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Pre-Market Primer: Best Buy and JC Penney Pop After Earnings; Asian Markets Sink on Taper Fears

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JC Penney's hemorrhaging slowed under Mark Ullman.

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Stock futures went from losses to gains this morning as Asian markets dove on fears that the Fed will announce the tapering off of asset purchases tomorrow and US big-box retailers rose after earnings reports.

Both emerging and developed markets in Asia dropped last night. The Hong Kong Hang Seng Index (INDEXHANGSENG:HSI) fell 2.20%, and the Japanese Nikkei (INDEXNIKKEI:NI225) sank 2.63% to a seven-week low as investors brace for the possible end to quantitative easing in the United States. Developing markets such as India and Indonesia are bearing the brunt of the Asian sell-off. European stocks also declined today.

After a bevy of earnings reports from major retailers, US stock index futures went from negative to positive. Before the opening bell, Dow (INDEXDJX:.DJI) futures were up 0.11% to 15,019 while futures contracts on the S&P 500 (INDEXSP:.INX) rose 0.16% to 1,647.50. Nasdaq (INDEXNASDAQ:.IXIC) futures climbed 0.18% to 3,076.00. There are no major economic data releases scheduled for today.

Home Depot (NYSE:HD) benefitted from the improving US housing market, and earnings in the second fiscal quarter beat expectations. Earnings per share came in at $1.24 as revenue rose 9.5% from the year earlier to $22.52 billion. Analysts only expected EPS of $1.20 on $21.7 billion in sales.

"The second quarter results exceeded our expectations as our business benefited from a rebound in our seasonal categories, continued strength in the core of the store, and the recovering housing market in the US," CEO Frank Blake said in the earnings press release.

Home Depot also lifted its fiscal 2013 earnings guidance to $3.60 per share. Shares rose 3.6% in pre-market trading.

JC Penney (NYSE:JCP) posted a loss of $2.16 per share, faring far worse than analysts' estimate of a $1.06 loss. Revenue fell to $2.66 billion as comparable store sales declined 11.9% over the quarter. The losses were associated with high markdowns related to former CEO Ron Johnson's failed marketing strategies and a tax valuation allowance.

"We are encouraged by our early performance this Back to School season, which reflects customers' growing confidence in the brands and styles we offer," said CEO Mike Ullman. "Our associates across the country are working tirelessly to serve our customers and I am proud of their efforts."

JC Penney stock is up 1.8% this morning.

Best Buy (NYSE:BBY), another troubled big-box retailer, reported that profit rose to $0.32 per share, up from $0.26 per share a year ago. US stores open longer than 14 months saw sales fall 0.4%. A year ago, comparable store sales fell 1.1%. Online sales rose 10.5% on higher volume. Over the quarter, Best Buy sold its 50% stake in Best Buy Europe, netting $526 million. Best Buy stock rose 12.25% this morning.

Barnes & Noble (NYSE:BKS) is expected to announce a loss of $0.89 per share, down from $0.78 per share a year earlier, while revenue is forecast to fall by $130 million to $1.32 billion in the second quarter.

The Wall Street Journal reported that Apple (NASDAQ:AAPL) supplier Hon Hai Precision Industry (TPE:2317) will ship two flavors of the iPhone this fall. This adds to months of speculation that Apple could release both a high-end and low-end version of the smartphone to gain market share in developing countries and the lower end of the developed markets.

Twitter: @vincent_trivett
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No positions in stocks mentioned.
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