Wall Street has shaken off Friday's Dubai-induced plunge, and seems to be headed into the open with a more level head this morning. In fact, U.S. stock futures on the Dow Jones Industrial Average (DJIA) are down a mere 20 points at 10,272, or all but flat (down two points) with fair value. Naturally, with Black Friday ending last week and "Cyber Monday" taking place today, the retailing sector should remain front and center, though Goldman Sachs rattled off a litany of reasons earlier this morning why you should be paying more attention to the steel sector. Economic data could also play a role, as the November Chicago purchasing managers' index (PMI) will arrive later this morning.
Checking in on currencies and commodities, the U.S. Dollar Index is lower this morning, shedding 0.40% to trade at 74.70 in premarket activity. Commodities, meanwhile, have not responded with their usual zeal to the weakening greenback. Specifically, February gold futures have dropped $4.50 to trade at $1,171 an ounce, while January crude oil is up a mere nickel at $76.10 per barrel.
In earnings news, UnitedHealth Group Inc. (UNH) affirmed its 2009 forecast for net earnings of about $3.15 per share. The company plans to make an official announcement on the subject during its annual investor conference in New York tomorrow. UNH also said it expects 2010 revenue of $88.5 billion to $89.5 billion and earnings of $2.90 to $3.10 per share. Wall Street was looking for earnings of $3.16 per share for 2009 and $3.09 per share for 2010.
Meanwhile, Bank of America's Merrill Lynch unit upgraded HSBC Holdings (HBC) to "buy" from "neutral." The brokerage firm said that it expects a sustained period of earnings revisions, that the lender's defensive qualities should rise to the fore and that the lender has an attractive risk/reward profile and a "quite attractive" dividend. Merrill added that it believes the market's concerns over the possible Dubai impact on HSBC are overblown.
Finally, Goldman Sachs lifted its rating on U.S. steel makers to "attractive" from "neutral." The brokerage firm cited the sector's underperformance and the emergence of "incrementally positive data points." Goldman also said that, "Steel and scrap prices in the U.S. have bottomed in our view, Chinese prices are rising, inventories remain low, a weak dollar has brought the U.S. close to being a net exporter, and we expect better industrial and auto demand in 2010." It added U.S. Steel (X) to its "conviction buy" list, and said its favorite stocks are Steel Dynamics (STLD), AK Steel (AKS), and Nucor (NUE). Goldman also removed Freeport-McMoran Copper & Gold (FCX) from its "conviction buy" list.
Earnings Preview
The earnings calendar continues to thin out this week, with only Guess? Inc. (GES) and OmniVision Technologies Inc. (OVTI) releasing their quarterly reports today. Keep your browser at SchaeffersResearch.com for more earnings news as it breaks.
Economic Calendar
The November Chicago purchasing managers' index (PMI) is slated for release today, while October's construction spending, the Institute for Supply Management's (ISM) manufacturing index for November, October pending home sales, and November's auto sales are on tap tomorrow.
On Wednesday, the Challenger, Grey, & Christmas job cuts report for November will be joined by the ADP employment report, weekly crude inventories, and the November Fed Beige Book. Thursday offers up weekly initial jobless claims, the revised third-quarter productivity report, and the ISM services index for November. Finally, we round out the week with a bang, as November's nonfarm payrolls, unemployment rate, hourly earnings, and October's factor orders wash over the Street.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 771,819 call contracts traded on Friday, compared to 477,282 put contracts. The resultant single-session put/call ratio arrived at 0.62, while the 21-day moving average slipped to 0.62.
**The volume data shown above is from the Nasdaq and NYSE exchanges only. It does not include regional volume activity, which means that other daily volume quotes you see may be higher.**
Every morning, our research staff analyzes the prior day and the overnight markets, and monitors the morning wires to give you an accurate preview of the day to come. If you enjoyed today's edition of Opening View, sign up here for free daily delivery, straight to your inbox, before the opening bell.
Overseas Trading
Overseas trading is mixed this morning, as five of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.81%. In Asia, financial stocks led the rally following Friday's sharp sell-off. Investors found refuge in reassurance by the United Arab Emirates central bank that it would support local and international banks exposed to Dubai debt. In Hong Kong, HSBC rose 4.3% after ending Friday down 7.6%. In Australia, National Australia Bank added 6%, while in Japan, Mitsubishi UFJ Financial Group rose 8.6%. Chinese shares saw added support after Beijing late Friday said it will maintain an active fiscal policy and moderately loosen monetary policy next year, allaying investor concerns over a tightening policy bias. In Hong Kong, new listing Sands China fell 10.2% on its debut. The casino operator's "aggressive expansion plan has resulted in heavy indebtedness, and coupled with its unattractive valuation I think the stock will remain underperforming in the near-term," said Ernie Hon, a strategist at ICBC International.
