Stocks we’re watching (15 Aug 2012)

Hopes and expectations for further stimulus from central banks on both sides of the Atlantic have begun to wane, in-turn, dragging European stocks lower on Wednesday. Here at home, the Canadian Real Estate Association will issue a report on existing home sales in July. Economists expect unit sales to be 0.5 per cent above and prices to be 2 per cent lower than levels one year ago. Meanwhile, the U.S. Commerce Department reports today on the consumer price index for July with economists expecting an annual increase of 1.6 per cent.

Here are the stocks we're watching today:

*Standard Chartered, the Asian-focussed banking giant, opened four per cent higher on the FTSE 100, a day after StanChart agreed to pay New York regulators US$430 million to settle claims it hid more than 60,000 Iranian transactions and violated U.S. sanctions law. Standard Chartered said in a statement on Wednesday it "continues to engage constructively" with other U.S. agencies including the Department of Justice, the Treasury and the Federal Reserve.

*Abercrombie & Fitch Co., the American casual wear retailer that your teen and twenty-something kids shop at, reported its second quarter earnings this morning and the results are disappointing. The international retail chain posted net income of US$15.5 million, or 19 cents per share, compared to $32 million and 35 cents per share in the same period one year ago. One bright spot: the company's direct-to-consumer business showed 25 per cent growth during the quarter. On the whole, sluggish consumer spending continues to take a toll on the retailer as it lowered its 2012 outlook.

*Cisco Systems Inc., the world's No. 1 provider of Internet gear and a major technology bellwether, will report its fourth quarter results on Wednesday. The San Jose, Calif.-based company is expected to report net income of $2.47 billion, or 46 cents per share, compared to $2.19 billion, or 40 cents per share, in its fourth quarter for 2011.

*Canadian Solar Inc., the Guelph, Ont.-based manufacturer of photovoltaic cells and panels, reported a second quarter loss of $25.5 million, or 59 cents per share, compared to $21.4 million, or 49 cents per share, one year ago. The company said it expects its gross margin will continue to fall in the current quarter. Solar companies have been hurt by a sharp drop in panel prices over the last 18 months and that in-turn has cut into profit margins. Expect more grey skies ahead.

*Sears Canada Inc., the Toronto-based retail department store chain, saw its second quarter sales drop as it reported a net loss of C$98 million, or 10 cents per share, compared to a loss of $200,000, or break even share, from one year ago. Revenue has fallen by 9 per cent to $1.05 billion in 2Q and sales at established stores, a key retail measure, fell by 7.1 per cent. Disappointing outdoor power equipment and weekend store sales were blamed for the weak returns.

*Staples Inc., the office supply retail chain with more than 2,000 stores in 26 countries, posted lower-than-expected results in its second quarter with sales falling by 5.5 per cent to $5.50 billion. The company cited weak customer demand for the poor showing. The retailer is forecasting flat sales for its fiscal year as its shares fell by more than 12 per cent. Office supply retailers are seen as barometers of economic health as their products are closely tied to white-collar employment rates.

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