ``significant'' and rising inflation risks, suggesting it may still raise interest rates.

ASML Climbs as Net Beats Estimates, Orders Increase for First Time in Year ASML Holding NV, Europe's largest maker of semiconductor equipment, rose the most in four years in Amsterdam trading after profit beat analysts' estimates and orders increased for the first time in four quarters.

U.K. Unemployment Fell to 2 1/2-Year Low in September on Economic Growth Unemployment in Britain fell to a 2 1/2-year low in September as accelerating economic growth led companies to add workers, reducing the case for an immediate cut in interest rates.

Munich Re Agrees to Buy Midland Co. for $1.3 Billion to Boost U.S. Profit Munich Re, the world's second- biggest reinsurer, agreed to buy Midland Co., a U.S. insurer of manufactured housing and mobile homes, for $1.3 billion in cash.

Source: Pre-Market Snapshot