Dow May Rebound After Home Depot and Macy's Beat the Street


LONDON -- Stock index futures at 7 a.m. EST indicate that the Dow Jones Industrial Average may open 0.25% higher this morning, while the S&P 500 may open up 0.27%. The CNN Fear & Greed Index extended recent falls yesterday as news of Italy's deadlocked election result sent the Dow sliding.

On the domestic agenda, economic data due for release today includes the Case-Shiller and FHFA home price indexes for December at 9 a.m. EST, followed by February's consumer confidence index and January's new-home sales at 10 a.m. EST. The consumer confidence index is expected to have risen to 62.3 from 58.6 in January, according to consensus forecasts, while new-home sales are expected to have risen to 384,000, from 369,000 in December.

Federal Reserve Chairman Ben Bernanke is due to testify to the Senate Banking Committee at 10 a.m. EST -- Bernanke's comments will be closely monitored by investors for any hints about the Fed's plans for its bond-buying program.

Home Depot is up 1.5% in premarket trading after the home improvement retailer released better-than-expected fourth-quarter results this morning. Q4 net income was up 32% over the prior-year quarter to $1 billion, or $0.68 per share, versus analyst estimates of $0.64 per share. The company cited strong U.S. sales, which contributed to a 14% rise in revenue, and announced a 34% dividend increase and a $17 billion share buyback program -- it's a good day to be a Home Depot shareholder.

Similarly, Macy's is up 4.4% in premarket trading after reporting forecast-busting Q4 results. Ex-item earnings came in at $2.05 per share versus a consensus estimate of $1.99 per share. Revenue during the make-or-break holiday-shopping quarter was up 7% to $9.35 billion against estimates of $9.3 billion. Online sales were up 48% in the quarter, and the company also credits its localized merchandise and marketing.

Other premarket reports include the latest figures from RR Donnelley, which delivered fourth-quarter revenue of $2.7 billion and diluted earnings of $0.43 per share, beating expectations of $2.55 billion and $0.37, respectively.

European markets
European markets fell heavily this morning as the risks of Italy's deadlocked general election result became clear. The country's Centre Left Democratic Party -- seen by the markets as a safe pair of hands -- secured an overall majority in the country's lower house, but the senate remains deadlocked, with no party having an overall majority. This would make it impossible for a new government to pass legislation if no coalition can be agreed. Many analysts believe new elections are now the most likely outcome, and the yield on Italian 10-year government bonds rose by 0.4% to 4.8% this morning due to the risk that Italy could face a prolonged period with no effective government.

At 8:10 a.m. EST, the DAX was down 1.6%, the CAC 40 was down 2%, the FTSE MIB was down 4.4%, and the IBEX 35 was down 2.6%. In London, the FTSE 100 was down 1.3%, with financial stocks Barclays and Schroders the biggest losers, down more than 4% each amid fears that the eurozone crisis could flare up once more. Gold miner Randgold Resources was one of just five companies to register a gain, rising 0.5% to 5,500 pence as the price of gold stabilized and rose slightly.

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