Updated from 6:04 p.m. ET to add information on after-hours trading. NEW YORK ( TheStreet) -- The rally in the first few days of the new year proved too tempting to resist. After months of outflows, mutual funds actually saw investors put money into equity funds last week. According to the Investment Company Institute, long-term mutual funds investing in stocks took in $1.43 billion in the week ended Jan. 11. Funds investing in U.S. stocks got $753 million, while international equity funds swelled by $681 million. To put that in perspective, equity funds experienced outflows of $25.07 billion in the previous four weeks, and have been running negative overall since May. ICI, which bases its numbers on data collected covering more than 95 percent of industry assets, said bond and hybrid funds (investing in both bonds and stocks) were still more popular, amassing inflows of $7.89 billion and $1.95 billion respectively, but it's still a sign that at least some investors are starting to back up the general bullish sentiment out there with their money. Tomorrow is the first big earnings Thursday of the season with big names galore on the docket. It's very early, of course, but the fourth quarter is undeniably off to slow start, which is all the more concerning given the bar was set pretty low in the first place after 20% of the S&P 500 issued negative pre-announcements. Through Tuesday, with 7% of the S&P 500 having reported, the blended (estimated and reported) earnings growth rate for the quarter sat at 5.5%, down from 7.9% on Jan. 3 and 15% on Oct. 3, according to Thomson Reuters data. Only 49% of the reporting companies have beaten expectations vs. a historical average of 70% in a typical quarter. Again, it's very early but those numbers have to have bulls at least a little nervous. Stocks continued to chug higher on Wednesday though with the S&P 500 finishing above 1300 for the first time since mid-summer and the financials still surging, so investors haven't been all that bothered so far. As for Thursday, Bank of America ( BAC), the last of the big money-center banks to open its books, is the headliner tomorrow morning. The shares have started 2012 with a gain of 17%, but that's probably done little to mitigate the anger of long-term holders who have seen the stock decline more than 50% in the past year.
It would take a real optimist to predict a strong showing from Brian Moynihan's behemoth after the poor reports of Citigroup ( C) and JPMorgan Chase ( JPM). Of the 31 analysts covering the stock, 18 are bearish, at either hold (17) or underperform (1), although the median 12-month price target of $8 shows some hope for a rebound. The consensus view is for Bank of America to post a profit of 15 cents a share in the December-ended period on revenue of $24.08 billion. An in-line performance would represent sequential declines on both the top and bottom line from the bank's third-quarter earnings of 56 cents a share on revenue of $28.45 billion. Expect another tale of tight net interest margins, a difficult lending environment and souring mortgage assets. The outlook for Morgan Stanley ( MS), also reporting before the opening bell, would seem to be a bit more positive, especially after Goldman Sachs ( GS) delivered an earnings-per-share beat of nearly 50%. But Morgan Stanley is expected to post a loss of 57 cents a share for its fiscal fourth quarter on revenue of $5.56 billion. The red ink is expected to stem from a $1.2 billion pre-tax loss related to the company's credit default swap settlement with MBIA ( MBI). Morgan Stanley shares rose nearly 7% to $17.35 ahead of the report, so there's some sentiment for a better-than-expected performance out there, although it should be noted that Goldman still missed on revenue. The other a.m. notables on Thursday include BB&T Corp. ( BBT), BlackRock ( BLK), Fairchild Semiconductor ( FCS), Freeport McMoran Copper ( FCX), Huntington Bancshares ( HBAN), Johnson Controls ( JCI), Knight Capital ( KCG), Progressive Corp. ( PGR), Rockwell Collins ( COL), Southwest Airlines ( LUV), and Union Pacific ( UNP). The late show on Thursday promises even more fireworks with four Dow components slated to report their quarterly results. As always, Intel ( INTC) will be closely watched for its guidance. The world's biggest chip maker warned of a revenue shortfall in its fiscal fourth quarter on Dec. 12, citing the impact of hard disk drive supply shortages caused by disruptions in the personal computer supply chain following floods in Thailand. Wall Street is expecting a profit of 61 cents a share for the December-ended period on revenue of $13.72 billion, a view that's in line with the company's outlook. The stock hasn't been hampered too much by the warning, rising more than 25% in the past year and hitting a 52-week high of $25.92 on Jan. 10.
