Market Focus with Tom Hudson – Jan 23, 2012

GHARIB:  Tom, here on Wall Street a slow day as you said waiting to see what the Fed is going to do this week and also just waiting for some news. No big earnings today, no major economic reports. So nothing out of Europe so it`s been a day of waiting and watching.

HUDSON:   It`s kind of what was expected happened today. Now we did
get some after the close earnings that provided for a bit of news after the close. But clearly we`re going have to wait for tomorrow to see the big impact of that. Let`s get you updated though with tonight`s “Market Focus.”
Even though we finished the day with just some muted moves, mix overall, we did see some volatility this morning. Well begin with the intraday S&P 500 chart showing that stocks started out strong, rallying from the get-go the first hour before falling to their worst levels of the day. All this happened before noon Eastern time. Prices then slowly improved into the closing bell ending with a fractional gain for the S&Ps.

Energy stocks were back on top as natural gas futures staged a pretty sharp rally. After hitting a decade low of last week, nat gas popped today thanks to several firms announcing plans to reduce supply. First, let`s take a look at the commodity, nat gas. Prices have just been crushed, down 40 percent just since early December.  A mild winter and record-high supplies have driven prices lower.  But today, futures jumped 8 percent on the prospects of less of supply coming onto the market in the months ahead.  Chesapeake Energy (NYSE:CHK) stock shot up 6 percent after beginning this, announcing an 8 percent cut to its own nat gas production and also it said if low prices continue, that reduction could be doubled.

Other natural gas producers were popping. Southwestern Energy (NYSE:SWN) rallied 10 percent. Range Resources (NYSE:RRC) was up 9 percent. EQT (NYSE:EQT) Corporation jumped about 8 percent on this news.  One more note from energy today, producer Apache (NYSE:APA) will pay almost $3 billion for a private firm Cordillera. It is a cash-and-stock deal for energy wells near the Texas-Oklahoma border. Apache (NYSE:APA) stock was up just a fraction on this, up 1.6 percent.  But investment firm RW Baird says the Apache (NYSE:APA) purchase increases the value of Forest Oil`s assets in the same area.  How about this, FST Forest Oil (NYSE:FST) shares rallied almost 9 percent.

Bank of America (NYSE:BAC) continues its turn-around efforts. According to Bloomberg, the second stage of B of A`s turnaround aims to reduce annual expenses by $3 billion. The first phase went after $5 billion in costs.  Bank of America (NYSE:BAC) stock was the biggest gainer among the Dow Industrial stocks, with this 2.5 percent rally today.  In fact for BAC shares, it`s the stock`s highest close since just before Halloween.  Details of the second round of cuts including possible job cuts won`t come until springtime.

This is another peak week for earnings and we did see several technology firms turn in financial report cards after the close.  We begin with semiconductor maker Texas Instruments (NYSE:TXN) coming in $0.03 short of estimates. It`s been dealing with weak demand for its chips, but it thinks demand globally is bottoming. Ahead of the results, shares fell 1 percent during the regular session. It rebounded more than 3 percent in after hour`s action as the firm announced it was closing two plants, one in Houston.  It says its profit forecast though came in less than anticipated, TXN one to watch tomorrow.

Disk drive maker Western Digital (NYSE:WDC) meantime rallied off of its closing price after much stronger than expected revenues and earnings and software firm VMWare made up all of what it lost during the regular session after strong earnings growth and better margins, again two in tech to watch tomorrow.  Other earnings included railroad giant CSX (NYSE:CSX).  Profits were a penny less than estimates, a surprise to the downside, less demand for coal and fewer shipped items on the rails during the holidays, first and fourth quarter earnings for CSX (NYSE:CSX).  The stock didn`t get hurt too badly ahead of the numbers, down only a fraction during the regular session.  But after the closing bell, the stock sank another 2.5 percent, down close to $22 per share. The drop in coal shipments in the fourth quarter very important as coal is almost 25 percent of the overall business at CSX (NYSE:CSX).

Finally, there can be some initial excitement when a company announces a strategic review, could be ready for a buyout, maybe a spin-off but for a while the technology patent firm Interdigital has ended its strategic review deciding to remain independent. Ahead of that news, the stock fell 3.5 percent in the regular session but down another 16 percent in after hour`s action. That puts the stock below $38 per share, below where it was trading in July when it announced its strategic review. And that is tonight`s “Market Focus.”

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