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.
Continuing its roller-coaster ride this week, the U.S. Dollar Index is up 0.57% at 75.50 in pre-market trading. Commodities have responded as expected, with the December gold futures contract down $7.10 at $1,133.90 an ounce, while crude oil for January delivery has shed 69 cents to trade at $79.41 per barrel in electronic trading.
In earnings news, Suntech Power Holdings Co. Ltd. (STP) said that its third-quarter net profit fell 30% to $29.8 million, or 16 cents per share, from $42.6 million, or 25 cents per share, a year earlier. Revenue for the quarter dropped 20% to $473.1 million. Analysts were expecting earnings of 9 cents per share on sales of $432.3 million. Looking ahead, Suntech said it expects fourth-quarter shipments to be at least 10% higher than the third quarter and raised its full-year shipment target from 600 megawatts to a range of 640 to 660 megawatts.
Elsewhere, Sears Holdings Corp. (SHLD) reported a fiscal third-quarter net loss attributable to holders of $127 million, or $1.09 per share, which narrowed from last year's loss of $146 million, or $1.16 per share. On an adjusted basis, the company lost 81 cents per share. Revenue totaled $10.19 billion compared with $10.66 billion in the same quarter last year. Analysts were expecting a loss of $1.05 on revenue of $9.9 billion. Domestic same-store sales fell 2.3% for the quarter.
Finally, NetApp Inc. (NTAP) reported a second-quarter profit of $96 million, or 27 cents per share, compared with earnings of $43 million, or 13 cents per share, last year. Revenue came in at $910 million, down slightly from $912 million a year ago. Excluding one-time items, the company would have earned $130 million, or 37 cents per share. Wall Street was looking for earnings of 30 cents per share on $881.6 million in revenue.
Earnings Preview
The earnings calendar offers up reports Children's Place Retail Stores Inc. (PLCE), Dick's Sporting Goods Inc. (DKS), GameStop Corp. (GME), Ross Stores Inc. (ROST), Trina Solar Limited (TSL), Dell Inc. (DELL), and The Gap Inc. (GPS) today. Keep your browser at SchaeffersResearch.com throughout the day for more.
Economic Calendar
The economic calendar offers up initial jobless claims today, which 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 1,578,307 call contracts traded on Wednesday, compared to 927,943 put contracts. The resultant single-session put/call ratio arrived at 0.59, while the 21-day moving average slipped to 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 in poor shape this morning, as only two of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a loss of 0.58%. In Asia, markets closed mixed. Japanese shares skidded as Mitsubishi UFJ Financial Group's capital-raising plans raised concern about equity dilution, while a strong yen hurt exporters. Exporters also lost ground as the yen strengthened against the U.S. dollar, with Sony Corp. falling 2.2% and Toyota Motor Corp. giving up 1.7%. In Hong Kong, shares of Longfor Properties Co. performed better than expected, ending at 8.01 Hong Kong dollars after heavy trading. The stock started trade at HK$7.20, compared with its IPO at HK$7.07. The listing was keenly watched as the company counts Government of Singapore Investment Corp., Temasek Holdings and Ping An Insurance among its investors, and reportedly drew subscriptions from billionaire investor George Soros and sovereign fund China Investment Corp. In Seoul, shares of casino operator Grand Korea Leisure Co. ended at 15,850 won, up more than 32% from its IPO at 12,000 won.
Turning to Europe, shares were mildly lower on Thursday, as miners slipped on lower commodity futures. Xstrata was down 1.8%, as the dollar gained a bit of traction against the euro and sterling, decreasing the appeal of commodities for investors. Meanwhile, shares of Danone fell 5% in Paris. The French yogurt and dairy group said after the Paris close that comparable sales growth will be close to 4% in the second half of 2009, with comparable operating margins up between 0.6 and 0.7 percentage points for the year. On the plus side of corporate earnings, shares of brewer SABMiller climbed 2.1% after it earned an adjusted 80 cents per share in the first half of the year, against 75 cents in the year-ago period, a gain of 6%. A survey of analysts was forecasting 71 cents a share. Shares of German chip company Infineon Technologies climbed 1.4% in Frankfurt. The firm swung to a fiscal fourth-quarter profit of 14 million euros, roughly in line with analyst expectations, from a loss of 884 million euros a year earlier.
The U.S. Dollar Index (DX/Y) dropped 0.31% to trade at 75.13 on Wednesday. The greenback fell for the third session in four yesterday, driven lower by weak U.S. housing starts and commentary from a Federal Reserve official. Specifically, James Bullard, the president of the St. Louis Fed, said that many economists have argued that the Fed kept rates too low for too long in the prior two recessions and that the easy monetary policy was a major factor in creating bubbles. Against this backdrop, the euro rose to $1.4956, while the dollar rose to 89.45 yen.
The futures contract on the 30-year bond (US/1 – 120'13) fell 21/32 on Wednesday. Treasurys finally broke a long winning streak yesterday, heading lower and sending yields higher after a government report showed consumer prices rose more than predicted last month. According to the Labor Department, the consumer price index rose a seasonally adjusted 0.3% in October, raising the specter of inflation. Inflationary pressures are bad for bonds, as it eats away at the value of fixed income assets.
Commodity Corner
Crude futures eked out another gain on Wednesday, as investors digested the government's latest inventories report. The Energy Information Administration (EIA) this morning said that domestic crude supplies retreated by 887,000 barrels last week, exceeding economists' expectations for a 600,000-barrel slide. However, black gold pared a portion of its early gains as a closer look at the EIA figures showed stagnating oil demand, with the four-week average of products supplied down 4.1% from the year-ago period. By the close, crude oil for December delivery advanced 44 cents, or 0.6%, to settle at $79.59 per barrel.
Gold futures also extended their recent winning streak on Wednesday, rallying to a fresh record high on the heels of a weaker dollar and escalating inflationary concerns. The government's report showing that consumer prices rose at a faster-than-anticipated rate last month sparked fears that inflation may not remain tame for as long as previously expected. In addition, commodities traders cheered news that billionaire hedge-fund manager John Paulson will launch a new gold fund, including $250 million of his own capital. However, some analysts believe the malleable metal's quick run higher may leave it vulnerable to a price correction. After climbing as high as $1,153.40 an ounce in intraday activity, December-dated gold finished with a more modest gain of $1.80 at $1,141.20 an ounce.
Unusual Put and Call Activity:
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