Dow Jones Industrial Average Futures Sink as China Sparks 'Currency War' Fear

Should You Fear the Dow's Death Cross?

by Karee Venema

Published on Aug 12, 2015 at 8:59 AM

The Dow Jones Industrial Average (DJIA) is eyeing another triple-digit drop, as China's central bank made a second shocking move to drop the guidance rate for the yuan. The action has sparked fears of a possible currency war -- and sent global markets tumbling. Among individual equities, exporters with exposure to the mainland could continue to be in focus, with names such as Apple Inc. (NASDAQ:AAPL) headed lower once again.

Back on the homefront, traders will have a lot to digest as well, including a speech by New York Fed President William Dudley -- which is currently underway. Also, updates on job openings, crude inventories, and the Treasury budget are due.

 

Continue reading for more on today's market, including:

 

And now, on to the numbers…

 

150812ovfutures

 

Futures on the Dow Jones Industrial Average (DJIA) are nearly 119 points below fair value.

 

5 Things You Need to Know Today

 

  1. A decision by the People's Bank of China to allow the yuan to further depreciate has sent global markets sharply lower.
  2. The CBOE Volatility Index (VIX) spiked 12.1% yesterday, hurdling its 10- and 20-day moving averages in the process. VIX calls outstripped puts by a more than 3-to-1 margin, and accounted for nine of the 10 most active strikes -- including a potentially massive call spread at the August 18 and 20 strikes.
  3. General Electric Company (NYSE:GE) has been busy this year auctioning off a number of its business units. This morning, the company said it will sell its healthcare loan division to Capital One Financial Corp. (NYSE:COF) for roughly $9 billion, with the deal expected to close in the fourth quarter. GE is down 0.8% in electronic trading.
  4. A third bailout for Greece could be in jeopardy, as German lawmakers indicate additional time is needed before they'll be ready to ratify a deal. Greek lawmakers are slated to vote on the measure tomorrow ahead of a meeting of eurozone finance ministers, tentatively scheduled for Friday. 
  5. Fossil Group Inc (NASDAQ:FOSL) is bracing for a 10% drop out of the gate -- on track for a fresh four-year low -- after the watchmaker reported lower-than-expected second-quarter revenue and downwardly revised its full-year sales forecast. Additionally, the stock received a fresh round of bearish brokerage notes.

150812OV_Buzz

 

Market Statistics

  • Gap Inc (NYSE:GPS), Caterpillar Inc. (NYSE:CAT), and Paychex, Inc. (NASDAQ:PAYX) were among the equities with unusual call and put activity on Tuesday. For the entire list, read Unusual Options Activity: GPS, CLDX, CAT, and PAYX.
  • The Chicago Board Options Exchange (CBOE) saw 775,401 call contracts traded on Tuesday, compared to 609,468 put contracts. The resultant single-session equity put/call ratio jumped to 0.79, while the 21-day moving average edged up to 0.70.
  • For info on currencies, commodities, trading volume, market breadth, and more, read Stock Market Stats for August 11, 2015.

Earnings and Economic Data

 

The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) for June, weekly crude inventories, and the Treasury budget will be released today. New York Fed President William Dudley will also speak in Rochester, New York. Cisco Systems, Inc. (CSCO), Alibaba Group Holding Ltd (BABA), Aramark (ARMK), Macy's Inc. (M), Netease.com (NTES), News Corp (NWSA), and Wayfair (W) are all scheduled to report earnings.To see what else is on this week's agenda, click here.

 


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