Ultimate Market Recap: Goldman’s Profits Drop But Shares Are Up, Education Stocks Get Schooled

Wednesday Morning’s Top Stories

Yahoo! Inc. (NASDAQ:YHOO) shares are climbing more than 3 percent Wednesday morning.  Late Tuesday, the company announced that Jerry Yang has resigned from its Board of Directors and all other positions with the company.  Shares of Google Inc. (NASDAQ:GOOG) are trading slightly lower.

Shares of Nokia Corp. (NYSE:NOK) edged up after Wal-Mart (NYSE:WMT) announced it is offering the company’s new Windows Phone Lumia 710 for free if customers sign a two-year contract.  The Lumia 710 is Nokia’s re-entry into the U.S. market after teaming up with Microsoft (NASDAQ:MSFT).

Investor Insight: Are Citigroup’s Earnings Worse Than They Appear?

Despite a 58 percent drop in profits, shares of Goldman Sachs (NYSE:GS) are trading higher in early trading. Goldman posted a profit of $1.01 billion, down from last year’s profit of $2.39 billion. Earnings per share fell to $1.84 from $3.79 a year earlier. Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) are also trading higher.

State Street Corp. (NYSE:STT) shares fell more than 1.6 percent after reporting fourth quarter results. The custodian bank reported profits of $381 million (76 cents per share), compared to $83 million (16 cents per share) last year. However, operating earnings missed estimates, and fee-based revenue declined by 4 percent.

US Bancorp (NYSE:USB) jumped .70 percent after fourth-quarter earnings surged 39 percent.  The bank reported a profit of $1.35 billion (69 cents per share), compared to $974 million (49 cents per share) from the prior year.

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Bank of New York Mellon (NYSE:BK) fell 4 percent after reporting a 26 percent drop in fourth quarter income.  Profit came in at $505 million (42 cents per share), compared to $679 million (54 cents per share) in the previous year.

PNC Financial Services Group Inc. (NYSE:PNC) fell more than 3 percent in early trading.  The company’s fourth quarter profit decreased to $493 million (85 cents per share), compared to $820 million ($1.50 per share) last year.

Wednesday Morning Hot Stocks

Earnings season is in full effect this week. So far, the latest reports are not causing investors to panic, rather hold the markets steady. Here are five companies that are moving and shaking among traders on Wall Street and why today:

Goldman Sachs Group, Inc. (NYSE:GS) shares are trading 5.12% higher today after revealing that Q4 investment banking revenue -43% Y/Y, +10% from Q3.  Q4 Underwriting revenue -56% Y/Y and compensation costs -21% Y/Y. Goldman Sachs Group Inc. Earnings: Revenue and Profit Decline>>

Shares of State Street Corporation (NYSE:STT) are trading 7.84% lower today after Q4 EPS of $0.93 of  misses by $0.01, and revenue of $2.32B (+11.9% Y/Y) misses by $80M.

Shares of Northern Trust Corporation (NASDAQ:NTRS) are trading 2.15% lower today, since Q4 EPS of $0.70 beats by $0.02, and revenue of $955.6M (+6.6% Y/Y) misses by $16.75M.

DA Davidson maintains a Buy rating on Avago (NASDAQ:AVGO), after Linear Technology Corporation (NASDAQ:LLTC)  provided guidance that Davidson views as strong, the firm sees the guidance as a positive read-through onAvago, since both companies generate a large proportion of their revenue from industrial customers. Oppenheimer expects investors to view the data as indications that Linear Technology has bottomed, after it reported largely in-line Q2 results and also gave higher than expected Q3 revenue guidance. Shares of Linear Technology Corporation are trading 7.87 percent higher today, after Oppenheimer recommended buying them.

Sunoco, Inc. (NYSE:SUN) shares are trading 12.72 percent lower today, after the completion of its distribution to its shareholders of 56.66M shares of common stock of SunCoke Energy (NYSE:SXC) owned by Sunoco. Sunoco no longer owns any SunCoke common stock, and Sunoco shareholders will receive 0.53046456 of a share of SunCoke common stock, in book-entry form, for every share of Sunoco common stock held as of the close of business on January 5, after the completion of the distribution.

Wednesday’s Trending Stocks

All three U.S. financial indices have reached a higher point this afternoon and are with a couple percentage points of their 3 year highs. Here are stocks driving the chatter on Wall Street today and why they are moving the markets:

Shares of Amphenol Corporation (NYSE:APH) are trading 10.25 percent higher today, as Q4 EPS of $0.73 beats by $0.03 and revenue of $949M (-0.1% Y/Y) beats by $16.7M.

The Bank of New York Mellon Corporation (NYSE:BK) shares are trading 3.48 percent lower today, as Q4 EPS of $0.42 misses by $0.10, and revenue of $3.57B (-5.6% Year/Year) misses by $180M. The Bank of New York Mellon Corp Earnings: Streak of Four Straight Profit Rises Snapped>>

Shares of PNC Financial Services (NYSE:PNC) are trading 3.95 percent lower today, as Q4 EPS of $1.39 misses by $0.02, and revenue of $3.55B (-9.1% Year/Year) beats by $10M.

