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US stock market, economy and companies update (October 24, 2012)

Contributed by Trade The News

- US equities ticked higher in the premarket and opened strong this morning thanks to solid earnings reports out of major names. Investors stepped in to buy after the DJIA had its worst day in four months on Tuesday. Sentiment was to a degree aided by a flurry of reports overnight that Greece had forced a bargain over a two-year extension of its austerity reforms (European officials have been insisting that no final deal was reached) and optimism about China following the uptick in its Oct HSBC manufacturing PMI reading. But indices dropped back to the flatline mid morning as the fragile sense of optimism vanished. Front-month WTI crude has been giving gains seen late yesterday all morning, with the contract dropping from an overnight high of $87.40 to around $85.63 mid morning.

- Shares of Facebook are having their best single-session advance in their brief history as a publicly traded company this morning, with FB up nearly 22%. Investors are focused on the 61% y/y growth in the firm's mobile users. On the conference call, CEO Zuckerberg said that monetization of mobile may exceed that seen on the desktop, and disclosed that mobile ad pages are performing 8x better than desktop sidebar ads. Shares of online property Yelp are up more than 12% after acquiring an international competitor and guiding Q3 revenue above par. Netflix is getting hammered after warning that it could report a significant loss in Q4, although adds seem to be holding up well.

- Aerospace and defense names did very well in Q3, despite the looming battle over the fiscal cliff. Boeing's earnings widely beat expectations and raised its full-year outlook. On the conference call, Boeing was very upbeat, saying that the strong jet order environment to continue through the year. Lockheed and Northrop Grumman also both beat earnings expectations and hiked their FY12 forecasts. General Dynamics missed both earnings and revenue expectations, as profits fell nearly 10% y/y. In regards to the fiscal cliff, Lockheed said that its preliminary outlook for 2013 is premised on the assumption that sequestration does not occur. GD warned that budget uncertainty was affecting government orders in shorter-cycle operations in the September quarter. Shares of GD and LMT are both up 3% or so, while BA and NOC are only up about 1% a piece.

- AT&T's headline numbers met all expectations, however investors were concerned by what they saw in the firm's operating metrics. Net adds were down sharply on a y/y basis and margins were lower. Iphone activations were up huge over year-ago levels, although the well-known supply constraints affecting the iPhone 5 held back the impact of the device's launch; recall iPhone 5 was only available for the last 10 days of the quarter. Shares of T dropped to -3% right after the bell, but are back around unchanged mid morning.

- Dow Chemical had some trouble in the quarter, as profits fell nearly 40% y/y and revenue declined across all regions, thanks to falling prices. In aggregate, prices fell 9% y/y, although the company said some units saw double-digit declines. Nevertheless shares of DOW are up 7% y/y this morning, bouncing higher after the steep declines yesterday that followed the announcement of its restructuring program.

- The European currencies rebounded from earlier lows despite the poor PMI data. EUR/USD re-approached the 1.30 handle thanks to the reports on Greece. GBP/USD was up almost a big figure following dealer chatter circulated that the upcoming UK Q3 GDP data would exceed market expectations.

***Looking Ahead***
- 12:00 (FR) France Sept Net Change in Jobseekers: +21.0Ke v +23.9 prior; Total Jobseekers: 3.030Me v 3.011M prior
- 13:00 (US) Treasury to sell $35B in 5-Year Notes
- 14:15 (US) FOMC Interest Rate Decision: Expected to leave rates unchanged at 0.25%
- 16:00 (NZ) Reserve Bank of New Zealand (RBNZ) Interest Rate Decision: Expected to leave Official Cash Rate unchanged at 2.50%

***Economic Data***
- (US) MBA Mortgage Applications w/e Oct 19th: -12.0% v -4.2% prior
- (US) Oct Preliminary Markit US PMI Manufacturing: 51.3 v 51.5e
- (CA) Canada Teranet/National Bank HPI M/M: -0.4% v +0.20% prior; Y/Y: 3.6 v 4.1% prior; House Price Index: No est v 155.52 prior
- (MX) Mexico Aug Global Economic Indicator: 3.5% v 3.7%e
- (US) Sept New Home Sales: 389K v 385Ke
- (US) Weekly DOE Crude Oil Inventories: Crude: +5.9M v +2Me; Gasoline: +1.44M v +500Ke; Distillate: -650K v -1Me; Utilization: 87.2% v 87.8%e