Opening View: Wall Street Still Digesting Fed Monetary Policy

The technology sector is in trouble this morning, as traders have reacted negatively to Dell Inc.'s (DELL) third-quarter earnings report. The company said that profit plunged 57%, and it missed Wall Street's expectations by 5 cents per share. What's more, Dell's miss arrives on the heels of Bank of America's downgrade of several semiconductor stocks on Thursday. As a result, U.S. stock futures on the Dow Jones Industrial Average (DJIA) have plummeted 80 points to 10,247, or about 63 points below fair value.

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The bull rally is apparently beginning to wane on Wall Street, and traders appear ready to take some profits off the table. Heading into the open, U.S. stock futures on the Dow Jones Industrial Average (DJIA) are down 67 points at 10,337, or about 65 points below fair value. Among equities, the technology sector could come under fire, as Bank of America Merrill Lynch downgraded eight microchip companies, including Intel Corp. (INTC) and Texas Instruments Inc. (TXN), citing concerns that inventories are too high unless there's a sharp upturn from the global economy. Meanwhile, initial jobless claims and October's leading economic indicators are on tap in the economic calendar.

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Wall Street appears to be headed for a relatively flat open this morning, as U.S. stock futures on the Dow Jones Industrial Average (DJIA) are up 19 points at 10,417, or about eight points above fair value. After pushing the Dow and the S&P 500 Index (SPX) to their best closes since October of last year, traders are once again taking it easy. All of that could change later this morning, however, as key reports on housing starts, consumer inflation, and weekly U.S. petroleum supplies are scheduled for release. Investors should also keep an eye on salesforce.com inc. (CRM), BJ's Wholesale Club Inc. (BJ), and Autodesk Inc. (ADSK), as all three have released their quarterly earnings statements.

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After posting gains in nine of the past 11 sessions, Wall Street appears ready for a bit of a rest today. In fact, U.S. stock futures are pointed lower, with futures on the Dow Jones Industrial Average (DJIA) down 25 points at 10,343, or about 35 points below fair value. On the economic front, housing data and inflation will come to the forefront, as traders will need to digest October's producer price index (PPI) and the National Association of Home Builders' housing market index for November. Speaking of housing, Home Depot (HD) noted that it has seen "positive signs of stabilization" in the sector. HD's comments follow on the heels of similar housing-sector sentiment from competitor Lowe's Companies (LOW) yesterday.

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Wall Street bulls are off to the races as we kick off this expiration week. Bolstered by stronger-than-expected growth out of Japan's economy and merger-and-acquisition activity, traders have pressured U.S. stock futures on the Dow Jones Industrial Average (DJIA) higher by 62 points at 10,304, placing the contract about 66 points above fair value. Several key U.S. economic reports are on tap, with October's retail sales and the November Empire State manufacturing index arriving. Elsewhere, Cisco Systems Inc. (CSCO) lifted its offer for Tandberg to $3.4 billion, while reports are suggesting that JPMorgan Chase & Co. (JPM) is nearing a deal to buy Britain's Cazenove.

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While Wall Street received a brief respite from the recent data deluge earlier in the week, traders will have to deal with a flood of reports heading into the weekend. Import/export prices, the trade balance, and the University of Michigan's consumer sentiment index join the continued march of corporate earnings today. Speaking of earnings, a strong outlook from The Walt Disney Co. (DIS) has helped push futures on the Dow Jones Industrial Average (DJIA) higher by 11 points at 10,200, placing futures about 35 points above fair value.

Elsewhere, the U.S. Dollar Index is headed lower heading into the open, shedding 0.30% to trade at 75.37 in pre-market activity. According to analysts, currency traders will be keeping a close eye on the trade balance, which is seen widening to $32 billion. Meanwhile, the December gold futures contract has added $2.40 to $1,109 an ounce. Finally, crude oil for January delivery is up 40 cents at $78.05 per barrel in electronic trading.

After the close last night, the Mouse's House reported that that fiscal-quarter profit rose 18% to $895 million, or 47 cents per share, from earnings of $760 million, or 40 cents per share, last year. Excluding an item, The Walt Disney Co. (DIS) said it would've earned 46 cents per share. Revenue rose 4% to $9.87 billion from $9.44 billion. Analysts were expecting earnings of 41 cents per share on sales of $9.31 billion. Disney cited improved results at cable network ESPN and syndication sales of "Grey's Anatomy" and "Desperate Housewives" for the better-than-expected results.

