Dow Jones Industrial Average Trims Losses As Yellen Hits Capitol Hill

FBR's New 'Top Pick'; Plus, Another Way to Trade Volatility

by Alex Eppstein

Published on Dec 3, 2015 at 12:09 PM

The Dow Jones Industrial Average (DJIA) has trimmed its losses after briefly flirting with a triple-digit deficit, as traders digest the European Central Bank's (ECB) rate decision, a raft of economic data, and Fed Chair Janet Yellen's congressional testimony. Specifically, jobless claims and factory orders rose more than expected, while the Institute for Supply Management's (ISM) services index suffered a sharper-than-forecast drop. Meanwhile, Yellen told Congress "U.S. economic growth is likely to be sufficient over the next year or two to result in further improvement in the labor market," reiterating yesterday's speech and underscoring expectations for a December rate hike.

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Among the stocks with notable option activity is semiconductor firm Avago Technologies Ltd (NASDAQ:AVGO), with the contracts crossing at seven times the expected intraday clip. The shares have exploded 10% higher to trade at $145.51 on an earnings-induced round of price-target hikes. One strike seeing possible buy-to-open action is the December 150 call, where more than 1,400 contracts have changed hands.

One of the leading laggards on the Big Board is Chesapeake Energy Corporation (NYSE:CHK), on the heels of some bearish brokerage attention. At last check, the oil-and-gas stock has dropped 7.4% to trade at $5.11, and earlier touched a 13-year low of $4.96.

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Among the Nasdaq's top gainers is drugmaker Foamix Pharmaceuticals Ltd (NASDAQ:FOMX), last seen 9.5% higher at $8.76. The shares are getting a big boost from positive trial results, which may have short sellers on edge.

The CBOE Volatility Index (VIX) is up 0.9 point, or 5.9%, at 16.84.

Today's put/call volume ratio on the SPDR S&P 500 ETF Trust (SPY) is 1.28, with puts outstripping calls. At last check, SPY was down 0.9 point, or 0.4%, at $207.63.


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