Europe Again a Focal Point, Volatility to Follow

Indie Research

The market surged, with stocks more than recouping yesterday's losses on reports that the ECB (European Central Bank) was set to swap its Greek bonds for new ones. The new bonds would be identical to the old ones except they would be exempt from collective action clauses (CACs). CACs allow for the possibility of the Greek government to impose involuntary losses on bondholders. The ECB is expected to realize a profit on the swap, which it will then distribute via national central banks to participating governments. Turning stateside, the U.S. economic data continues to show signs of improvement. The market remains in bull mode, but we are a bit disappointed that Europe has once again become a focal point, which we think is likely to create more market volatility.

The Uranium Stocks Index was the top performing tickerspy Index on the day, led by Crosshair Energy (AMEX: CXZ - News) with a 10% gain. The Vehicle Rental Stocks Index was the day's worst performing tickerspy Index, with Avis Budget Group (Nasdaq: CAR - News) down -14%.

Stocks climbed on the day, led by a 44-point, or 1.5%, surge in the Nasdaq to 2,960. The Dow jumped 123 points to 12,904, while the S&P leapt 15 points higher to 1,358. Oil rose 51 cents to $102.31, while gold edged up 30 cents to $1,728.40 an ounce.

In economic news, the producer price index rose 0.1% in January following a -0.1% drop in December, but that was still far better than the 0.4% increase economists had expected. Excluding volatile food and energy prices, the core index rose 0.4%, more than the 0.2% economists forecast. Weekly jobless claims, meanwhile, fell by -13,000 to 348,000, better than the 365,000 new claims economists had expected. Elsewhere, U.S. housing starts rose to an annual rate of 699,000, easily topping the 671,000 economists had expected. The December number was also upwardly revised to 689,000 starts from 657,000.

In earnings news, shares of data storage provider NetApp (Nasdaq: NTAP - News) surged 7.2% after the company forecast a first-quarter profit of 60-65 cents a share on revenue of $1.65-$1.73 billion. Analysts were expecting a profit of 63 cents a share on revenue of $1.68 billion. For the fourth quarter, NetApp posted a profit of $119.6 million, or 32 cents per share, compared with $186.4 million, or 46 cents per share, a year earlier. Revenue rose to $1.57 billion from $1.29 billion. On an adjusted basis, NetApp earned 58 cents compared with 56 cents a year earlier. Analysts had expected EPS of 58 cents per share on $1.56 billion in revenue. Eighteen pros held NetApp in their portfolios at the end of Q4 and nearly 400 tickerspy members own the stock in their portfolios.

NVIDIA (Nasdaq: NVDA - News) posted a fiscal fourth-quarter profit of $116 million, or 19 cents a share, compared with a profit of $171.7 million, or 29 cents a share, a year earlier. Revenue rose to $953.2 million from $886.4 million. On an adjusted basis, the chipmaker earned 26 cents a share. Analysts had expected EPS of 20 cents on revenue of $950.6 million. The company previously lowered in guidance ahead of the quarter. The chipmaker forecast fiscal first-quarter revenue of $900-$930 million. Analysts were expecting $944 million. After a steep drop, shares of NVIDIA rallied to end up 1.7%. Four pros counted Nvidia among their top holdings at the end of Q4 and over 900 tickerspy members own the stock in their portfolios.

athenahealth (Nasdaq: ATHN - News) said its fourth-quarter profit fell to $5.3 million, or 15 cents a share, from $7.3 million, or 21 cents a share, a year earlier, but revenue climbed 33% to $92.5 million. On an adjusted basis, athenahealth earned 26 cents. Analysts had expected earnings of 24 cents a share on revenue of $92.5 million. Shares of athenahealth rose 3.2%.

Shares of Itron (Nasdaq: ITRI - News) soared 20.2% after the company forecast 2012 EPS of $3.80-$4.20 on revenue of $2.1-$2.3 billion. Analysts were expecting full-year earnings of $4.10 on revenue of $2.37 billion. The company posted a fourth-quarter loss of -$55 million, or -$1.35 a share, compared with a profit of $27 million, or 65 cents a share, a year earlier. On an adjusted basis, company earned $1.19 a share as revenue climbed 4% to $642.5 million. Analysts had expected EPS of 99 cents a share on revenue of $582.14 million. The company also announced it will purchase privately held SmartSynch, a provider of cellular-based smart grid solutions.

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