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Wall Street could be in for a bit of consolidation in today's trading, as U.S. stock futures on the Dow Jones Industrial Average (DJIA) are down 29 points at 10,190, or about 26 points below fair value. The potential for a negative start to the day should come as no surprise, as traders take time out to digest yesterday's 2% rally that pushed the DJIA to its highest level since Oct. 6, 2008. Meanwhile, there are a handful of companies already bucking the potential doldrums of today's session, as Beazer Homes USA Inc. (BZH) has jumped more than 9% in pre-market trading after the company said it swung to a fourth-quarter profit from last year's loss. Other companies joining the earnings parade heading into the open include Tyco International Ltd. (TYC) and Electronic Arts Inc. (ERTS).

In currencies and commodities, the U.S. Dollar Index is trading flat again this morning, adding about 0.09% at 75.08 in pre-market activity. Meanwhile, the December gold futures contract is down $2.50 at $1,098.70 an ounce. Finally, crude oil for December delivery is off 10 cents at $79.33 per barrel in electronic trading.

Beazer Homes USA Inc. (BZH) reported that it swung to a fourth-quarter profit of $33.8 million, or 84 cents per share, from a loss of $473.9 million, or $12.29 per share, last year. Revenue dropped to $376.3 million from $649.8 million. Inventory impairments and option contract abandonments losses narrowed to $29.9 million, from $50.9 million last year, and the firm also recorded an $89.3 million gain on early extinguishment of debt. "During the quarter, we experienced some moderation in negative market trends," the firm said.

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Even though the Federal Reserve concluded last week that the weak U.S. economy still requires the currently massive amount of stimulus, Wall Street appears to have once again come to terms with the policies that have helped push the market more than 60% off its March lows. Heading into the open, U.S. stock futures on the Dow Jones Industrial Average (DJIA) have soared some 85 points to trade at 10,063, or about 80 points above fair value. Traders may be left to their own devices for much of the week, as the economic calendar is devoid of reports until about Thursday. Meanwhile, corporate earnings continue to flow, with Freddie Mac (FRE), Dish Network Corp. (DISH), and Berkshire Hathaway (BRK) releasing their quarterly reports.

In currencies and commodities, the U.S. Dollar Index is trading sharply lower, shedding 0.96% to trade at 75.08 in pre-market activity. Meanwhile, the December gold futures contract is up $12.70 at $1,108.40 an ounce. Finally, crude oil for December delivery is up $1.05 at $78.49 per barrel in electronic trading.

In earnings news, Freddie Mac (FRE) reported that its third-quarter net loss narrowed to $5.01 billion from a loss of $25.3 billion in the same quarter a year earlier. After payment of a $1.3 billion dividend on its senior preferred stock to the Treasury Department, the company's net loss attributable to common stockholders was $6.3 billion, or $1.94 per share. Revenue totaled $3.38 billion. "We believe that factors like high unemployment, excess inventory and rising foreclosures will continue to impede a full recovery for some time and put further downward pressure on house prices. We expect to request additional funds from Treasury as this prolonged deterioration of market conditions continues to negatively impact our financial results," Chief Executive Charles Haldeman said in a statement.

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The bulls are holding their breath this morning, as Wall Street awaits the release of October's nonfarm payrolls report and the unemployment rate. U.S. stock futures on the Dow Jones Industrial Average are up 7 points at 9,970, or about 2 points above fair value. Analysts are forecasting a loss of 150,000 jobs in October, the 22nd such decline in employment, but better than September's drop of 263,000. Furthermore, October's unemployment rate is seen rising to 9.9% from 9.8% in September, with some economists predicting a jump to 10% or even 10.1%.

In currencies and commodities, the U.S. Dollar Index is trading basically flat, having fallen a mere 0.03% to hover near 75.72 in pre-market activity. Meanwhile, the December gold futures contract has posted a slight gain, adding $4.00 to trade at $1,093.30 an ounce. Finally, crude oil for December delivery is off 5 cents at $79.60 per barrel in electronic trading.

In earnings news, American International Group Inc. (AIG) said that it swung to a third-quarter profit of $455 million, or 68 cents per share, from a loss of $24.5 billion, $181.02 per share, in the year-ago period. On an adjusted basis, net income was $1.9 billion, compared with an adjusted net loss of $9.2 billion in the third quarter of 2008. Total revenue rose to $26.05 billion from $898 million. However, analysts were looking for a profit of $1.20 per share. The stock was down some 6%, at last check, in pre-market trading following the report.

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