2012 Stock Predictions and Outlook
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Dow Jones Industrial Average were down 26 points, or 25 points below fair value, at 12,387. Futures for the S&P 500 were down 4 points, or 3 points below fair value, at 1288. Futures for the Nasdaq were down 3 points, or 3 points below fair value, at 2376.
Shares of JPMorgan Chase ( JPM) were dropping more than 3% in premarket trading after the company kicked off earnings for major U.S. banks on a downbeat note. The banking giant's net income declined 23% in the fourth quarter, as persistent weakness in trading and capital markets revenues, offset strength in loan growth. Fourth-quarter earnings came in at $3.7 billion, or 90 cents a share, about in line with estimates. However, revenue at $22.2 billion was down 17% from a year earlier and missed expectations for $22.99 billion, according to Thomson Reuters. While the U.S. market was headed for losses at the open, European equities were gaining. Germany's DAX was up 0.41% while London's FTSE was trading about flat. Japan's Nikkei Average settled 1.36% higher, and Hong Kong's Hang Seng was up 0.57%. A bond auction in Italy helped set a positive tone after the government sold 3 billion euros of bonds maturing in 2014 at a yield of 4.83%, down from 5.62% at a similar auction in the past. This came on the heels of government debt sales in both Spain and Italy during the prior session in which borrowing costs also fell. Spain was able to sell twice the amount of bonds that it had planned, a signal that investor demand for its sovereign debt remains robust. Bonds sales in Italy on the whole have been comparatively softer.
Before the opening bell, the Commerce Department reported that the trade gap widened to $47.75 billion in November from $43.27 billion in October. Economists forecast a deficit of $45 billion, according to a poll by Thomson Reuters. Import prices fell 0.1% in December, in line with estimates, after rising a revised 0.8% in November. Export prices dropped 0.5% compared to the 0.1% rise forecast. At 9:55 a.m., the University of Michigan is expected to report that its consumer sentiment index for January rose to 71.5 from 69.9 in the prior month. In other corporate news, Novartis ( NVS), the Swiss drug maker, will cut almost 2,000 jobs in the U.S. this year because of the parent expiry of its best-selling hypertension drug Diovan. Novartis said Friday the job cuts also were necessary because of the failure of a clinical study into Tekturna, another hypertension drug. The company said it would record a first-quarter charge of $160 million. Novartis said the job cuts would save $450 million a year from 2013. Shares were down 1.4% to $55.94. Delta ( DAL), US Airways ( LCC) and private-equity group TPG are separately considering making bids for AMR, the bankrupt parent of American Airlines, according to published reports. Delta has hired Blackstone as its financial adviser to assess a bid for American Airlines, a source told Reuters. TPG is looking for a strategic partner with ties to the airline industry to launch a bid, according to The Wall Street Journal. The Justice Department may get involved in a Securities and Exchange Commission investigation of Diamond Foods' ( DMND) payments to walnut growers. According to The Wall Street Journal, federal prosecutors are looking into potential criminal fraud in the company's financial practices. The news could potentially threaten Diamond Foods' deal with Procter & Gamble ( PG) to acquire the Pringles brand of potato chips. Shares were plunging 11.4% to $29.36. February oil futures were down 18 cents to $98.92 a barrel. In other commodities, February gold futures were down $9.60 to $1638.10 an ounce. The dollar index was up 0.17%. The benchmark 10-year Treasury was up 8/32, diluting the yield to 1.9%. -- Written by Chao Deng in New York.