Trader Talk

Will Yesterday's Rally Hold?

This post was written by CNBC producer, Robert Hum.

U.S. stock futures are near the lows of the session, but still look to follow yesterday’s rally with a flat open this morning.

Hong Kong’s Hang Seng index soared 5% in Wednesday trading following the U.S markets’ rally yesterday and the Hong Kong government’s announcement of an additional (U.S.) $2.2 billion in economic stimulus. The benchmark Hang Seng index now rests at its highest level since the beginning of last October.

Back in the U.S., although not a surprise, General Motors is down 10 percent pre-open after letting its $27 billion debt-for-equity exchange offer expire. The deal would have given bondholders a 10 percent equity stake in the company in exchange for their bonds. Having failed to generate enough interest from its bondholders for the deal, the automaker is now almost certainly poised for an expected bankruptcy filing likely next week.


1) Seed producer Monsanto is down 4 percent pre-open after warning that its full-year earnings will come at $4.40 – at the bottom of its previously issued range. Analysts were expecting 2009 earnings to be $4.58. The company notes that poor weather and weak demand has hurt its Roundup herbicide unit.

2) Bank of America is up 3 percent pre-open after announcing that it has raised $26 billion in capital. The bank assures it is “well on way” to reach the $33.9 billion capital buffer the U.S. government is requiring following the stress tests it performed.

3) Shares of auto parts retailer AutoZone fall 2 percent in pre-market trading despite its Q3 earnings beating estimates. Its U.S. same-store sales rose 7.4 percent, as consumers opted to repair their cars with replacement parts rather than buying new cars. Despite the small decline pre-open, AutoZone’s stock hovers near an all-time high.

4) Fast food restaurant CKE Restaurants reported a 1.8 percent decline in its Q1 same-store sales. Citing difficult economic conditions in California, the company saw a large 5.1 percent decline in same-store sales at its Carl’s Jr. chain. This decline offset its stronger same-store sales gains of 2.5 percent at its Hardee’s restaurants.

5) American Eagle shares fall 3 percent pre-open. Q1 earnings for the teen retailer plunged 50%, but it still managed to beat estimates. Same-store sales also were weak, falling 10 percent in the quarter.

While its CEO Jim O’Donnell notes that there are “early indications that the business is stabilizing,” the company offers cautious Q2 guidance of 12 cents to 15 cents – mostly below the Street’s forecast of 15 cents. 




Questions?  Comments?