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.
Tyco International Ltd. (TYC) reported fourth-quarter net income of $205 million, or 43 cents per share, down from $434 million, or 91 cents per share, earned in the year-earlier period. Revenue fell to $4.42 billion from $5.28 billion. Excluding one-time items, earnings from continuing operations would have been 61 cents per share, down from 81 cents per share a year ago. Wall Street was expecting earnings of 52 cents per share. Tyco recorded restructuring-related charges of $96 million before taxes against results for the latest quarter.
Finally, Electronic Arts Inc. (ERTS) said last night that its net loss widened to $391 million, or $1.21 per share, from a loss of $310 million, or 97 cents per share, for the same period last year. Excluding items, the company said it would have earned $19 million, or 6 cents per share. Revenue excluding the impact of deferred sales grew 2% to $1.147 billion. Analysts were expecting earnings of 7 cents per share on revenue of $1.13 billion.
Earnings Preview
The earnings calendar remains packed this week, with Fossil Inc. (FOSL), JA Solar Holdings Co. Limited (JASO), Bob Evans Farms Inc. (BOBE), Pan Am Silver Corp. (PAAS), and Weight Watchers International Inc. (WTW) releasing their quarterly reports today. Keep your browser at SchaeffersResearch.com throughout the day for more.
Economic Calendar
The economic calendar is devoid of reports until Thursday, giving Wall Street a much needed break following the flood of the prior two weeks. On Thursday, weekly initial jobless claims, weekly U.S. petroleum supplies, and the October Treasury budget are on the docket. We end the week on Friday with October's import/export prices, September's trade balance, and the preliminary University of Michigan consumer index for November.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,548,581 call contracts traded on Monday, compared to 817,575 put contracts. The resultant single-session put/call ratio arrived at 0.53, while the 21-day moving average held at 0.61.
**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.**
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Overseas Trading
Overseas trading is in positive territory this morning, as seven of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.09%. In Asia, stocks closed mostly higher as financials rose after a strong show on Wall Street, though the gains were capped in some markets as commodity stocks came off their highs and U.S. stock index futures pointed to a lower opening. Chinese shares ended higher for an eighth successive session, aided by automobile stocks. Data showed passenger vehicle sales surged nearly 76% in October. Financials in China and Hong Kong extended gains a day after ratings agency Moody's lifted the outlook on many of them. Industrial & Commercial Bank of China added 1.2% and Bank of China rose 1.1% in Hong Kong, in addition to posting a 1.3% and 0.2% rise, respectively, in Shanghai. Samsung Electronics ended up 0.4% after the company said it expects no impact on its business from a ruling in the U.S. ordering it to stop selling some of its liquid crystal display devices in the U.S.
Turning to Europe, stocks hovered around breakeven as investors contrasted upbeat comments on trading from banking giant HSBC Holdings with a weaker-than-expected ZEW reading. The German ZEW economic sentiment indicator slipped to 51.1 in November from a reading of 56.0 in October. It was forecast to slip to 54.0. Credit Suisse upgraded its stance on Continental Europe to 5% overweight from 5% underweight, the first time it has been overweight on the region since 2007. The broker said that Europe typically starts to outperform nine months after a trough in global lead indicators and when interest rate expectations start to rise. A 3.5% rise for HSBC Holdings shares helped limit downside for Europe. The company said that its underlying pretax profit in the third quarter was significantly ahead of a year earlier. In contrast, Barclays shares declined 2.9%. Third-quarter net profit fell 54% to 1.08 billion pounds from 2.33 billion pounds a year earlier, after booking a big gain from its Lehman Brothers deal a year earlier. Meanwhile, shares of wireless telecom giant Vodafone Group fell 3%. The firm's first-half profit more than doubled to 4.82 billion pounds as the British pound weakened and it took less of a bruising in Turkey, though the mobile phone operator doubled its target for cost savings as revenue from its key European markets declined.
The U.S. Dollar Index (DX/Y) plunged 0.83% to trade at 75.03 on Monday. The index was pressured to a 15-month low as traders reacted to commentary from a weekend meeting of Group of 20 (G20) policymakers, who offered no support for the U.S. currency. Meanwhile, traders also scrutinized an International Monetary Fund report issued at the G20 meeting. The report said that the dollar has moved closer to "medium-term equilibrium" but "still remains on the strong side." Against this backdrop, the euro rose about 1% to $1.4991, while the dollar rose to 90.01 yen.
The futures contract on the 30-year bond (US/1 – 118'16) crept 2/32 higher on Monday. Treasurys rose while yields fell for a third day after a successful government auction of three-year notes. The offering kicked off the first of three major sales in the government's quarterly refunding with $40 billion in 3-year notes, at a yield of 1.404%, which received record demand from a group that includes foreign central banks.
Commodity Corner
Crude futures joined the equities market in blazing a path higher on Monday, with weakness in the U.S. dollar prompting renewed interest in black gold. Traders also kept an eye on Tropical Storm Ida, which has prompted several production shutdowns along the Gulf Coast. By the close, crude oil for December delivery added $2.00, or 2.58%, to finish at $79.43 per barrel.
The U.S. dollar's swoon also proved to be a positive driver for gold futures yesterday, with the malleable metal flaunting its appeal as an alternative investment vehicle. As a result, gold continued its record-setting streak -- the most active December contract tapped an intraday peak of $1,111.70 per ounce, blowing away the previous all-time high. Gold for December delivery wrapped up the session on a healthy gain of $5.70 at $1,101.40 per ounce.
Unusual Put and Call Activity:
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