Market Insider/Tuesday Look Ahead
Important economic data will compete with Citigroup's much-anticipated earnings report ahead of Tuesday's opening bell. Retail sales data is being particularly watched to see if it is weak enough to prompt the Fed to cut rates even before its regular meeting at the end of the month.
Citgroup , meanwhile, is expected to take a new monster-sized writedown when it reports earnings shortly after 6:30 a.m. New York time. Citigroup, in fact, could also hint at future plans that could ultimately result in the restructuring of the biggest U.S. bank, transforming it from a financial services supermarket into a leaner banking firm. Citi holds a conference call with analysts at 8:30 a.m.
Citi's new CEO Vikram Pandit meets with employees after the earnings release and is expected to give some details of how he intends to fix Citi. Those plans could result in asset sales and the layoff of possibly 24,000 Citigroup workers over the next year, reports Charlie Gasparino. The Citi writedown will be billions of dollars, with an outer range of as much as $24 billion, Gasparino says.
Citigroup is expected to report a $1 per share loss for the fourth quarter. There is also speculation it will take a knife to its dividend, saving it billions of dollars. Citi also could announce a big cash infusion from foreign investors.
Producer prices and retail sales for December are both released at 8:30 a.m. New York time. Retail sales are expected to be down 0.1 percent.
Traders are also watching producer prices to see if there are new signs of inflation at the producer level. Economists expect producer prices to come in at 0.2 percent. Traders believe a "hot" number might keep the Fed on hold until its regularly scheduled meeting at the end of the month. Another piece of inflation data is reported Wednesday, when consumer prices are released.
Monday was the best market day in many, and IBM's stock had its best day in five years. IBM's early release of better-than-expected fourth quarter profits before the open showed investors that just maybe the global growth story everyone has been talking about is in fact real. The news gave IBM shares a lift and propelled tech stocks and the overall stock market. IBM said its revenue growth benefited from foreign sales, the positive side of dollar weakness. Information technology stocks were up 2.6 percent.
More tech news could help stocks Tuesday. First, Apple CEO Steve Jobs appears at MacWorld in San Francisco. Speculation has it that Apple will unveil a new ultra thin laptop and other products.
Tech bellwether Intel, meanwhile, releases its earnings after the bell. Intel is expected to earn $0.40 per share for the fourth quarter on revenues of $10.843 billion.
The Dow finished Monday at 12,778, up 171 points, or 1.4 percent, its best day since Dec. 21. The Nasdaq, buoyed by tech stocks following IBM's lead, rose 38 points or 1.6 percent to 2478. The S&P was up 15, or 1.1 percent to 1416.
The global growth story also played out in the commodities markets as oil, metals and grains all moved higher. Oil was up $1.51 per barrel, or 1.63 percent to $94.20 per barrel. Gold was at record levels, closing just above $900 per troy ounce, as the dollar weakened. Platinum was also at record levels, and silver closed at a fresh 27-year high. Grains also rallied.
The dollar finished the day at $1.4871 against the euro, off 0.6 percent. The dollar was also 0.7 percent lower against the yen. The 10-year Treasury yield slipped to 3.793 percent, while the two year yield was at 2.576 percent.
Here's a look at the data expected Tuesday.
0830 Dec. Retail Sales expected -0.1%
0830 Dec. Retail Sales Ex. Autos expected -0.2%
0830 Dec. Producer Price Index expected +0.2%
0830 Dec. PPI Ex. Food & Energy expected +0.1%
0830 Jan. Empire State Survey expected 8.25
1000 Nov. Business Inventories expected +0.5%
*all times eastern
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