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Dow Jones Industrial Average Futures Drop on Rate Hike Anxiety, Falling Oil

How a Call Wall Could Cap SPY This Week

Mar 14, 2017 at 8:59 AM
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Dow Jones Industrial Average (DJIA) futures are trading below fair value, indicating stocks will start the day lower. Traders are holding their collective breath as the Federal Open Market Committee (FOMC) weighs a possible interest rate hike, with the two-day Fed meeting kicking off despite winter storms on the East Coast. Also weighing on stocks this morning is a further drop in oil prices, with April-dated crude futures down 1.5% at $47.70 per barrel -- the lowest level since late November. On the economic front, the producer price index (PPI) for February rose 0.3%, exceeding estimates of a 0.1% climb.

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

  • The call wall that could cap the SPDR S&P 500 ETF Trust (SPY) this week, according to Schaeffer's Senior V.P. of Research Todd Salamone. 
  • 3 biotech stocks set to take off on a round of short covering.
  • How a Mobileye halo lift gave these 2 stocks a boost.
  • Plus, Ackman exits Valeant, a stock offering sinks Aurinia, and Pacira pops on drug data. 

Dow Futures March 14

Futures on the Dow Jones Industrial Average (DJIA) are 51.5 points below fair value.

5 Things You Need to Know Today
  1. The Chicago Board Options Exchange (CBOE) saw 707,320 call contracts traded on Monday, compared to 496,333 put contracts. The resultant single-session equity put/call ratio climbed to 0.70, while the 21-day moving average inched up to 0.62.
  2. Drugmaker Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is down 10.8% ahead of the bell, on pace to open at its lowest level since May 2009 following news activist investor Bill Ackman has sold his position in the company. Ackman, who told CNBC he "should have sold Valeant earlier," will reportedly remain on the firm's board for the time being, but will not stand for reelection.
  3. After barreling up the charts in recent weeks, and hitting a more than five-year high on Monday, shares of biotech Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) are down 25.7% in pre-market trading. Sinking the stock is AUPH's pricing of a 22.3 million-share public stock offering at $6.75 apiece -- a deep discount to last night's close of $10.54. 
  4. Shares of drug stock Pacira Pharmaceuticals Inc (NASDAQ:PCRX) are 2.2% higher ahead of the open after the company revealed positive results in a late-stage trial of its post-surgical pain treatment in patients undergoing knee replacement procedures. PCRX is set to widen its already 43.7% year-to-date lead, which could have short sellers on edge.
  5. The two-day FOMC meeting begins today, and earning reports from DSW (DSW) and PTC Therapeutics (PTCT) will hit the Street.

Buzz Stocks March 14

Overseas Trading

Major Asian stock indexes closed mixed ahead of today's U.S. Fed meeting. In China, traders were digesting a raft of economic data. While industrial output grew more than expected in February, retail sales for the same period disappointed. Meanwhile, Goldman Sachs raised its opinion on Chinese stocks to "overweight." The Shanghai Composite closed up 0.1%, and Hong Kong's Hang Seng ended just below breakeven. Rounding out the region, South Korea's Kospi added 0.8% and Japan's Nikkei gave back 0.1%.

Markets in Europe are also hesitating ahead of today's rate-hike decision. Brexit uncertainty, a possible Scottish independence referendum, and this week's election in the Netherlands are likely adding to the risk-off attitude, as well. On the economic front, investors are considering a lower-than-expected increase in eurozone industrial production. London's FTSE 100 has so far managed a 0.1% increase, though France's CAC 40 and Germany's DAX were off 0.4% and 0.1%, respectively, at last check. 

Stay on top of breaking stock market news with Schaeffer's Midday Market Check.


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