Bolstered by a better-than-expected quarterly report by Ford Motor Co. (F), U.S. stock futures on the Dow Jones Industrial Average (DJIA) are up 36 points at 9,700, or roughly 37 points above fair value. Traders appear to have shrugged off last week's sell-off, which saw the Dow plunge 2.6% on a week-over-week basis. Still, the blue-chip barometer managed to squeak by with a gain of 0.01% for October. This week could certainly test the bulls' wherewithal, as the Street will be faced with a decision on monetary policy by the Federal Open Market Committee (FOMC) and October's nonfarm payrolls and unemployment rate. In currencies and commodities, the U.S. Dollar Index is down 0.19% at 76.15 in pre-market activity. Meanwhile, the December gold futures contract has rallied $12.70 to trade at $1,053 an ounce. Finally, crude oil for December delivery is up 78 cents at $77.78 per barrel in electronic trading. Ford Motor Co. (F) said Monday it swung to third-quarter net income of $997 million, or 29 cents per share, from a loss of $161 million, or 7 cents per share, in the year-ago period. On an after-tax basis, excluding special items, Ford posted an operating profit of $873 million, or 26 cents per share, compared to a loss of $3 billion, or $1.32 per share, a year ago. The period marks Ford's first pre-tax operating profit since the first quarter of 2008. Revenue fell to $30.9 million from $31.7 million. Wall Street analysts expected Ford to lose 13 cents per share on revenue of $29.1 billion. Based on its recent performance and present planning assumptions, Ford is changing its full-year 2011 guidance for total company and North American Automotive operations from being "breakeven or better" to "solidly profitable" on a pre-tax basis excluding special items, with positive automotive operating-related cash flow. For 2010, the carmaker said it may face a substantial decrease in European industry volume.
Dean Foods Co. (DF) reported Monday that its third-quarter profit rose to $49.7 million, or 27 cents per share, from $37.8 million, or 24 cents, a year earlier. Sales declined to $2.77 billion from $3.19 billion. Excluding items, the company said it would have earned 34 cents per share. Dean Foods sees fourth-quarter profit excluding items of at least 36 cents per share and profit of at least $1.63 per share for the year. Analysts, on average, estimated Dean Foods to earn 34 cents per share in the third quarter, 39 cents in the fourth quarter and $1.65 for the year.
Earnings Preview
The earnings calendar is still packed, and includes Cooper Tire & Rubber (CTB), Humana Inc. (HUM), and Chesapeake Energy Corp. (CHK). Keep your browser at SchaeffersResearch.com throughout the day for more.
Economic Calendar
The economic calendar offers up September's construction spending, the Institute for Supply Management's (ISM) manufacturing index, and pending September home sales. On Tuesday, the Street will be graced with September factory orders and October auto sales.
The Challenger, Christmas & Grey job cuts report for October, the October ADP employment report, the ISM services index for October, weekly U.S. petroleum supplies, and the Federal Open Market Committee's (FOMC) decision on monetary policy are on tap for Wednesday. On Thursday, preliminary third-quarter productivity will be joined by weekly initial jobless claims. We end the week with a bang on Friday, as September's wholesale inventories, September's consumer credit report, and the coup de grâce, October's nonfarm payrolls, unemployment rate, average work week, and hourly earnings.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,483,626 call contracts traded on Friday, compared to 1,181,339 put contracts. The resultant single-session put/call ratio arrived at 0.80, while the 21-day moving average held at 0.59.
**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 weak this morning as only two of the ten markets that we follow are in positive territory. The cumulative average return on the group stands at a loss of 0.36%. Most Asian markets ended lower Monday, with Japanese exporters such as Sony hurt by concerns over the U.S. economy and the yen's recent strength. However, Chinese stocks in Shanghai jumped sharply after data showed the country's manufacturing activity accelerated at the fastest pace in 18 months, helping narrow losses in Hong Kong. Chinese stocks retraced early losses after initially falling in a knee-jerk reaction to regional market declines. Shares may have gotten an extra fillip from HSBC China PMI for October climbing to an 18-month high of 55.4 from September's 55.0, marking the seventh-straight month the figure has remained above 50.0, which indicates the manufacturing sector is expanding. Leading gains in Shanghai, shares of Ping An Insurance climbed 6.7%, Poly Real Estate Group advanced 3.8%, while SAIC Motor jumped 6.3%.The performance helped some China-related stocks rebound or pare losses in Hong Kong, with Ping An rising 0.3% and Industrial & Commercial Bank of China gaining 0.2%. But property and resource stocks were mostly lower, with Sino Land sliding 2.4% and Sun Hung Kai Properties dropping 1.6%, while Cnooc shed 1.2%.