European shares dropped on Monday, with every sector under pressure, as markets remained jittery after last week's news of Dubai debt woes. Energy firms were trading lower in Europe on Monday with oil giant BP shares down 1.1%. In the financial sector, shares of ING Group dropped 4.6% in Amsterdam as the firm's shares started to trade without the right to participate in the firm's plans to sell shares to raise cash. Allied Irish Banks shares declined 4% on news that it intends to participate in the government's National Asset Management Agency and said that not taking part in the program would likely result in the partial or full nationalization of the bank. Bank of Ireland, down 3.7%, also said that its court of directors will recommend participation in the National Asset Management Agency. In the auto sector, BMW shares fell 2.3% after it was downgraded at Goldman Sachs, with the broker saying other carmakers have more potential upside.
The U.S. Dollar Index (DX/Y) added 0.26% to trade at 75.02 on Friday. The greenback trimmed early gains, as traders flocked to the dollar in pre-market activity following news of Dubai's debt problems. Specifically, state-controlled Dubai World, the emirate's largest corporate entity, asked creditors for a six-month stay on debt repayments on Thursday. Dubai World's liabilities total around $60 billion. Against this backdrop, the euro fell to $1.4889, while the dollar rose to 86.46 yen.
The futures contract on the 30-year bond (US/1 – 122'10) added 24/32 on Friday. Treasurys rallied and yields fell as worries about Dubai World's debt problems sent investors scrambling to exit positions on stocks and commodities, with government debt emerging as a safe haven once again.
Commodity Corner
Crude oil futures plunged to a seven-week low on Friday, as investors jumped ship on the commodity in the wake of Dubai's debt troubles. Oil for January delivery ended down $1.91, or 2.4%, at $76.05 per barrel. Earlier the contract had dropped 7.1% to an intraday low of $72.39 as the U.S. dollar bounced higher. Crude oil ended the week 1.8% lower.
Gold futures were also pummeled following news out of Dubai, ending their nine-session winning streak. Gold for December delivery tumbled $12.80, or 1.1%, to close at $1,174.20 an ounce. Despite Friday's losses, the metal ended the week up 2.6%.
Unusual Put and Call Activity:
For an explanation of how to use this information, check out our Education Center topics on Option Volume and Open Interest Configurations.
Discuss this article:
Post your own comment
More articles:
The Dow Jones Industrial Average (DJIA) closed below 10,000 for the first time since early November yesterday, as traders weighed growing concerns about European debt loads and a Wall Street Journal report that Federal Reserve Chairman Ben Bernanke will begin preparing to tighten credit later this year. However, it appears that Wall Street is in for a bounce this morning, as U.S. stock futures on the Dow are up 54 points at 9,949, or about 80 points above fair value. S&P 500 Index (SPX) futures are trading nearly 10 points above fair value, with the index hovering just above key support at its 160-day moving average. Finally, the CBOE Market Volatility Index (VIX) remains capped by its 160-month trendline, but could find support near the 25 level amid a potential bounce back in the equities market today. read more...
The Dow Jones Industrial Average (DJIA) held onto the 10,000 level by the skin of its teeth last week, as a late-session rally pushed the Dow some 170 points higher on Friday. That support could be called into question early in today's trading, as U.S. stock futures on the DJIA are up 11 points at 9,952, or about 16 points below fair value, pointing toward a weak open. Meanwhile, the S&P Depository Receipts (SPY) exchange-traded fund (ETF) is hovering above peak put open interest at the 105 level, which corresponds to 1,050 for the S&P 500 Index (SPX) -- a region that could provide additional support for the index. Finally, the CBOE Market Volatility Index (VIX) closed above its 200-day moving average last week, suggesting that the market is moving toward higher volatility, which could mean additional selling pressure. read more...
Wall Street is struggling to right itself following yesterday's nearly 270-point loss by the Dow Jones Industrial Average (DJIA). The drubbing sent the Dow below the 10,000 mark on an intraday basis for the first time since Nov. 6, 2009. On the sentiment front, the latest American Association of Individual Investors survey data revealed the lowest bullish and highest bearish percentages since Nov. 5. This technical and sentiment backdrop could make today's U.S. unemployment rate and jobs data even more important for the market as a whole. VIX watchers will also want to note that the CBOE Market Volatility Index (VIX) is flirting with overhead resistance at its 10-month moving average. The index hasn't traded significantly above this trendline on a daily basis since April 2009. read more...
Concerns about government debt in the euro zone are helping to extend yesterday's malaise on Wall Street. A poorly received services sector report and lackluster corporate earnings helped push the S&P 500 Index (SPX) back below its 80-day moving average Wednesday. U.S. stock futures on the SPX were last seen lower by 6.70 points at 1,089.70, or about four points below fair value, pointing toward additional weakness for the index heading into the open. News that Portugal's finance ministry cut the size of a bond issue is adding to the negative mood on Wall Street, as traders were already keeping a close eye on Greece's debt load. Cisco Systems Inc. (CSCO) could prove to be a bright spot, as the company reported a better-than-expected quarterly profit after the close last night. As for the CBOE Market Volatility Index (VIX), the so-called "fear" index crept higher yesterday, edging back above its 10-week moving average. read more...
