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Opening View: DJIA Heads Lower as Wall Street Eyes New Leadership in Italy, Greece

On the home front, IBM and LOW have stepped into the spotlight

by 11/14/2011 8:20:31 AM
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U.S. stocks are pointed lower ahead of the bell, as Wall Street wraps its head around the latest political developments out of Italy and Greece. As expected, the former country's lower parliament approved key austerity measures over the weekend, triggering the resignation of Prime Minister Silvio Berlusconi. As a result, all eyes have now turned to former European Commissioner Mario Monti -- charged with the task of forming a new Italian government -- as well as the debt-strapped country's bond market. Meanwhile, investors will also keep a close eye on Greece, where new Prime Minister Lucas Papademos will face a confidence vote later in the week. Against this backdrop, the Dow Jones Industrial Average (DJIA) is trading about 35 points below fair value, while the S&P 500 Index (SPX) is facing a 5.4-point dip out of the gate.

Dow, S&P and Nasdaq futures

In equities news, Warren Buffett -- who has famously avoided technology stocks -- disclosed that his Berkshire Hathaway (BRK) took a $10.7-billion, 5.4% stake in IBM Corp. (IBM - 187.38). In a pre-market interview with CNBC, the Oracle of Omaha said he's been building his stake since the beginning of March, but that executives at IBM were unaware of the purchases. Furthermore, Buffett said IBM has "done an incredible job" of outlining a plan for the future, and that he was impressed with the blue chip's ability to find and maintain clients. Ahead of the bell, IBM is trading about 0.9% higher.

In earnings news, Lowe's Cos. (LOW - 38.70) said third-quarter earnings fell to $225 million, or 18 cents per share, from last year's profit of $404 million, or 29 cents per share. Excluding items, LOW earned 35 cents per share, topping analysts' expectations for a per-share profit of 33 cents. Revenue, meanwhile, edged 2.3% higher to $11.85 billion, exceeding Wall Street's estimates for $11.69 billion in sales. Looking ahead, the company upped its fiscal-year sales growth forecast to a range of 2% to 3%, compared to previous guidance for sales growth of just 2%. In pre-market trading, LOW is lingering 0.4% north of breakeven.

Earnings Preview

Today's earnings docket will also feature reports from Assured Guaranty (AGO), Dynegy (DYN), eDiets.com (DIET), J.C. Penney (JCP), Motricity (MOTR), Sky-mobi (MOBI), Urban Outfitters (URBN), and Zagg (ZAGG). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

There are no major economic reports on today's calendar. Inflation data starts to hit the Street on Tuesday, with the release of the producer price index (PPI) and core PPI. Also due out are reports on retail sales and business inventories, along with the Empire State manufacturing index. On Wednesday, the consumer price index (CPI), core CPI, and NAHB housing market index are on the docket, as well as the latest stats on industrial production and capacity utilization. Thursday brings us the regularly scheduled weekly report on jobless claims, the Philadelphia Fed manufacturing index, and housing starts. The economic calendar concludes on Friday with the Conference Board's index of leading indicators.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 840,367 call contracts traded on Friday, compared to 539,920 put contracts. The resultant single-session put/call ratio arrived at 0.64, while the 21-day moving average was 0.68.

NYSE and Nasdaq summary

Volatility indices

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