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Trader Talk: Joblessness, Inflation Jump — So Does Dollar

Thursday, 18 Feb 2010 | 10:32 AM ET

Bob Pisani is off; this post was written by CNBC producer Robert Hum.

Weak corporate outlooks and discouraging economic data weighed on futures this morning. S&P futures lost about 4 points after PPI data were notably higher than economists had predicted (up 1.4 percent vs. up 0.9 percent consensus). Weekly jobless claims also came in higher than expected (473,000 vs. 438,000 consensus), dampening hopes for better job growth in February.

Meanwhile, the Dollar Index continues to climb on the heels of the hotter inflation number. It now sits its highest levels since July.

One theme this morning, while many firms beat earnings, outlooks for the current quarter remain very cautious:

a) Wal-Mart is down 2 percent. Good news: Q4 earnings topped expectations and international sales remained strong (up 11.9 percent, excluding currency fluctuations). Bad news: the retailer’s disappointing sales and poor Q1 guidance. U.S. same-store sales fell more than expected (down 1.6 percent), led by weakness at its namesake Walmart stores (down 2 percent).

However, earnings for the current quarter are seen between $0.81 and $0.85, mostly below the Street’s estimates of $0.85.

b) Avis Budget (CAR) falls 8 percent. The car rental company reported a narrower-than-expected loss (loss of $0.25 vs. loss of $0.28 consensus). Revenues continued to fall as a result of weak rental demand.

Weighing more on the stock this morning: the company’s Q1 outlook. It cautions that rental volumes will “again be lower” compared to the year-ago quarter.

c) WellCare Health Plans (WCG) drops 15 percent. Better-than-expected earnings ($0.47 vs. $0.44 consensus) were overshadowed by reduced membership and poor full-year guidance. In the past year, the healthcare provider saw an 8 percent drop in membership.

Looking ahead, the company sees 2010 earnings between $1.90 and $2.15 vs. $2.56 consensus as medical costs continue to climb.

However, not all was lost though, as tech earnings remained strong:

Hewlett-Packard continued the trend of stronger-than-expected tech earnings. Q1 earnings for the computer maker topped estimates ($1.10 vs. $1.06 consensus) on robust sales (up 8 percent) and improving margins.

HP results were boosted by higher PC shipments (up 26 percent) and strong revenues in Asia (up 26 percent). Overseas revenues now make up nearly 2/3 of the firm’s total sales.

Things look good ahead, as the company provides better-than-expected revenue and earnings guidance for Q2 and the full-year.

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CA
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HPQ
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WCG
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WMT
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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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