Ultimate Market Recap: Southwest Flies Higher, Google Starts to Bounce Back

Friday Morning’s Top Stories

General Electric Co. (NYSE:GE) shares are down more than 2 percent after reporting fourth quarter results.  The company earned $3.8 billion (35 cents per share), down from $4.8 billion (42 cents per share) in the previous year.

Google Inc. (NASDAQ:GOOG) shares fell 7.6 percent in early trading on Friday.  The Internet search king reported a 6 percent rise in earnings, but missed Wall Street’s expectations.  Net revenue came in at $8.13 billion — analysts were expecting $8.43 billion, according to consensus estimates from FactSet Research.  Shares of Yahoo! Inc. (NASDAQ:YHOO) are also trading lower.

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Shares of Schlumberger (NYSE:SLB) are receiving a 1 percent boost.  The oil service company announced that it expects to see growth in 2012.  “We remain confident that any potential reductions in activity will be short-lived and that our competitive position remains strong,” Schlumberger said.  Shares of Halliburton Co. (NYSE:HAL) are also trading higher on the announcement.

Southwest Airlines Co. (NYSE:LUV) shares are flying .86 percent higher after reporting fourth quarter results. The company reported a profit of $152 million (20 cents per share), compared to $131 million (18 cents per share) a year earlier. Shares of United Continental (NYSE:UAL) and JetBlue (NASDAQ:JBLU) are trading lower.

Earnings Coverage: Google Shares Plummet on Disappointing Earnings Report.

Vodafone (NASDAQ:VOD) shares are jumping nearly 2 percent after winning an Indian court case.  The company will not be held liable for $4.4 billion in back-taxes and penalties. Cadbury (NYSE:KFT), AT&T (NYSE:T) and Sanofi-Aventis (NYSE:SNY) face similar lawsuits.

Insmed Inc. (NASDAQ:INSM) shares are surging more than 30 percent after the FDA removed a hold on a clinical trial of a drug called Arikace.  The drug is for treating patients suffering from a lung disease.

Friday Morning Hot Stocks

Google Inc (NASDAQ:GOOG): Intel (NASDAQ:INTC) CEO Paul Otellini said last night that tablets running on Microsoft’s (NASDAQ:MSFT) Windows 8 operating system are “being queued up for production,” according to Cnet. Otellini added that tablets running on Google’s (NASDAQ:GOOG) Android operating system can’t compete with Apple’s (NASDAQ:AAPL) iPad right now. However, Android tablets will do better once they’re equipped with the latest version of Android, Ice Cream Sandwich, the CEO said, the publication added. Shares of Google Inc are trading 7.92% lower today.

Capital One Financial Corp. (NYSE:COF): Capital One Financial Corp. (NYSE:COF), which is seeking approval to purchase ING Groep’s (NYSE:ING) U.S. online bank, was asked by analysts to explain an increase in expenses after their Q4 profit missed estimates, reports Bloomberg. The credit card issuer said non interest expense jumped 25% to $2.62B, net income fell 42% to $407M, and earnings from continuing operations were 89c a share, below the $1.55 estimate of 28 analysts surveyed by Bloomberg. Shares of Capital One Financial Corp. are trading 6.19% lower today.

TreeHouse Foods Inc. (NYSE:THS): The company’s preliminary total Q4 revenue grew 5% to approximately $535M vs. $510M in Q4 of 2010. The Q4 retail channel volumes decreased 4%, mainly due to an 8% decline in December volumes, well below historical levels. The company believes the volume decline was driven by three main factors: 1) Reduction in consumer food purchases, 2) Sales shift away from traditional grocery customers toward alternate channel retailers, 3) Negative effect of warm weather in the Midwest and Northeast on seasonal sales. Shares of TreeHouse Foods Inc. are trading 12.9% lower today.

Insmed Incorporated (NASDAQ:INSM): Insmed announced that the U.S. FDA has lifted the clinical hold previously placed on ARIKACE — liposomal amikacin for inhalation — in patients with non-tuberculous mycobacteria, or NTM, lung disease. Insmed continues to engage in discussions with FDA regarding the clinical hold placed on ARIKACE in Cystic Fibrosis, or CF, patients with Pseudomonas lung infections. The clinical holds placed on the ARIKACE programs in NTM and CF were based on an initial review by FDA of the results reported by Insmed of a long-term rat inhalation carcinogenicity study of ARIKACE. FDA previously requested that Insmed conduct a phase 2 clinical trial of ARIKACE in adult patients with NTM to provide proof-of-concept efficacy and safety data before proceeding with a phase 3 clinical trial. As part of its on-going assessment of the appropriate path forward for the ARIKACE program, including the phase 2 trial of ARIKACE in NTM patients, the company is continuing communication with FDA regarding the CF clinical hold. Insmed also announced that it will move ahead with the 9-month dog inhalation toxicity study of ARIKACE as previously requested by FDA to determine if the findings of the rat inhalation carcinogenicity study are observed in a non-rodent model. Shares of Insmed Incorporated are trading 33.16% higher today.

Friday’s Trending Stocks

Schlumberger Limited. (NYSE:SLB): Says “Uncertainty remains over the outlook for 2012 due to the continuing sovereign debt crisis in Europe which places downward pressure on GDP and oil demand forecasts. Natural gas markets are well supplied in North America with gas storage well above five-year highs. In this environment, the thin excess oil supply cushion is expected to support oil prices close to current levels, while global demand for LNG continues to increase. Recent E&P customer spending forecasts also point to higher E&P investment in 2012, particularly in international markets.” Shares of Schlumberger Limited. are trading 1.28% higher today.

