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US stock market, economy and companies update (October 23, 2012)

Contributed by Trade The News

- European equity indices traded straight down for most of the day following Moody's downgrade of five Spanish regions yesterday afternoon, making for a risk-off atmosphere heading into the US session. Corporate earnings out this morning have included some dire numbers and plenty of negative commentary about the state of the economy, piling on the weak sentiment. The VIX is heading higher again as well, topping 18 for the first time since early September. To the North, the Canadian Dollar has surged following the Bank of Canada rate decision, with traders citing less dovish than expected comments. USD/CAD moved from 0.9970 to test 0.9910. Front-month WTI tanked this morning as the steady drumbeat of negative views from corporate executives continued, with the contract briefly testing the $86 handle.

- Both earnings and revenue declined from last year's levels at UPS in Q3, although the firm did manage to meet analysts' estimates. UPS's volumes held up in the quarter, although the CEO warned that there is some uncertainty around the holiday shopping season. On the conference call, executives said profits should be better in Q4. Shares of UPS are up 2.7%. United Technologies handily beat earnings expectations on a continuing basis and affirmed its FY12 earnings outlook. UTX is flat on the day. Whirlpool is up nearly 4% after the firm beat earnings expectations and raised its FY12 outlook.

- Headline numbers from both DuPont and 3M slightly missed expectations and both firms also cut FY12 guidance forecasts. 3M's profits grew slightly on a y/y basis, while DuPont saw a contraction in profits thanks to trouble in its paint and solar units. Sales volumes in all of DuPont's major markets fell, and the firm said it would cut around 2% of its workforce as a consequence. On the conference call, 3M said that there were no indications that Q4 would be dramatically different from Q3, with business conditions expected to remain challenging for rest of the year. MMM is down 3%, while DD is down more than 8%.

- Texas Instruments Q3 performance was relatively good, however investors did not like the firm's weak Q4 guidance and the big sequential decline in orders in Q3. In addition, the key embedded processing business saw lower y/y revenue. Western Digital had a solid Q1, although like TXN the firm's guidance for the current quarter (Q1) was pretty weak. WDC is down 3.5% but well off its worst levels, while TXN is down slightly. Shares of Yahoo.com surged yesterday after the close and remain up a solid 5% this morning thanks to decent Q3 numbers and comforting words from CEO Meyer, who talked about focusing the firm on the transition to mobile. Note that Yahoo's revenue growth rate is as good as the company has seen since late 2008.

***Looking Ahead***
- (AR) Argentina Oct Consumer Confidence: No est v 42.27 prior
- 11:00 (US) Fed to sell $7.0-8.0B in notes
- 11:30 (US) Treasury to sell combined $$40B in 4-week bills
- 12:00 (US) Former Fed Chairman Greenspan speaks at SIFMA
- 13:00 (US) Treasury to sell $35B in 2-Year Notes
- 14:00 (PT) Portugal Year-to-D- European equity indices traded straight down for most of the day following Moody's downgrade of five Spanish regions yesterday afternoon, making for a risk-off atmosphere heading into the US session. Corporate earnings out this morning have included some dire numbers and plenty of negative commentary about the state of the economy, piling on the weak sentiment. The VIX is heading higher again as well, topping 18 for the first time since early September. To the North, the Canadian Dollar has surged following the Bank of Canada rate decision, with traders citing less dovish than expected comments. USD/CAD moved from 0.9970 to test 0.9910. Front-month WTI tanked this morning as the steady drumbeat of negative views from corporate executives continued, with the contract briefly testing the $86 handle.

- Both earnings and revenue declined from last year's levels at UPS in Q3, although the firm did manage to meet analysts' estimates. UPS's volumes held up in the quarter, although the CEO warned that there is some uncertainty around the holiday shopping season. On the conference call, executives said profits should be better in Q4. Shares of UPS are up 2.7%. United Technologies handily beat earnings expectations on a continuing basis and affirmed its FY12 earnings outlook. UTX is flat on the day. Whirlpool is up nearly 4% after the firm beat earnings expectations and raised its FY12 outlook.

- Headline numbers from both DuPont and 3M slightly missed expectations and both firms also cut FY12 guidance forecasts. 3M's profits grew slightly on a y/y basis, while DuPont saw a contraction in profits thanks to trouble in its paint and solar units. Sales volumes in all of DuPont's major markets fell, and the firm said it would cut around 2% of its workforce as a consequence. On the conference call, 3M said that there were no indications that Q4 would be dramatically different from Q3, with business conditions expected to remain challenging for rest of the year. MMM is down 3%, while DD is down more than 8%.

