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Pre-Market: Cisco Dives on Poor Guidance; Yellen Strikes a Dovish Tone

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Jobless claims fell by 2,000 last week.

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Wall Street is heading for another day of gains as investors expect the incoming Federal Reserve head to continue monetary stimulus. Investors are also encouraged by the much lower figure for jobless claims.

After reaching record highs yesterday, Dow (INDEXDJX:.DJI) futures were up 0.04% at 15,785.00 while futures on the S&P 500 (INDEXSP:.INX) rose 0.14% to 1,781.20. However, Nasdaq (INDEXNASDAQ:.IXIC) futures were down 0.26% to 3,393.00.

Janet Yellen will deliver her testimony to the Senate Banking Committee to begin her confirmation process. Yellen released a prepared statement yesterday after the market close, defending the Fed's quantitative easing. Her dovish statements indicated that she isn't about to pull back on the stimulus program, but traders will be listening closely to her testimony today for clues about when the central bank will reduce the pace of asset purchases. The hearing will begin at 10 a.m.

Three major US economic indicators were released today. Initial jobless claims fell by 2,000 last week to 339,000. The indicator has been volatile lately due to processing delays in California. Labor productivity rose 1.9% while labor costs fell 0.6% in the third quarter. America's trade deficit with the rest of the world widened to $41.8 billion from $38.7 billion.

A better-than-anticipated report on Japanese GDP also lifted global markets. Japan grew 2.4% on a yearly basis in the third quarter.

The eurozone didn't fare so well, however. France's economy grew just 0.2%. On a quarterly basis, France contracted by 0.1%. Germany missed expectations, growing just 0.6%. Italy's recession continued for its ninth straight quarter, shrinking 1.9%. The eurozone as a whole shrank 0.4% year-over-year.

In company news, Cisco Systems, Inc.(NASDAQ:CSCO) shares dropped nearly 12% despite the networking company's better-than-expected earnings report. Adjusted earnings per share were $0.53, up from $0.48 per share a year earlier. Revenues rose just 1.8% as orders were weak. CEO John Chambers said Asian sales were down 10%, blaming the political situation China, which favors competitors such as Huawei (SHE:002502). Guidance for the current quarter were ugly. Cisco predicts it will see revenue drop 8-10% on a yearly basis.

Wal-Mart Stores, Inc. (NYSE:WMT) fell 1.7% in the pre-market. The chain store reported greater earnings than expected with EPS of $1.14 from $114.9 billion in revenue. Comparable store sales fell 0.3%, however.

One gainer this morning was Office Depot Inc (NYSE:ODP), which rose 3.5% in pre-market trading after Bank of America (NYSE:BAC) raised its rating on the stock to Buy from Underperform. The bank's analysts cited the merger with OfficeMax and the newly appointed CEO as positive developments.

Twitter: @vincent_trivett
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