Pre-Market Primer: Stocks Point Higher as Durable Goods Orders Blow Past Expectations

By Vincent Trivett  JAN 28, 2013 8:45 AM

Caterpillar's earnings were hit hard by bad accounting in its Chinese division.

 


Stocks could rise today, according to higher futures ahead of the opening bell, as government figures show a much bigger than expected rise in capital spending.

Durable goods orders rose 4.6% in December 2012, far exceeding expectations. Economists expected non-defense capital goods orders excluding aircraft to rise 2% in December after rising 0.8% in November.

Dow (INDEXDJX:.DJI) futures were up 0.13% at 13,830. Futures contracts on the S&P 500 (INDEXSP:.INX) gained 0.15% to 1,488.50 and Nasdaq (INDEXNASDAQ:.IXIC) futures gained 0.17% to 2,732.75. Asian markets were mixed and markets are flat in Europe. The National Association of Realtors is expected to show that pending home sales rose 0.1% on a monthly basis in December, or 12.5% over the year before. The data will be released at 10:00 a.m.

Caterpillar (NYSE:CAT) reported that fourth quarter profits fell 55% from the year before to $697 million or $1.04 per share. The world's biggest maker of construction and mining equipment saw an $0.87 per share goodwill impairment charge related to the write-down of Siwei, the company's Chinese unit. After finding accounting misconduct at the the company, which it bought as part of its 2011 acquisition of ERA Mining, Caterpillar took a $580 million write-down.  The company, which is a Dow component, issued cautious guidance for the full year 2013. It expects to earn between $7 and $9 per share this year. Analysts expected $8.54 a on average.

Yahoo (NASDAQ:YHOO), VMware (NYSE:VMW), and Steel Dynamics (NASDAQ:STLD) are three big-name companies that will report earnings after the bell today.

Barnes & Noble (NYSE:BKS) will close a third of its retail stores over the next 10 years, according to Mitchell Klipper CEO of the company's retail group. Klipper says that in 10 years, the company will operate just 450-500 stores. It currently has 689 retail locations.

Toyota (NYSE:TM) retook its position as top automaker from General Motors (NYSE:GM) in 2012. Toyota sold 9.75 million vehicles, a 23% gain from 2011 when the Japanese earthquake and Thai flooding disrupted the company's supply chain. GM sold 9.29 million units. Largely thanks to the drop in the yen, analysts are more bullish on Toyota. According to Bloomberg, 12 analysts have raised their outlook for the company in 2013. The newly elected government promises monetary easing and an end to deflation. The yen has weakened against the dollar by 5% in the past month.

In another sign that China's manufacturing sector is rebounding, the country's industrial companies' earnings rose for a fourth straight month in December. Net income rose 17.3% from the year-earlier period to 895 billion yuan.

European banks are lending less to consumers and companies. Data released today showed that private sector bank lending in the eurozone fell 0.7%, indicating that demand for credit remains low and companies are too skittish to borrow to expand and hire new workers.

Italian consumer confidence hit a 17-year low of 84.6 in January, down from 85.7 in December. This is the lowest level for the index since ISTAT started measuring consumer sentiment in 1996.

Greek electric workers are planning a strike against the country's harsh austerity policies. Farmers are threatening to also use tractors to block highways.

Twitter: @vincent_trivett
No positions in stocks mentioned.

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