Analyst Upgrades

• Micron (MU) to buy from neutral at UBS.
• Baker Hughes (BHI) to outperform from market perform at BMO Capital.
• PDL BioPharma (PDLI) to outperform from sector perform at RBC Capital.
• Fluor (FLR) and Rush Enterprises (RUSHA) to buy from neutral at BofA/Merrill.
• Camden Property (CPT) to outperform from neutral at Macquarie.
• Pinnacle Financial (PNFP) to buy from hold at Wunderlich.
• Linear Technology (LLTC) to neutral from reduce at Nomura.
• Hologic (HOLX) and Illumina (ILMN) to buy from hold at Citigroup.
• F5 Networks (FFIV) to buy from neutral at Gleacher.

Financial services firm State Street Corp. (STT) reported this morning that its fourth-quarter profit fell 84% to $81 million, or 16 cents per share, from its year-ago earnings of $498 million, or $1 per share. However, ex-items earnings arrived at 87 cents per share, up from 71 cents on a year-over-year basis. Revenue for the period slipped 10% to $2.04 billion, but rose 9.6% to $2.28 billion on an operating basis.

The adjusted results surpassed analysts' expectations, which called for a profit of 86 cents per share on revenue of $2.14 billion. However, traders seem less than pleased by STT's quarterly results. The stock gapped lower with the sound of Wednesday's opening bell, falling to a loss of about 4% in early trading.

The earnings season ramps up this week. Analysts polled by Thomson Reuters foresee strong reports from such big names as Apple (AAPL), eBay (EBAY), IBM (IBM), General Electric (GE), Google (GOOG), Schlumberger (SLB) and Southwest Airlines (LUV). And fast on the heels of last week's big earnings beat from JPMorgan Chase (JPM), there will be plenty more results from the financial sector to peruse this week.

Among the financials expected to post double-digit earnings growth this week are Capital One Financial (COF), Morgan Stanley (MS), SLM Corp. (SLM) and U.S. Bancorp (USB), but the week's biggest earnings winner may be Wells Fargo (WFC).

Analyst Upgrades

• SuperValu (SVU) to buy from hold at Hapoalim.
• Constellation Energy (CEG) to buy from hold at Citigroup.
• Doral Financial (DRL) to neutral from sell and ABB (ABB) to buy from neutral at Sterne Agee.

Analyst Downgrades

• American Eagle (AEO) to neutral from buy at SunTrust.
• Tenet Healthcare (THC) to market perform from outperform at Wells Fargo.

U.S. stock index futures are higher Wednesday, after better-than-expected factory production data from China. Futures on the Dow Jones Industrial Average gained 119 points to 11,115.00, while S&P 500 futures rose 13.80 points to 1,193.40. Nasdaq 100 futures advanced 21.75 points to 2,138.75.

U.S. stock markets closed lower yesterday, with the blue-chip Dow index losing 46.47 points or 0.42%.

The ADP employment survey for November was due at about 8:15 a.m. ET. However, data on Q3 productivity will be released at 8:30 a.m. ET. The ISM manufacturing data for November will be released at 10 a.m. ET.

Analyst Upgrades

• State Street (STT) was upgraded to buy from neutral at Goldman.
• Roth Capital upgraded Intel (INTC), Marvell Technology (MRVL) and Nvidia (NVDA) to buy from neutral.
• Bebe Stores (BEBE) was upgraded to buy from neutral at Janney Montgomery.
• W&T Offshore (WTI) was upgraded to buy from accumulate at Global Hunter.
• Citigroup upgraded International Rectifier (IRF) and Timberland (TBL) to hold from sell.
• Watson Pharma (WPI) was upgraded to buy from neutral at UBS.
• Atmel (ATML) was upgraded to strong buy from buy at Needham.
• Ashford Hospitality (AHT) was upgraded to outperform from neutral at RW Baird.
• Oppenheimer upgraded MetroPCS (PCS) to outperform from perform.

Financial services firm State Street Corporation (STT) is slated to take its turn in the earnings spotlight tomorrow morning. Analysts surveyed by Thomson Reuters are expecting STT to report a second-quarter profit of 93 cents per share, down from $1.04 per share in the year-ago period. The company has a formidable history on the earnings front, having exceeded analysts' per-share profit expectations in each of the past four reporting periods.

However, options players are bracing for a potential post-earnings pullback. During the past 10 days, speculators on the Chicago Board Options Exchange (CBOE) and the International Securities Exchange (ISE) have bought to open 1.32 puts for every call on STT. This ratio ranks in the 81st percentile, indicating that traders are purchasing bearish bets over their bullish counterparts at a faster pace than usual.

Tomorrow is filled with the potential to boost the market upward, or trip it up going into the weekend. Three financial giants are reporting: Bank of America Corporation (BAC), Citigroup, Inc. (C) and General Electric Company (GE). This could set the stage for a continued market rally next week as earnings season has been generally positive and a trend is developing.

