NEW YORK (
) -- How you view Tuesday's
action on Wall Street
likely says a lot about your philosophical stance on the stock market.
The optimistic, glass half-full interpretation, of course, is going to point to the late-day surge and embrace the opinion that a default by Greece, even the country's possible exit from the eurozone is manageable. The United States is still in good shape with gross domestic product expected to chug along in the 2%-2.5% growth range, and corporate earnings have already come through what was expected to be the weakest quarter of 2012 relatively unscathed.
The half-empty gang isn't getting swayed so easily. Even after Tuesday's bounce, the
Dow Jones Industrial Average
is now down five days in a row, losing 2.6%, nearly 350 points, in the process, and both
just plumbed lows unseen in two months.
Sell in May and go away
is looking like pretty good advice in 2012. Just like it was the past two years.
The domestic data of late is more troubling than encouraging, earnings expectations for the second quarter have come down in the past month, and believing the headlines from Europe only get better from here requires putting on some serious blinders.
sees increased risk of Greece ultimately leaving the single-currency bloc after the political upheaval over the weekend and called the market's reaction on Monday to the news "remarkably benign."
"This calm response presumably reflects a belief that any Greek exit from EMU would be fairly 'orderly' -- it could potentially trigger similar outcomes among other smaller countries, but it would be very unlikely to result in the departure of a large economy from the region," the firm said earlier on Tuesday. "Indeed, there may be a growing perception that the euro-zone would end up stronger once the dust had settled, aided perhaps by a more growth-friendly policy agenda, championed by the new French president."
But beliefs are different from facts, and Capital Economics thinks the actual event would be a much sterner test for the market's faith.
"Although we agree with this prognosis, we would be surprised if the reaction in the financial markets remained quite so sanguine if and when Greece did leave the euro-zone, given the huge amount of associated uncertainty," the firm wrote. "Indeed, at that point we would expect government bond yields in Portugal and Ireland to move significantly higher, and those in Spain andItaly to rise, too, even if both countries ultimately remained in the euro-zone."
This Greek drama still has a ways to go, but it's hard to be an optimist in the face of so much
. On Tuesday, the deepest of the dips got bought on Wall Street but it still feels like the worst is yet to come.
As for Wednesday's scheduled news, Dow component
is slated to report its fiscal third-quarter results after the closing bell. The average estimate of analysts polled by
is for a profit of 47 cents a share on revenue of $11.57 billion in the April-ended period.
The networking giant has shook its reputation for offering up weak guidance over the past few quarters and has the top line moving in the right direction. An in-line performance would represent year-over-year revenue growth of more than 6%. Last quarter, Cisco delivered an 8%-plus upside profit surprise and announced it hit its target to reduce annual expenses by $1 billion a quarter early. Not bad.
The stock has been a solid performer in 2012, rising more than 5%, but based on Tuesday's close at $18.71, it's pulled back 12% since hitting a 52-week high of $21.30 on April 2. The sell side is pretty well split on Cisco ahead of the report with 24 analysts feeling bullish at strong buy (9) or buy (15), and 21 take the bear view at hold (19) or underperform (2). The 12-month median price target sits at $23.
UBS has a buy rating and a target of $24 but the firm is expecting earnings of 46 cents a share on revenue of $11.53 billion, slightly below consensus on both counts.
"Our checks show CSCO saw a slow start to the quarter, but orders improving in April," the firm said in a note previewing the results on Monday. "From a geographic standpoint, we see European weakness offset by better trends in APJC
Asia-Pacific Japan China and the Americas. We expect subdued public sector spending to curtail potential upside, alongwith some weakness from the financial vertical."
On the question of whether the tech behemoth can still eat up market share from the competition, UBS was positive, saying it believes Cisco is "more likely to preserve/gain share" in networking with momentum continuing to build in demand for its blade servers.
"Our 1Q12 CIO
chief information officer survey shows 27% of respondents seeing Cisco gaining share on a global basis, which is the strongest result for Cisco in the past 4 surveys," the firm said. "Eighty percent see Cisco share preservation or better. VAR
value-added reseller checks show an aggressive Cisco. Its sales force is more energized with higher morale."
As for the all-important guidance, UBS is modeling for earnings of 47 cents a share on revenue of $11.99 billion in the company's fiscal fourth quarter ending in July. The average analysts' view is for a profit of 49 cents a share on revenue of $11.99 billion.
Check out TheStreet's quote page for Cisco for year-to-date share performance, analyst ratings, earnings estimates and much more.
Another late report sure to garner plenty of digital ink is due from
. Wall Street is looking for earnings of $3.95 a share from the online travel company in the first quarter on revenue of $1.04 billion.
With a streak of eight straight beats on the line and the stock up more than 55% since the start of the year, there's not much margin for error. Priceline did note last quarter though that weak economic conditions in Europe were slowing its roll a bit and forecast non-GAAP earnings of $3.80 to $3.90 a share for the quarter.
The sell side seems to have set the bar a bit higher to back up its extreme bullishness as 19 of the 23 analysts covering the stock are at strong buy (5) or buy (14), and the 12-month median price target is a lofty $800, implying potential upside of 11% from Tuesday's close at $716.20. Given the deterioration of economic conditions in Europe since Priceline gave its guidance, there's a good chance investors could be naming a lower price for the stock at this time tomorrow.
Crossing the wire before the opening bell will be numbers from
Dollar Thrifty Automotive
Intercontinental Hotels Group
The late roster features
Dot Hill Systems
Eagle Bulk Shipping
Wednesday is another light day on the economic data front with the Mortgage Bankers' Association's weekly application activity index at 7 a.m. ET; wholesale inventories for March at 10 a.m. ET; and weekly crude inventories at 10:30 a.m. ET.
Green Mountain Coffee Roasters
got more bad news late Tuesday as the company announced the replacement of its chairman, Robert Stiller, and lead director, William Davis, following stock sales that were "inconsistent" with the company's internal trading policies.
Stiller and Davis were forced to unload a total of 5.548 million shares, Green Mountain said, with the sales "related to margin loans, which were secured by pledges of Mr. Stiller's and Mr. Davis' GMCR stock and triggered by recent GMCR stock price activity."
The stock, which took a more than 40% haircut last week after disappointing results and poor performance on the conference call by management, was last quoted at $25.67, down 2.7%, on late volume of nearly 400,000, according to
Written by Michael Baron in New York.
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