The S&P 500 Index (SPX) surmounted a key technical hurdle yesterday, as the broad-market index reclaimed its 80-day moving average in the wake of a two-day, nearly 3% rally. The bulls are in a holding pattern this morning, however, as Wall Street will get its first dose of monthly employment data from ADP, a report that is often viewed as a preview for Friday's nonfarm payrolls and unemployment report. Heading into the open, U.S. stock futures on the S&P 500 Index (SPX) are basically flat, up only 1.5 points at 1,098.7, or about 1.17 points below fair value. Meanwhile, the CBOE Market Volatility Index (VIX) extended its recent backslide, and could be poised to finish the week back below its 10-week and 20-week moving averages. Such a weekly finish would continue a pattern that has contained the VIX for the better part of the past year. read more...
Wall Street kicked the month off right yesterday, with the major market indexes rallying roughly 1% across the board, fueled by strong corporate earnings and economic data. The February jumpstart had a negative effect on the CBOE Market Volatility Index (VIX), which broke back below potential support at its 20-week moving average. A resumption of the VIX's long-term downtrend could have bullish implications for stocks. Speaking of which, equities appear poised to extend Monday's gains, with U.S. stock futures on the Dow Jones Industrial Average (DJIA) up 25 points at 10,162, or about 27 points above fair value. read more...
If the saying "as goes January, so goes the rest of the year" holds true, Wall Street could be in for a rough year. The major market indexes dropped nearly 4% across the board last month, setting an unnerving tone for the rest of 2010. What's more, the S&P 500 Index (SPX) broke below its 80-day moving average for the first time since the March 2009 bottom last week, providing more technical fuel for the bears. There is a positive bias heading into the open this morning, however, with U.S. stock futures on the SPX up 4.60 points at 1,075, or roughly 4.58 points above fair value. What's more, sentiment could also be on the bulls' side, as the latest American Association of Individual Investors survey looks very similar to readings taken at the September and October 2009 bottoms. As for the CBOE Market Volatility Index (VIX), the fear barometer remains trapped between its 10-month moving average, near the 27 level, and its 20-week moving average, near the 23 level. read more...
The S&P 500 Index (SPX) began the week trading below potentially staunch resistance at its 80-day moving average, and the weeks' events have the index trading about 1.3% below this key technical benchmark. As Todd Salamone noted in Monday Morning Outlook, a reclamation of the 80-day trendline could send the SPX back to the 1,150 within the next few weeks, while a failure here could send the index down to the 1,050 area. There is an upward bias heading into the open this morning, as U.S. stock futures on the SPX are up 2.40 points at 1,081.60, or about half a point above fair value. Driving the bullish momentum are earnings reports from Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), and Honeywell International Inc. (HON). However, enthusiasm is being held in check, as Wall Street awaits the release of the advance report on fourth-quarter U.S. gross domestic product (GDP). read more...
Traders have quite a bit of data to digest this morning, following last night's State of the Union address and yesterday's Federal Open Market Committee (FOMC) policy statement. First, with the Fed's economic outlook improving, Kansas City Fed President Thomas Hoenig dissented from the committee's decision to keep accommodative language in the official Fed statement. Meanwhile, President Obama also highlighted economic improvements, while calling for a wave of job creation measures and a redoubling of efforts to finish health care reform. Wall Street is handling the deluge pretty well, as U.S. stock futures on the Dow Jones Industrial Average (DJIA) are up 23 points at 10,218, or about 32 points above fair value. Despite its recent pullback the Dow is holding steady above its 20-week moving average. As for VIX watchers, the CBOE Market Volatility Index (VIX) continued its retreat yesterday, with the index now perched on potential support at its 20-week moving average. read more...
The Federal Open Market Committee's (FOMC) decision on U.S. monetary policy and interest rates is due out this afternoon, while President Obama is slated to give the annual State of the Union address later tonight. Despite recent negativity directed toward Washington, Wall Street appears cautiously optimistic in early trading activity, as U.S. stock futures on the Dow Jones Industrial Average (DJIA) are up 25 points at 10,163, or about 18 points above fair value. Ahead of the FOMC and Obama's speech, traders will be graced with December's new home sales report, a slew of earnings reports, and a special announcement from Apple Inc. (AAPL). As for the CBOE Market Volatility Index (VIX), the fear barometer found support at its 20-week moving average yesterday, after extending its pullback from Friday's near-term high at 28.01. read more...
Today's Most Popular Stories
working... 