Parker-Hannifin Corporation (NYSE:PH): Sees FY12 Industrial International sales up 1.9%-3.9% vs. FY11, Aerospace sales up 7.1%-9.9%, Climate & Industrial Controls sales down 2.7%-up .3%. Comments from slides that will be presented on the Q2 earnings conference call. Shares of Parker-Hannifin Corporation are trading 4.74% lower today.

AsiaInfo-Linkage, Inc. (NASDAQ:ASIA): AsiaInfo-Linkage announced that its Board of Directors has received a non-binding proposal letter from Power Joy Cayman Ltd, a wholly owned subsidiary of CITIC Capital China Partners II, L.P., pursuant to which Power Joy proposes to acquire all of the outstanding shares of common stock of AsiaInfo-Linkage in cash at a price which represents a premium over the current stock price. The Special Committee of the Board of Directors, which was formed to consider the Proposal and any potential alternative transactions involving the company, has retained Shearman & Sterling LLP as its legal counsel and is in the process of engaging a financial advisor to assist it in consideration of such matters. Shares of AsiaInfo-Linkage, Inc. are trading 20.87% higher today.

Cogent Communications Group, Inc. (NASDAQ:CCOI): Internet service provider Cogent Communications (NASDAQ:CCOI) is retreating, after the FBI raided and shut down one of Cogent’s customers, Megaupload.com, which provides online storage services and allows users to share files, according to The Wall Street Journal. The FBI also took information from Cogent’s computer systems, FBR Capital wrote in a note to investors, after conducting checks with Cogent. Meanwhile, the founders and several employees of Megaupload, some of whose sites are hosted by Cogent, were arrested, according to Wired.com. In an indictment, prosecutors charged Megaupload’s owners with criminal copyright infringement and money laundering, added Wired.com. The indictment also alleged that Megaupload had transferred $30M in proceeds from copyright infringement activities to a Cogent bank, according to FBR. Cogent received an average of $1M per month from Megaupload from February 2009 to July 2011, the indictment says according to the firm. Since Cogent’s revenue grew $1.8M sequentially in all of Q3, the company’s Q1 revenue could decline sequentially following Megaupload’s shutdown, FBR says. The firm, which maintains a Market Perform rating on Cogent, believes that the government may take action against other file sharing websites. In mid-morning trading, Cogent dropped $2.85, or 15.15%, to $15.97. Shares of Cogent Communications Group, Inc. are trading 16.85% lower today.

Market Recap

Markets closed up on Wall Street today: Dow +0.76%, S&P +0.07%, Nasdaq -0.06%, Oil -2.12%, Gold +0.76%.

On the commodities front, Oil (NYSE:USO) fell slightly to $98.41 a barrel. Precious metals were up, with Gold (NYSE:GLD) rising to $1,667.00 an ounce while Silver (NYSE:SLV) rose 5.15% to settle at $32.08.

Hot Feature: Shale Glut Driving Down Electricity Prices

Today’s markets were up because:

1) Housing. Sales of previously-owned homes rose for the third consecutive month in December, reaching an 11-month high as the supply of properties on the market dropped to a near 7-year low, the National Association of Realtors reported today, signaling a recovery in one of the worst areas of the U.S. economy since the recession began in 2008.

2) GE. General Electric, a conglomerate with its hands in everything from jet engines and wind turbines to home appliances and home mortgages, is a sort of economic bellwether. And as such, its earnings reports can signal trends in everything from industry to finance. On Friday, GE reported higher fourth-quarter profits, but revenue slumped 8 percent, due in large part to weakness in European sales. Earnings in energy infrastructure were relatively unchanged, while revenue in GE’s industrial businesses rose 10 percent. The company’s revenue was held back by a 9 percent decline at its GE Capital unit, largely because the credit crunch forced GE to begin to scale back the division.

3) Tech. Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC), and IBM (NYSE:IBM) posted solid fourth-quarter earnings after the bell on Thursday, but Google (NASDAQ:GOOG) badly missed Wall Street’s expectations, plunging more than 8 percent and weighing down the Nasdaq. Intel was up nearly 3 percent, IBM climbed about 4.5 percent, and Microsoft was up more than 5 percent.

BONUS: Governments Rob Tax Payers of Billions to Fund Ill-Advised Incentive Programs

After Hours Radar Stocks

Despite closing 2 percent lower, shares of Home Depot Inc.(NYSE:HD) are climbing .20 percent in late market trading.  The company announced it has acquired Redbeacon.com, an online home-services website that pairs homeowners with contractors.  Shares of Lowe’s Companies Inc. (NYSE:LOW) are also trading higher.

Google Inc. (NASDAQ:GOOG) shares are edging slightly higher after the closing bell.  Shares closed down 8.38 percent after reporting disappointing results.  The Internet search king reported a 6 percent rise in earnings, but missed Wall Street’s expectations.  Net revenue came in at $8.13 billion — analysts were expecting $8.43 billion.  Apple Inc. (NASDAQ:AAPL) and Microsoft Corp. (NASDAQ:MSFT) are also climbing slightly higher.

Investor Insight: Inflation Concerns Remain as Gold and Silver Climb Higher.

After surging 4.4 percent during regular market hours, shares of International Business Machines Co. (NYSE:IBM) are slipping .21 percent in late trading.  The tech giant was responsible for much of the Dow’s (NYSEARCA:DIA) gain on Friday.

Cell Therapeutics Inc. (NASDAQ:CTIC) shares are jumping more than 3 percent late Friday.  The company announced it is expecting the European Medicines Agency’s Committee for Medicinal Products for Human Use to release its opinion in mid-February on the company’s Marketing Authorization application for Pixuvri.

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