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US stock market, economy and companies update (January 24, 2013)

Contributed by Trade The News

- The DJIA and S&P500 are seeing solid gains this morning thanks to some solid earnings reports, while the Apple meltdown forced the Nasdaq lower earlier this morning. The S&P500 broke above 1500 for the first time since 2007 and is currently up 0.44% at 1501. The DJIA is up 0.67% and the Nasdaq is flat. Weekly claims marked another low, dropping to their lowest level since 2008 while continuing claims are at their lowest point since July 2008.

- The euro maintained a firm tone heading into Friday's LTRO repayment news. Friday's announcements will represent the first exit from extraordinary measures by a major central bank since the beginning of the financial crisis. Lloyd's is planning to repay €8.0-10.0B of its €11.4B three-year ECB LTRO funds in February. The unwinding of liquidity will be a driving force in eurozone one yields and could play strongly in the currency. Key resistance in EUR/USD remains at 1.3400 area.

- Japan has come under fire this week for policies that critics say deliberately devalue the yen, but analysts say fears of an outright currency war are overblown. Chancellor Merkel commented at Davos that she was somewhat concerned about Japan FX rate issues. The yen was weaker and re-approaching the psychological levels of 90 and 120, versus USD and EUR, respectively.

- Spot gold was down more than 1% this morning, trading as low as $1,670 before retracing. Traders say the move is at least partially due to sales to cover margin calls in Apple. Front month crude is right in the middle of yesterday's relatively broad $95-97 trading range.

- Traders are obsessing about Apple this morning. At the worst point in the premarket, shares were down more than 10%, although deal seekers have stepped this morning and AAPL is now only down 9.75%. Seven major firms have downgraded ratings while a handful have reiterated sell ratings; Piper Jaffray is notable for reiterating its overweight call. Many point out that the firm's iPhone shipments in the quarter hit all-time highs at 47.8M, even though this didn't live up to expectations in the 50M unit range. Many have asserted that the Apple growth story is now over and the high-margin days are gone forever, with the firm now obviously needing a lower-priced (and lower margin) handset offering.

- Netflix is doing a good job of sustaining 38% gains in mid-morning trading, with shares at one-year highs. At least six major firms have upgraded the name, and recent investor in the company Carl Icahn said that the sea change in consumer viewing habits strongly favors Netflix. Icahn also indicated that CEO Reid Hastings would consider buyout offers. Note that the company attributed much of its impressive 2M net adds in streaming to consumers snapping up tablet computers and smart TVs over the holidays.

- In other tech earnings, shares of chipmaker Altera slid more than 10% after missing expectations in its Q4 report and offering very weak guidance for its Q1. Hard drive name Western Digital is at highs around +3.5% on solid outperformance, allowing it to duck the overall 'soft PC sales' bogeyman haunting the industry. Sandisk is also up more than 3% on a solid quarterly report, citing strong demand for SSDs.

- Diebold is down more than 8% this morning after warning investors that it would miss expectations in its Q4 report and guided FY13 revenue below consensus. The poor Q4 outlook caps a grim year for Diebold, and as a result CEO Swidarski is stepping down immediately.

- Airlines United Continental and Southwest had misses in their Q4 reports, however the overall rosy outlook offered by executives from both firms are supporting the names this morning. UAL is up 4% and LUV is up 2%, with other airline names also gaining. Southwest's CEO said that bookings are suggesting a 2-3% y/y gain in January passenger revenues.

- Both Raytheon and Lockheed Martin had pretty solid Q4 results, topping what were already beaten-down estimates. However the ramp-up in rhetoric in Congress is spooking investors about possible steep defense cuts, sending defense names broadly lower.

***Looking Ahead***
- 11:00 (US) Weekly DOE U.S. Crude Oil Inventories
- 11:30 (UL) BOE member Salmon
- 12:30 (UK) BOE member Weale
- 13:00 (US) Treasury to sell $15B in 10-Year TIPS
- 14:00 (AR) Argentina Dec Industrial Production M/M: No est v -2.1% prior; Y/Y: +0.3%e v -1.4% prior
- 18:30 (JP) Japan Dec National CPI Y/Y: -0.2%e v -0.2% prior; CPI Ex Food, Energy Y/Y: -0.5%e v -0.5% prior

***Economic Data***
- (RO) Romania Dec Money Supply Y/Y: 4.6% v 7.5% prior
- (ZA) South Africa Central Bank (SARB) left its Interest Rate unchanged at 5.00%. as expected
- (IE) Ireland Dec PPI M/M: -0.9% v +0.8% prior; Y/Y: 1.3% v 2.7% prior
- (RU) Russia Gold & Forex Reserve w/e Jan 18th: $530.4B v $526.4B prior
- (UK) Jan CBI Industrial Reported Sales: 17 v 15e
- (US) Initial Jobless Claims: 330K v 355Ke; Continuing Claims: 3.157M v 3.200Me
- (US) Jan Preliminary Markit US PMI Manufacturing: 56.1 v 53.0e
- (BE) Belgium Jan Business Confidence: -13.2 v -11.0e
- (MX) Mexico Nov Global Economic Indicator: 4.1% v 3.1%e
- (US) Dec Leading Indicators: +0.5% v +0.4%e
- (US) Weekly EIA Natural Gas Inventories: -172 bcf vs. -160 to -170 bcf expected range
- (US) Jan Kansas City Fed Manufacturing Activity: -2 v +1e
- (US) Weekly DOE U.S. Crude Oil Inventories: crude: +2.81M v +2Me; gasoline: -1.74M v +1Me; distillate: +510K v -0.5Me; utilization: 83.6% v 87.5%e