Heating Up: Jobs, Banks, China

Futures rose Thursday as initial and continuing jobless claims both came in a bit lighter than expected. (Update: Dow Slumps at Open Despite Jobless Claims)

China's hot economic growth — Q4 GDP grew 9.8 percent, higher than expected — has put pressure on global markets, already concerned about inflation and higher rates.


1) Morgan Stanley reported earnings above expectations, but as with most big banks, reported significant declines in trading in fixed income, currency and commodities (FICC). Revenues of $7.81 billion were also well ahead of consensus of $7.42 billion.

2) PNC reported earnings above expectations and followed other banks in noting much improved credit quality; they too set aside less money to cover loan losses.

3) The weak economy is helping HMOs. UnitedHealth Group reported Q4 earnings above expectations ($0.94 vs. $0.84 consensus) and gave 2011 guidance of $3.50-$3.70 vs. consensus of $3.74. HMOs earnings have been helped by lower medical claims, which have declined in relation to revenue as fewer people sought medical help. However, health care mandates may require HMOs to maintain minimum medical loss ratios.

4) Johnson Controls which is heavily tied to the international automotive industry, reported earnings and revenues above expectations for their Q1 and guided higher than prior guidance for the full year, noting "solid momentum in all 3 of our businesses." The key is growing exposure to China.

5) Wendy's Arby's rises 5 percent after the fast food company announced it was exploring strategic alternatives for its Arby's restaurant chain. The two companies merged back in 2008, but Arby's has been plagued by declining sales as a result of its higher prices, more intense competition from McDonald's , and the broader recession.

6) BHP Billiton said the floods in Australia would hurt coal production for at least six more months.

7) Freeport-McMoRan falls 2 percent despite a stellar earnings report. Profits skyrocketed 60 percent and earnings easily beat estimates ($3.25 vs. $2.15 consensus). Revenues grew 22 percent, more than expected, buoyed by higher metal prices and production. Copper production rose 3 percent in the quarter, but prices jumped 31 percent. Meanwhile, gold production rose 13 percent amid a 25 percent rise in prices.

8) BHP Billiton falls 1.5 percent after reporting Q4 production data. Iron ore production rose 4 percent to a record 33.7 million tonnes on strong demand. Meanwhile, the effects from the recent floods were quite evident with coking coal production down 24 percent overall, primarily due to a 30 percent drop from production in the Queensland region. The miner warned that lingering effects from the floods would impact production "for the remainder of the 2011 financial year."

9) Union Pacific falls 1 percent despite a strong Q3 report. Earnings topped estimates ($1.56 vs. $1.48 consensus) as revenues grew 17 percent on a 9 percent jump in volumes. That top line growth helped offset a 20 percent rise in fuel costs. Leading the revenue growth: industrial products up 27 percent, intermodal up 25 percent, while energy, agricultural, and chemicals all rose at a mid-teens rate.

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