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Before the Bell: Euro Fears Subside on Deficit Agreement


Investors are optimistic this morning.

Good morning.

US index futures expiring in March are up all across the board today, with the the Dow (^DJI) at 12,661.00, the S&P 500 (SPY) valued at 1,315.50, and the Nasdaq (^IXIC) 100 at 2,472.00.

Investors are optimistic this morning after yesterday's deficit talks in Brussels, where European leaders agreed to a deficit-reduction treaty. Negotiations between the Greek government and its creditors are apparently progressing, increasing the likelihood that bondholders will voluntarily take a hit. Not very good news for anyone holding CDS betting on a Greek default. One snag could come from the Czech Republic. Prime minister Petr Necas is said to be 'scrutinizing' the deficit pact.

Yesterday's fiscal agreement shored up confidence in the Euro which made gains on the dollar, topping off this morning at $1.3173.

European stocks rose after the talks. One major winner was Arm Holdings (ARMH), the British chip maker that supplies the processors in Apple's (AAPL) iPhone. Arm's pre-tax profits for the last three months of 2011 rose 42% over the same period in 2010. Arm Holdings shares jumped 7%.

Exxon Mobil (XOM) Q4 profit rose 2% on rising crude prices, booking $1.97 per share, missing an already revised down expectations of $1.98 per share. Exxon stock is down in the pre-market.

United Parcel Service (UPS) reported over $14 billion in profits for the fourth quarter of 2011. Diluted EPS rose 21% over Q4 2010 to $1.28. UPS's success in 2011 reflects rising demand for shipping services. The logistics company is expanding its European and emerging markets operations. UPS also made a change in pension accounting that boosted earnings by three cents pre share. Earnings for competitor FedEx (FDX) also beat analyst estimates last month.

Pfizer (PFE) reported Q4 earnings this morning. Adjusted EPS came in at 50 cents per share, beating analyst estimates by three cents. The drug company lowered its earnings outlook for 2012, citing a strong dollar. Pfizer's stock is down 0.18% in the pre-market.

Yesterday, Radio Shack (RSH) warned investors of lackluster Q4 earnings that will fall below expectations.

The yen also gained on the dollar, prompting speculation that the Bank of Japan might intervene again to devalue the yen. Japanese industrial production gained 4% in December 2011 despite the perfect storm of a strong yen, tsunami in industrial areas of Tohoku, and flooding in Thailand that held back a number of Japanese factories there.

Twitter: @vincent_trivett
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