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.
The U.S. Dollar Index is pointed lower heading into the open, shedding 0.37% to trade at 75.06 in pre-market activity. Meanwhile, the December gold futures contract has added $11.80 to $1,128.50 an ounce. Finally, crude oil for January delivery is up 95 cents at $77.98 per barrel in electronic trading.
In corporate earnings, Lowe's Companies (LOW) said that third-quarter profit fell to $344 million, or 23 cents per share, from $488 million, or 33 cents per share, a year earlier. Sales fell 3% to $11.4 billion with same-store sales declining 7.5%. Lowe's said it had a 2-cent per-share charge for reducing the carrying value of assets for three stores and for closing a location. The company sees profit of 9 cents to 13 cents per share in the fourth quarter, and $1.16 to $1.20 per share for the full year. Analysts estimated earnings of 24 cents per share in the third quarter, 10 cents per share in the fourth quarter, and $1.20 per share for the year.
General Motors Co. said its third-quarter adjusted loss before interest and taxes was $261 million on a net revenue of $26.4 billion. For the quarter, GM said that its cash and marketable securities totaled $42.6 billion, including $17.4 billion held in escrow from the U.S. Treasury and Export Development Canada. GM's total debt as of the end of the quarter was $17 billion, and the company said it would repay $1.2 billion to the national governments in December. Looking ahead, GM expects fourth-quarter sales to moderate now that the U.S. "Cash for Clunkers" program has ended, followed by modest growth in 2010.
Earnings Preview
The earnings calendar offers up reports from ReneSola Ltd. (SOL), Pacific Sunwear of California Inc. (PSUN), and SINA Corp. (SINA) today. Keep your browser at SchaeffersResearch.com throughout the day for more.
Economic Calendar
The economic calendar kicks the week off with October's retail sales, September's business inventories, and the November Empire State manufacturing index. On Tuesday, the producer price index (PPI) for October, the core PPI, and October's capacity utilization and industrial production reports will arrive.
Wednesday brings October's housing starts, building permits, the consumer price index (CPI), the core CPI, and weekly U.S. petroleum supplies. On Thursday, initial jobless claims will be joined by October's leading economic indicators and November's Philadelphia Fed manufacturing index. There are no reports slated for release on Friday.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,131,509 call contracts traded on Friday, compared to 706,325 put contracts. The resultant single-session put/call ratio arrived at 0.62, while the 21-day moving average held at 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 up big this morning, as all 10 of the foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 1.12%. In Asia, the markets ended higher Monday, with another record high for gold boosting shares of miners. Specifically, Sino Gold Mining and Lihir Gold climbed 4.3% and 4.2%, respectively, in Sydney. In Hong Kong, Zijin Mining surged 6% and Zhaojin Mining gained 4.1%, while Shandong Gold-Mining rose 2.7% in Shanghai. Japanese shares, however, made limited gains on concerns about potential capital raisings from banks. Economic data was strong in Japan, though, as official figures showed the country's third-quarter economy rose at a faster-than-expected pace of 1.2% from the previous three months. Mitsubishi UFJ Financial Group tumbled 5.5% after a person familiar with the matter said it was considering raising capital of one trillion yen by issuing common shares. If the offering goes ahead, the capital boost would be one of the biggest share sales by a Japanese financial institution.
Turning to Europe, shares climbed in early trading Monday, with miners advancing as the dollar weakened and broker upgrades lent a hand. Rio Tinto shares were up 3.9% and Randgold Resources was up 4.2%. European Aeronautic Defense & Space Co. gained 1.6%. It swung to a third-quarter net loss of 87 million euros, compared to a profit of 679 million euros a year ago, but stuck to its fiscal-year Airbus new order target. Meanwhile, Vivendi shares fell 2.1% in Paris after it launched an improved bid for Brazil's GVT Holding. Vivendi offered 56 reals per share, equivalent to around 2.8 billion euros, up from a previous bid of 42 reals per share. The offer tops Telefonica's latest bid of 50.50 reals per share. Telefonica shares were up 0.3% in Madrid.
The U.S. Dollar Index (DX/Y) rose 0.46% to trade at 75.29 on Friday. The greenback lost ground against most of its major rivals as risk aversion evaporated and U.S. stocks rose, even after the government reported a wider-than-predicted U.S. trade deficit for September. The dollar came under additional pressure after government data indicated that the U.S. trade deficit widened by more than expected in September, as well as a 0.7% increase in import prices last month. Against this backdrop, the euro rose to $1.4903, while the dollar fell to 89.72 yen.
The futures contract on the 30-year bond (US/1 – 118'29) slipped 15/32 on Friday. Treasurys finished last week with a gain, sending yields on 10-year notes sharply lower. Decent demand for the last week's $81 billion in note and bond auctions and a drop in U.S. consumer confidence fueled demand for government debt. Specifically, bonds were boosted by a report that showed that consumer sentiment pulled back in early November for a second straight month.
Commodity Corner
Crude futures extended their retreat on Friday, finishing near a one-month low in the wake of escalating demand-related concerns. A Reuters/University of Michigan survey showed that consumer sentiment fell to a three-month low in early November, sparking fears that oil demand could remain lethargic. The news, which followed Thursday's bearish crude inventory report, overshadowed weakness in the U.S. dollar, as well as a positive oil forecast from Bank of America Merrill Lynch. The bank boosted its 2010 price prediction for crude from $75 to $85 per barrel, and noted a "growing risk for oil prices to spike above $100 a barrel as we head into 2011." Nevertheless, January-dated crude oil surrendered 62 cents, or 0.8%, to end at $77.03 per barrel. For the week, crude futures lost 1.4%.
Elsewhere, gold futures capitalized on the greenback's weakness, as well as reports that Vietnam lifted its ban on gold imports. Meanwhile, analysts at GoldCore said the news from Vietnam "will add fresh impetus and demand into a historically pro-gold region," and predicted the precious metal will "continue its bull run." Against this backdrop, gold for December delivery added $10.10, or 0.91%, to finish at $1,116.60 an ounce. For the week, the malleable metal powered 2% higher.
Unusual Put and Call Activity:
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