Dow Jones Industrial Average Futures Fall as Earnings Disappoint

2 Contrarian Trades for This Market

Jan 31, 2017 at 9:10 AM
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Following yesterday's triple-digit loss for the Dow -- and the stock market's worst session of 2017 -- Dow Jones Industrial Average (DJIA) futures are again trading below fair value, as investors continue to weigh the implications of President Donald Trump's immigration ban. Stocks are also reacting to a generally downbeat round of quarterly earnings, including profit misses from blue chips Exxon Mobil Corporation (NYSE:XOM) and Pfizer Inc. (NYSE:PFE). In addition, today marks the start of the two-day Federal Open Market Committee (FOMC) policy meeting, though no interest rate hikes are expected.

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

  • Schaeffer's Senior V.P. of Research Todd Salamone offers up 2 trade ideas for contrarians.
  • The group of options traders gutted by Fitbit Inc's (NYSE:FIT) 16% drop.
  • It may be a good time to buy calls on this heavily shorted tech stock.
  • Plus, Under Armour tanks, Mastercard announces earnings, and a weak outlook weighs on UPS.

dow futures jan 31

Futures on the Dow Jones Industrial Average (DJIA) are roughly 49 points below fair value.

5 Things You Need to Know Today
  
  1. The Chicago Board Options Exchange (CBOE) saw 653,551 call contracts traded on Monday, compared to 536,980 put contracts. The resultant single-session equity put/call ratio jumped to 0.82, while the 21-day moving average edged up to 0.67.
  2. Under Armour Inc (NYSE:UAA) is down 23% in electronic trading -- and on track to hit a two-year low -- after the apparel maker's disappointing earnings report, which included a downbeat forecast. In addition, CFO Chip Molloy will resign from his role.
  3. Mastercard Inc (NYSE:MA) is pointed 2.6% lower pre-market, even as the credit card concern's fourth-quarter earnings and revenue roughly matched estimates. On a year-over-year basis, profit rose 4.8%, boosted by increased holiday spending.
  4. Another stock set to tank post-earnings is United Parcel Service, Inc. (NYSE:UPS), down nearly 5% ahead of the open. The delivery company's adjusted profit fell short of the consensus view, and the upper end of its 2017 forecast was below expectations.
  5. Today's economic calendar features the S&P CoreLogic Case-Shiller home price index, the Chicago purchasing managers index (PMI), and the Conference Board's consumer confidence survey. On the earnings front are Apple (AAPL), Advanced Micro Devices (AMD)Aetna (AET), Aflac (AFL), Electronic Arts (EA), Eli Lilly (LLY), Illumina (ILMN), Sprint (S), Thermo Fisher Scientific (TMO), United States Steel (X), Valero Energy (VLO), and Xerox (XRX).

stocks in the news today Jan 31

Overseas Trading

While markets in China and Hong Kong remained shuttered for holiday, there was plenty for traders to digest out of Japan. For instance, the Bank of Japan decided against any changes to its monetary policy, which sent the yen higher against the U.S. dollar. The currency's strength weighed heavily on exporters, with prominent automakers like Toyota and Honda suffering heavy losses. Also, Nintendo dipped 1.9% during the session, though the video game company reported better-than-expected quarterly results after the close. In economic data, Japan's jobless rate for December matched expectations, consumer spending declined at a lower-than-expected rate, and industrial output topped forecasts. At the close, the Nikkei was off 1.7%, while South Korea's Kospi shed 0.8%.

European stocks are higher following the latest round of economic data. Fourth-quarter gross domestic product (GDP) revealed the eurozone economy grew at a 1.8% annualized rate, while 2016 GDP outpaced the U.S. for the first time since 2008. Investors are also eyeing a sharp rise in the euro, after Trump's trade adviser, Peter Navarro, said the currency was "grossly undervalued." Among individual equities, Deutsche Bank is on the rise after paying out another $630 million to regulators, and retail stock H&M is providing a boost to the sector after its strong earnings results. So far, London's FTSE 100 is up 0.5%, France's CAC 40 has added 0.2%, and the German DAX has gained 0.05%. 

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