European shares struggled for direction at the onset of a new month, although Royal Bank of Scotland and Ryanair Holdings were under notable pressure. The Royal Bank of Scotland fell more than 5% as the lender said it's going to have sell off assets "not initially contemplated" due to negotiations with the European Commission. ING, which said last week it will break itself apart in order to repay the Dutch state, fell 2%, while KBC shares were down 1.5%. Meanwhile, the Bank of England may take steps to buy up to 50 billion pounds of assets to help the U.K. escape recession. Earnings are due from UBS, BNP Paribas, Societe Generale, Total, Adidas and Deutsche Telekom among many others. Of movers in Europe, Ryanair Holdings, down 4.9%, said its profit climbed 35% to 250.5 million euros ($369.8 million) during the fiscal second quarter, as declining fuel prices more than offset the impact of declining average fares. But the airline, traditionally a cautious one, repeated its concern that fares may drop by up to 20% this winter, which could cause "material" losses over the next two quarters. Shares of Dutch international express mail service TNT advanced 2.2%. Its third-quarter net profit fell 12.4% to 99 million euros ($146 million) from the same period a year ago, but beat analyst expectations for a profit of 85.5 million euros.
The U.S. Dollar Index (DX/Y) rose to 76.32 on Friday, up from 75.87 in late-Thursday trading. The greenback gained ground against its major foreign counterparts for the sixth time in the past seven trading session after a government report revealed that U.S. consumer spending fell in September. As a result, traders abandoned the equities market in droves, with the dollar benefiting from safe-haven demand. Against this backdrop, the euro fell to $1.4729, while the dollar fell 1.3% to 90.00 yen.
The futures contract on the 30-year bond (US/1 – 120'05) jumped 1-15/32 on Friday. Treasurys rose sharply on the session, logging a weekly gain on the heels of a decline in U.S. personal spending, which raised concerns that the economy can't sustain the recent pace of recovery. However, a report showing the Chicago purchasing managers' index rose more than expected to 54.2 in October limited upside in the bond market.
Commodity Corner
Crude futures kept pace with steep losses in the equities market on Friday, with black gold getting hammered by a surge in the U.S. dollar. While the greenback reaped the benefits of a flight to safety among edgy investors, crude was pressured by September's disappointing consumer spending data. By the close, December-dated crude shed $2.87, or 3.59%, to settle at $77 per barrel. Nevertheless, crude oil still managed to gain 9% in October.
Gold futures also sank on Friday, as a solid U.S. dollar diminished demand for the popular inflationary hedge. The malleable metal was also dented by a down day for oil and stocks, prompted by fresh woes about the financial sector and the U.S. consumer. However, gold still eked out a positive October, thanks to its gains earlier in the month. Gold for December delivery settled on a drop of $6.70, or 0.64%, at $1,040.40 per ounce. For the month, gold futures added 3.8%, bringing their year-to-date gain up to 18%.
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) 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...
Worries from the Far East are threatening to sink trading on Wall Street this morning. Concerns over the health of Japan's economy and China's moves to curtail the growth of its economic boom have helped pressure U.S. stock futures on the Dow Jones Industrial Average (DJIA) 22 points lower to 10,118, or about 15 points below fair value. On the home front, investors are still waiting on several events out of Washington, including an interest rate decision, news on the confirmation of Federal Reserve Chairman Ben Bernanke, the State of the Union address, and bank regulatory developments. Meanwhile, corporate earnings looked strong, with VMware Inc. (VMW), EMC Corp. (EMC), and Apple Inc. (AAPL) all topping estimates. Finally, the CBOE Market Volatility Index (VIX) retreated from resistance at its 10-month moving average on Monday, but appeared to find support near the 25 level. read more...
Today's Most Popular Stories