Expectations are high, following solid quarters reported by State Street (STT) last week that surprised many, and JPMorgan Chase & Company (JPM), who followed up with a big beat this morning.

Sentiment seems to be on the bullish side as tomorrow is also options expiration time and those betting on the banks should be pleased to book some gains.

State Street Corporation (STT) closed up $3.29 to $36.62 yesterday. STT saw Q2 results above analyst views. STT call option volume of 14K compared to put volume of 6K contracts. July put implied volatility was at 36, November at 40; above its 26-week average of 33 according to Track Data, suggesting larger price movement.

CBOE Volatility Index: The VIX was down 2.68 to 26.97.

Option volume leaders yesterday, just before the close, according to Track Data were: Citigroup, Inc. (C), BP plc (BP), Bank of America Corporation (BAC), and JPMorgan Chase & Co. (JPM).

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com

The market was flat to weak this morning before key data and then the reading that consumer confidence fell all the way down to 46.0 from 56.5 in January, well under the 55.0 estimate from Bloomberg, added insult to injury. We saw profit taking take hold after that, and any early gains were taken away with the market in the red most of the day.

Here were today's unofficial closing bell levels:

Dow 10,282.41 -100.97 (-0.97%)
S&P 500 1,094.60 -13.41 (-1.21%)
Nasdaq 2,213.44 -28.59 (-1.28%)

Top Analyst Upgrades/Downgrades
Top Stock Market Rumors

Banks have seen a hectic couple of days' of trading, thanks to a bevy of news. I thought it may be good to take a look at some earnings results from a few of the banks, and what it could mean for the economy going forward.

First, let's look at the earnings:

• JPMorgan Chase (JPM): earnings of 74 cents per share; expectations for 60 cents per share
• Citigroup (C): a loss of six cents per share; expectations for a loss of 33 cents per share
• Goldman Sachs (GS): earnings of $8.20 per share; expectations for earnings of $5.20

Last week, JPMorgan Chase & Co. (JPM) led off the coming parade of earnings from the big banks when it reported better-than-expected fourth-quarter and full-year earnings, though its revenue fell short of estimates.

Plenty more earnings from the financial sector are due out this week. Analysts surveyed by Thomson Reuters anticipate fourth-quarter earnings growth from American Express Co. (AXP), Bank of New York Mellon Corp. (BK), Hudson City Bancorp Inc. (HCBK), SLM Corp. (SLM) and US Bancorp (USB).

Analyst Upgrades

• Deutsche Bank upgraded Research in Motion (RIMM) to hold from sell to reflect the company's Q3 results and guidance. The firm raised its target price on shares to $75 from $60.
• Keefe Bruyette upgraded Northern Trust (NTRS) and State Street (STT) to outperform from market perform to reflect valuation and favorable longer-term secular trends. The firm keeps a $58 price target on Northern Trust and a $51 target on State Street.
• UBS upgraded Universal Health (UHS) to buy from neutral and raised its target to $38 from $31. The firm said hospital checks indicate bad debt has not increased vs. Q3 and that Universal Health should report an in-line to better-than-expected Q4.
• Take-Two Interactive (TTWO) was upgraded to hold from sell at Kaufman Bros.
• Whiting Petroleum (WLL) was raised to outperform from market perform at Wells Fargo.
• BP Plc (BP) was upgraded at Goldman to buy from neutral.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Advanced Micro Devices Inc. (NYSE: AMD) narrowed its net loss in Q2 but not as much as expected.
• Apple Inc. (NASDAQ: AAPL) posted better-than-expected Q3 results on demand for iPhones and Macs.
• Intuitive Surgical Inc. (NASDAQ: ISRG) reported earnings and revenue that topped expectations.
• JDA Software Group Inc. (NASDAQ: JDAS) shares surged after it reported record results for Q2.
• Microsoft Corp. (NASDAQ: MSFT) lower Q4 results still topped earnings estimates, but shares fell.
• VMware Inc. (NYSE: VMW) unimpressive Q2 results still managed to beat analysts' low expectations.
• Yahoo! Inc. (NASDAQ: YHOO) Q2 profit was flat year over year and revenue and cash flow declined.

State Street (NYSE: STT - option chain) stock is falling today after the company reported a second-quarter loss of $3.3 billion or $7.12 per share, hurt by charges related to the consolidation of the asset-backed commercial paper conduits onto the company's balance sheet and its TARP repayment. Excluding one-time items, STT earned 79 cents per share, missing analysts' estimates of 97 cents per share. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on STT.

This morning, STT opened at $48.81. So far today the stock has hit a low of $45.98 and a high of $48.77. As of 11:45, STT is trading at $46.91, down $1.90 (3.9%). The chart for STT looks bullish and S&P gives STT a positive 4 STARS (out of 5) buy ranking.