Investor sentiment on Wall Street continues to be driven by yesterday's release of minutes from the latest Federal Open Market Committee (FOMC) meeting. Bulls are keying off the Fed's upwardly revised growth projections for the U.S. economy for this year and 2010, as well as indications that interest rates should remain low for most of 2010. Extending yesterday's rally into the close, U.S. stock futures on the Dow Jones Industrial Average (DJIA) are up 25 points at 10,430, or about 15 points above fair value. Still, traders must deal with a veritable tidal wave of economic data today, with reports ranging from weekly jobless claims and weekly petroleum supplies, to the University of Michigan's consumer sentiment index.
Checking in on currencies and commodities, the U.S. Dollar Index is down sharply this morning, shedding 0.82% to trade at a fresh annual low of 74.52 in pre-market activity. Taking their cue from the lower dollar, commodities are in rally mode. Specifically, February gold futures (the most active contract this morning) have jumped $14.70 to trade at $1,182.10 an ounce. January crude oil, meanwhile, has risen only 27 cents to $76.29 per barrel, as traders remain cautious ahead of today's weekly supplies report.
In earnings news, Tiffany & Co. (TIF) said that its third-quarter net profit dipped 1% to $43.3 million, or 34 cents per share, from $43.8 million, or 36 cents per share, a year earlier. Sales for the quarter fell 2.9% to $598.2 million. Comparable store sales dropped 6%. Excluding one-off items, earnings in the quarter were 33 cents per share. Analysts had expected earnings of 23 cents per share on sales of $575.8 million. Looking ahead, Tiffany lifted its full-year earnings guidance to a range of $1.88 to $1.98 per share, and said total worldwide sales would drop around 8%. Analysts had forecast earnings of $1.78 per share for the year.
Meanwhile, Deere & Co. (DE) reported that it swung to a fourth-quarter net loss of $222.8 million, or 53 cents per share, from a net profit of $345 million, or 81 cents per share, in the year-ago period. On an adjusted basis, earnings were 23 cents per share. Total net sales fell 30% to $4.7 billion. Analysts were looking for sales of $4.6 billion. For 2010, Deere predicted net income of about $900 million, versus the Wall Street consensus of $1.1 billion.
Finally, J. Crew Group Inc. (JCG) reported that its third-quarter net income more than doubled to $43.9 million, or 67 cents per share, from $19 million, or 30 cents per share, in the same quarter a year ago. Revenue increased to $414.1 million from $363.1 million a year earlier. Analysts were looking for earnings of 58 cents per share on $406.6 million in revenue. JCG projected fourth-quarter earnings of 37 cents per share to 42 cents per share.
Earnings Preview
There are no additional major earnings reports slated for today. Keep your browser at SchaeffersResearch.com for more earnings news as it breaks.
Economic Calendar
We hit the mother lode today, with October's personal income/spending indexes, the personal consumption expenditures (PCE) price index for October, weekly initial jobless claims, October's durable goods orders, the November University of Michigan consumer sentiment index, October's new home sales figures, and weekly U.S. petroleum supplies. The market is closed on Thursday for Thanksgiving, and trading wraps up early on Friday due to the holiday.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,093,034 call contracts traded on Tuesday, compared to 679,393 put contracts. The resultant single-session put/call ratio arrived at 0.62, while the 21-day moving average held at 0.63.
**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 looks solid 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 0.67%. In Asia, markets closed mostly higher following a volatile session. Japanese stocks climbed, with exporters up after a strong set of trade data for October. Chinese stocks in Shanghai and Hong Kong overcame choppiness in early trading to finish higher, as investors snapped up shares that were beaten down in Tuesday's sell-off. However, banks underperformed on concerns about capital-raising. Steelmakers and automakers advanced on hopes that the economic recovery will continue, with Baoshan Iron & Steel Co. jumping 8.5% and SAIC Motor Corp. gaining 2.9%. Meanwhile, banks had trouble as investors awaited clarity on any possible changes to industry capital requirements. Bank of China gained 0.7%, Industrial & Commercial Bank of China added 0.2% and Bank of Communications inched up 0.1%.
Turning to Europe, shares climbed for the second time in three days, as miners advanced amid another record for gold futures, and deal making emerged in the telecom sector. The dollar weakened against major rivals, commodity futures were strong and miners advanced, with Lonmin shares up 2.4% and Xstrata shares up 1%. The British economy shrank in the third quarter but at a slower pace than initially estimated. Meanwhile, France Telecom shares rose 1.5% after it said it will pay TDC, the Danish telecom mostly held by private equity groups, 1.5 billion euros as the groups merge their Swiss operations. TDC shares jumped 8.6%. Shares of Groupe Eurotunnel rose 3.6% after the France-based company operating the Channel Tunnel between the U.K. and France was rated "overweight" on Wednesday at Morgan Stanley, which initiated coverage of the stock.
The U.S. Dollar Index (DX/Y) edged about 0.01% lower to trade at 75.09 on Tuesday. The greenback gave up early gains after the Federal Reserve said it expected a slow recovery with high unemployment. The comments, gleaned from yesterday's release of minutes from the latest FOMC meeting, affirmed Wall Street's expectations that the central bank will keep rates low for some time. Against this backdrop, the euro rose to $1.4979, while the dollar slipped to 88.46 yen.
The futures contract on the 30-year bond (US/1 – 121'17) added 20/32 on Tuesday. Treasurys extended recent strength in the wake of the FOMC's minutes and a downward revision to third-quarter gross domestic product, which fell to 2.8% from the previously reported 3.5% annualized pace. Elsewhere, the Treasury Department sold $42 billion in five-year notes at a yield of 2.175%. The government's string of debt offerings ends today, as $32 billion in seven-year notes will hit the auction block.
Commodity Corner
Crude futures tumbled yesterday in sympathy with stocks on Tuesday, taking their cues from the downwardly revised gross domestic product reading. Black gold's pummeling was also prompted, in part, by expectations for a bearish round of weekly inventory data. Ahead of today's report from the Energy Information Administration (EIA), consensus expectations call for a weekly increase of 1.5 million barrels of crude. Analysts are pointing to a steep discount in front-month oil as compared to longer-term contracts, which indicates an oversupply in the market. As a result, crude oil for January delivery shed $1.54, or 1.99%, to end at $76.02 per barrel -- its weakest finish since Oct. 14.
After kicking off the week with yet another new record high, gold futures enjoyed a relatively calm session on Tuesday. In fact, the malleable metal failed to break out of the trading range it inhabited on Monday. A lack of major movement in the U.S. dollar contributed to the tranquil activity in gold futures, with the greenback convalescing quietly in the wake of yesterday's drubbing. By the close, gold for December delivery added a modest $1.10 to settle at $1,165.80 per ounce.
Unusual Put and Call Activity:
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