The buy side is slightly bearish though with 29 of the 53 analysts covering the stock at either hold (25) or underperform (4), and the median 12-month price target sitting at $27, implying potential upside of just 6% from Wednesday's regular-session close at $25.39. Kaufman Bros. has a buy rating and a $25 price target on Intel, and the firm thinks there may be some slight upside to the company's guidance. "We think there is a fairly good chance for INTC to come in at the higher end of its pre-announced 4Q11 results as our checks are suggesting that HDD constraints were not as bad as feared, and we think its higher margin server business ended the quarter on a strong point," Kaufman said Wednesday. "On the other hand, the company is obviously struggling with its consumer PC business (hit harder by the HDD situation - Plus we think end demand is soft in general for this business)." The firm's expectations for the company's outlook are fairly low. "Looking forward to guidance, we find it hard to get overly excited about INTC shares based on near-term 1H12 fundamentals mostly because we find it hard to rationalize why INTC's management would take an aggressive posture with its overall business at this point," Kaufman said. Evercore Partners has an equal-weight rating on Intel and a $25 price target, and it's thinking that gross margins may take a hit in the first quarter. "We see risk to 1Q GMs as management did not lower factory utilizations when they pre-announced 4Q results," the firm said in its earnings preview. "As we don't think PC demand materially improved since their update, management is likely to moderate utilizations. We model GMs of -250 basis points in 1Q 12 vs. Street -200 basis points." Check out TheStreet's quote page for Intel for year-to-date share performance, analyst ratings, earnings estimates and much more. The other three Dow components are American Express ( AXP), Microsoft ( MSFT) and IBM ( IBM). That trio of big names will compete for the spotlight with the always entertaining Google ( GOOG) as well. Google has delivered upside earnings surprises of 11% in the past two quarters, but the stock is basically flat in the past year as the company's ambitious expansion efforts have raised questions. Wells Fargo downgraded Google to market perform from outperform on Wednesday, mainly because of concerns about its pending acquisition of Motorola Mobility ( MMI). "Large acquisitions in and of themselves are difficult, but we believe this one is outside of Google's core competency and adds increased complexity to the Android ecosystem," the firm told clients. "We think Google acquired MMI for both the patents and the business. We don't expect them to spin-off MMI and believe they see value in having integrated devices like Apple. The inclusion of the lower margin MMI business means Google's model will likely begin to look more like Apple's. As such we think the PE multiple will also track to Apple's range of 12-14x." The consensus view is calling for Google to report a profit of $10.49 a share in its fiscal fourth quarter on revenue of $8.41 billion, which would be its highest total of the fiscal year. The after-the-bell gang also includes Capital One Financial ( COF), City National ( CYN), Consolidated Edison ( ED), Digi International ( DIGI), Flextronics International ( FLEX), Interactive Brokers ( IBKR), Intuit ( INTU), Intuitive Surgical ( ISRG), Peoples United Financial ( PBCT), and Skyworks Solutions ( SWKS).
Thursday's economic calendar features weekly initial and continuing jobless claims at 8:30 a.m. ET; the consumer price index for December at 8:30 a.m. ET; housing starts and building permits at 8:30 a.m. ET; and the Philadelphia Fed survey of regional manufacturing activity at 10 a.m. ET. The consensus view is calling for initial claims to dip down to 385,000 from 399,000 last week. The number has been able to move away from the 400K level over the past few weeks, a a trend that is key to the economic recovery picking up any steam, but there's still a lot of work to do. Ed Yardeni of Yardeni Research, a sell-side consulting firm, laid out his scenario for a "double back-to-back recovery" playing out over the next three years-- rather than the double-dip recession that many were predicting not too long ago -- on Tuesday, putting an improving employment picture front and center in his hypothesis. "Since the official start of the latest recovery during July 2009, payroll employment is up only 1.1%, significantly lagging the average 5.1% gain of the previous seven recoveries over the same length of time--though it is on par with the last two 'jobless' recoveries," he wrote. "The average monthly gain has been only 46,900 during the current recovery. What if it's 150,000 to 200,000 this year and next year?" Yardeni thinks corporate America may finally be getting to the point where expansion is needed to grow profits as cost-cutting is no longer turning the trick. "Why might it be so? The rebound in profits has been unusually strong during the current recovery. Profitable companies expand," he explained. "However, they've been cautious about expanding their payrolls as a result of the severity of the last recession and some significant uncertainties and risks associated with the current recovery. That could change now that they don't have as much room to expand by stretching the workweek and boosting productivity. In other words, all those profitable companies should soon start hiring more workers." Yardeni sees initial claims as the "key number that will make or break this second recovery scenario," and he's looking for a drop down to 300,000 over the next 12 to 18 months. He also noted that while claims did cozy up near 400K last week, the four-week average is a more encouraging 381,750.
And finally, F5 Networks ( FFIV) will be a big mover on Thursday after the networking equipment maker topped Wall Street's earnings expectations for its fiscal first-quarter results and gave an upbeat outlook. The news sent shares of F5 roughly 7% higher in the extended session, and could give a lift to rivals Cisco ( CSCO) and Juniper Networks ( JNPR) as well. WebMD ( WBMD) will also be in focus after Carl Icahn disclosed that he's boosted his stake in the company to 11.64% and suggested it use $1 billion worth of its cash to conduct a Dutch auction tender offer to buy shares at $30 each. -- Written by Michael Baron in New York. >To contact the writer of this article, click here: Michael Baron. >To submit a news tip, send an email to: firstname.lastname@example.org