U.S. Bancorp (NYSE:USB) shares are trading 0.83 percent lower today, as total loans +5.9% Y/Y, deposits +17.3% Y/Y, excluding acquisitions, +11.7%. Also, net interest income +7% Y/Y with interest margins falling to 3.6% from 3.83% in Q4 2010. Additionally, net charge-offs -7% from Q3. USB vs. the banks of Dimon, Moynihan and Pandit.

Fastenal Company (NASDAQ:FAST)  says it could do “high teens” top line sales growth for 2012 “if not better.” Shares are trading 1.97 percent lower today after reporting revenue $697.8M vs. consensus of $694.29M.

Featured Reading: Will China Unleash More Stimulus and Boost Gold Prices?>>

Market Recap

Markets closed up on Wall Street today: Dow +0.78%, S&P +1.11%, Nasdaq +1.53%, Oil +0.15%, Gold +0.37%.

On the commodities front, Oil (NYSE:USO) climbed to $100.86 a barrel. Precious metals were also up, with Gold (NYSE:GLD) climbing to $1,661.70 an ounce while Silver (NYSE:SLV) rose 1.16% to settle at $30.49.

Hot Feature: World Bank Cuts Global Growth Forecasts

Today’s markets were up because:

1) EuropeThe International Monetary Fund is seeking to boost its war chest by $500 billion. IMF Managing Director Christine Lagarde said yesterday that her staff are studying options for more than doubling the size of the fund’s lending capacity in order to better insulate the global economy against Europe’s debt crisis after identifying the potential for a $1 trillion global financing gap in the next two years. Greek government officials also resumed talks with the group representing private sector investors and banks today. Institute of International Finance director Charles Dallara, who represents the private sector in negotiations, said that final terms could be reached within days, ensuring that private holders of Greek bonds accept a writedown that cuts Greece’s debt load by more than a quarter.

2) Housing. Investors were encouraged by a better-than-expected housing report today, which showed builder confidence in the market for newly built, single-family homes to have climbed four points in January as employment and consumer confidence slowly improved in a growing number of markets and builders witnessed greater interest among potential buyers. The NAHB/Wells Fargo Housing Market Index, or HMI, rose to 25 points in its fourth consecutive month of gains to the highest level the index has attained since June 2007.

3) Goldman. Despite reporting fourth-quarter revenue well below expectations, Goldman Sachs (NYSE:GS) shares shot up almost 7 percent today after the firm reported earnings that beat forecasts and CEO Lloyd Blankfein said in a statement that he is seeing “encouraging” signs of improvement in the market and economy. Goldman’s results come just one day after Citigroup (NYSE:C) missed earnings estimates and Wells Fargo (NYSE:WFC) met expectations with its fourth-quarter report. Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) will report on Thursday.

BONUS: Manufacturing Rebound Boosts U.S. Industrial Production

After Hours Radar Stocks

eBay Inc. (NASDAQ:EBAY) shares are climbing 1 percent higher after the closing bell.  The company announced net income of $1.98 billion ($1.51 per share), compared to $559 million (42 cents per share) last year.  Earnings were helped by selling Skype, which is now owned by Microsoft (NASDAQ:MSFT).

F5 Networks Inc. (NASDAQ:FFIV) shares are surging more than 7 percent in extended trading.  The company announced positive earnings and outlook.  Net income came in at $66.5 million (83 cents per share), compared to $55.7 million (68 cents per share) last year.  For the current quarter, the company said it expects revenue in the range of $332 million to $337 million, and adjusted earnings of $1.05 to $1.07 a share. Analysts were expecting earnings of $1.05 from revenue of $331 million.

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After closing up 7.45 percent on Wednesday, shares of Pandora Media Inc. (NYSE:P) continue to climb .70 percent in late trading. Raymond James initiated coverage at outperform, and placed a price target of $15 per share. Traditional radio outlets such as CBS (NYSE:CBS) and CC Media Holdings (CCMO) are flat after the closing bell.

Educational stocks such as DeVry Inc. (NYSE:DV), Apollo Group Inc. (NASDAQ:APOL) and Capella Education Co. (NASDAQ:CPLA) fell sharply Wednesday. Research firm Height Analytics said that President Obama might reduce the threshold for military funding, which would include college loans. However, Morgan Stanley (NYSE:MS) says the stock declines are an “overreaction.”

Shares of Xilinx Inc. (NASDAQ:XLNX) are jumping 7.3 percent in extended trading.  Although net income declined at the company, it expects sales to increase to $521 million to $542 million in the current quarter. Analysts were only expecting sales of $508 million.

Investing Insights: eBay Inc. Earnings: Revenue and Net Income Grow.

To contact the reporter on this story: Stella Mariz at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com