- Texas Instruments Q3 performance was relatively good, however investors did not like the firm's weak Q4 guidance and the big sequential decline in orders in Q3. In addition, the key embedded processing business saw lower y/y revenue. Western Digital had a solid Q1, although like TXN the firm's guidance for the current quarter (Q1) was pretty weak. WDC is down 3.5% but well off its worst levels, while TXN is down slightly. Shares of Yahoo.com surged yesterday after the close and remain up a solid 5% this morning thanks to decent Q3 numbers and comforting words from CEO Meyer, who talked about focusing the firm on the transition to mobile. Note that Yahoo's revenue growth rate is as good as the company has seen since late 2008.

***Looking Ahead***
- (AR) Argentina Oct Consumer Confidence: No est v 42.27 prior
- 11:00 (US) Fed to sell $7.0-8.0B in notes
- 11:30 (US) Treasury to sell combined $$40B in 4-week bills
- 12:00 (US) Former Fed Chairman Greenspan speaks at SIFMA
- 13:00 (US) Treasury to sell $35B in 2-Year Notes
- 14:00 (PT) Portugal Year-to-Date Budget Report
- 15:00 (UK) BOE Gov King
- 15:00 (AR) Argentina Sept Shop Center Sales Y/Y: No est v 23.0% prior
- 16:30 (US) Weekly API Crude Oil Inventories
- 20:30 (AU) Australia Q3 Consumer Prices Q/Q: 1.0%e v 0.5% prior; Y/Y: 1.6%e v 1.2% prior
- 21:45 (CN) China Oct HSBC Flash Manufacturing PMI: No est v 47.9 prior

***Economic Data***
- (IS) Israel Sept Leading "S" Indicator: No est v 0.1% prior
- (TR) Turkey Oct Industrial Confidence: 102.4 v 103.1 prior (lowest reading since Jan 2012); Capacity Utilization: 74.9% v 74.0% prior
- (US) ICSC/GS weekly chain store sales w/e Oct 19th w/w: -0.7% v +0.2% prior; y/y: +2.9% v 2.7% prior
- (BR) Brazil Sept Current Account: -$2.6B v -$2.5Be; Foreign Direct Investment (FDI): $4.4B v $4.0Be
- (CA) Canada Aug Retail Sales M/M: 0.3% v 0.3%e; Retail Sales Less Autos M/M: 0.4% v 0.4%e
- (US) Redbook Retail Sales w/e Oct 19th: +1.3% y/y; Oct MTD: -1.7% m/m; Oct MTD -1.6% y/y
- (BE) Belgium Oct Business Confidence: -13.5 v -11.0e
- (CA) Bank of Canada (BOC) left interest rates unchanged at 1.00%; as expected
- (EU) ECB weekly Forex Reserves w/e Oct 19th: €229.2B v €229.4B prior
- (UK) BOE buys £1.0B 2027-2060 Gilts in reverse auction; Bid-to-cover: 1.81x v 2.38x prior
- (EU) Euro Zone Oct Advanced Consumer Confidence: -25.6 v -25.9e
- (US) Oct Richmond Fed Manufacturing Index: -7 v +5eate Budget Report
- 15:00 (UK) BOE Gov King
- 15:00 (AR) Argentina Sept Shop Center Sales Y/Y: No est v 23.0% prior
- 16:30 (US) Weekly API Crude Oil Inventories
- 20:30 (AU) Australia Q3 Consumer Prices Q/Q: 1.0%e v 0.5% prior; Y/Y: 1.6%e v 1.2% prior
- 21:45 (CN) China Oct HSBC Flash Manufacturing PMI: No est v 47.9 prior

***Economic Data***
- (IS) Israel Sept Leading "S" Indicator: No est v 0.1% prior
- (TR) Turkey Oct Industrial Confidence: 102.4 v 103.1 prior (lowest reading since Jan 2012); Capacity Utilization: 74.9% v 74.0% prior
- (US) ICSC/GS weekly chain store sales w/e Oct 19th w/w: -0.7% v +0.2% prior; y/y: +2.9% v 2.7% prior
- (BR) Brazil Sept Current Account: -$2.6B v -$2.5Be; Foreign Direct Investment (FDI): $4.4B v $4.0Be
- (CA) Canada Aug Retail Sales M/M: 0.3% v 0.3%e; Retail Sales Less Autos M/M: 0.4% v 0.4%e
- (US) Redbook Retail Sales w/e Oct 19th: +1.3% y/y; Oct MTD: -1.7% m/m; Oct MTD -1.6% y/y
- (BE) Belgium Oct Business Confidence: -13.5 v -11.0e
- (CA) Bank of Canada (BOC) left interest rates unchanged at 1.00%; as expected
- (EU) ECB weekly Forex Reserves w/e Oct 19th: €229.2B v €229.4B prior
- (UK) BOE buys £1.0B 2027-2060 Gilts in reverse auction; Bid-to-cover: 1.81x v 2.38x prior
- (EU) Euro Zone Oct Advanced Consumer Confidence: -25.6 v -25.9e
- (US) Oct Richmond Fed Manufacturing Index: -7 v +5e