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US stock market, economy and companies update (October 12, 2012)

Contributed by Trade The News

- US equities opened flat on the day and haven't budged much in the wake of quarterly results from JPMorgan and Wells Fargo. After the open the preliminary reading of the University of Michigan Confidence Index jumped to highs last seen in September 2007. WTI crude is flat on the day as reports suggest the EU is considering expanding its sanctions against Iran.

- There has been a muted response to JPMorgan's pretty decent Q3 results this morning. The firm's profits were even stronger than expected as net income jumped 34% and earnings widely beat expectations. Revenue also topped estimates. There were minimal impacts from the CIO Office losses and DVA adjustments that had such an impact last quarter. CEO Dimon said that the housing market has turned the corner and noted that the bank reduced loan-loss reserves by another $900 million as credit trends continued to modestly improve. Shares of JPM are flat on the day.

- Wells Fargo's results drove a 4% decline in the bank's shares before the open. Top- and bottom-line numbers met expectations, although traders are focusing on negative signs in the firm's metrics, specifically the y/y contraction in its net interest margin. Wells had warned back in September that the margin would take a significant hit, but the decline to 3.66% from 3.84% is greater than the market expected. Shares of WFC are around -2% mid morning.

- AMD warned that it would not meet analysts' revenue expectations in its Q3 report, citing weaker-than-expected demand. In addition, it said Q3 gross margins would be 31%, down from the prior 44% expectations, thanks to a big $100M inventory write-down and pricing softness. Shares of AMD are down nearly 10%. In other tech news, ADRs of STMicro are up 7.5% on press reports that the firm is mulling a plan to split in two, into analog and digital units. STMicro has denied the reports. Investors are taking JB Hunt's modest revenue beat as a good entry point, pushing up shares of the trucking firm more than 7% this morning.

- FX trading has been relatively quiet during the New York session. The earlier risk-on sentiment driven by rumors that Spain would officially request aid over the weekend has tapered off. Overall dealers believe that Spain would not make such a move so close to regional elections scheduled for Oct 21st. EUR/USD is holding steady below the 1.30 handle.

***Looking Ahead***
- 11:00 (US) Fed to buy $1.75-2.25B in bonds
- 12:35 (US) Fed's Lacker speaks on economy
- 14:00 (US) Sept US Monthly Budget Statement: +$42.0Be v -$191.0B prior
- 15:00 (AR) Argentina Sept Consumer Price Index M/M: 0.8%e v 0.9% prior; Y/Y: 10.0%e v 10.0% prior
- 15:00 (AR) Argentina Sept Wholesale Price Index M/M: No est v 1.0% prior; Y/Y: No est v 12.8% prior
- (CO) Colombia Central Bank Monetary Policy Minutes
- (PE) Peru Aug Trade Balance: No est v -$192.0M prior

***Weekend***
- (CN) China Sept Trade Balance: No est v $26.7B prior; Exports Y/Y: No est v 2.7% prior; Imports Y/Y: No est v -2.6% prior
12-15 OCT (CN) China Sept Foreign Exchange Reserves: $3.228Te v $3.240T prior
12-15 OCT (CN) China Sept M2 Money Supply Y/Y: 13.6%e v 13.5% prior; M1 Money Supply Y/Y: 4.7%e v 4.5% prior; M0 Money Supply Y/Y: 10.0%e v 9.7% prior
12-13 OCT (CN) China Sept Actual FDI Y/Y: No est v -1.4% prior

***Economic Data***
- (IN) India Forex Reserves w/e Oct 5th $295.0B v $294.8B prior
- (IC) Iceland Sept Unemployment Rate: 4.9% v 4.8% prior
- (PL) Poland Sept M3 Money Supply M/M: -0.3% v +0.4%e
- (US) Sept Producer Price Index M/M: 1.1% v 0.8%e; Y/Y: 2.1% v 1.8%e
- (US) Sept PPI Ex Food & Energy M/M: 0.0% v 0.2%e; Y/Y: 2.3% v 2.5%e
- (MX) Mexico Aug Industrial Production M/M: -0.8% v +0.1%e; Y/Y: 3.6% v 3.8%e
- (US) Oct Preliminary University of Michigan Confidence: 83.1 v 78.0e