Dow Jones Industrial Average Futures Plummet on Trump Doubts

How Options Traders Can Play the Fear Index

Mar 27, 2017 at 9:05 AM
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Dow Jones Industrial Average (DJIA) futures are far below fair value, indicating the large-cap index is on pace for a triple-digit plummet at the open. Weighing on stocks this morning is Friday afternoon's decision to pull the healthcare bill before a House of Representatives vote, when it became clear not enough votes could be found to pass the American Health Care Act, even after President Trump issued an ultimatum. The failure has cast a shadow of doubt over the Trump administration's ability to follow through on other campaign promises, including tax reform, looser financial regulations, and infrastructure. Against this backdrop, the Dow is on pace for an eighth straight loss.

Elsewhere, oil prices are slipping on concerns over whether the output cuts from the Organization of the Petroleum Exporting Countries (OPEC) and other producers will be extended past June. May-dated crude futures were last seen 1% lower at $47.47 per barrel, following dubious comments from Russian Energy Minister Alexander Novak.
 
Continue reading for more on today's market, including:

  • 4 Dow stocks flashing "buy" signals.
  • How options traders can play the fear index.
  • The diagnostics stock that more than quadrupled last week. 
  • Plus, Cal-Maine slides on earnings; G-III eyes multi-year lows; and the drugmaker popping on China approval.

Dow Futures March 27

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

5 Things You Need to Know Today
  
  1. The Chicago Board Options Exchange (CBOE) saw 760,823 call contracts traded on Friday, compared to 525,693 put contracts. The resultant single-session equity put/call ratio edged up to 0.69, while the 21-day moving average stayed put at 0.65.
  2. A disappointing earnings result has shares of Cal-Maine Foods Inc (NASDAQ:CALM) off 6.3% ahead of the bell, with the stock on track to open at a two-year low. The company noted that "egg markets have remained under pressure," citing both lower prices and lower demand.
  3. Retail interest G-III Apparel stock reported a wider-than-expected fourth-quarter loss, overshadowing an agreement with Macy's, with the latter becoming the only department store selling G-III's DKNY brand women's clothing and accessories in the U.S. Shares of GIII are set to open in three-year low territory, shedding 12.8% in electronic trading.
  4. After winning approval in China for its lung cancer drug, Tagrisso, AstraZeneca plc (ADR) (NYSE:AZN) stock is set to add 1% at the open. The shares could be on track for their best close in more than five months, which likely sits just fine with options traders, who continue to place bullish bets on the drug stock.
  5. The Dallas Fed manufacturing index will be released today, and Chicago Fed President Charles Evans will take the mic during the trading session, while Dallas Fed President Dennis Kaplan is slated to speak after the close. Conn's (CONN), Digital Ally (DGLY), and Red Hat (RHT) are due to report earnings.

Buzz Stocks March 27

Overseas Trading

Stocks in Asia were rocked by House Republicans' decision to shelve the healthcare vote on Friday, casting doubt on the Trump administration's ability to pass pro-business policy changes. Japan's Nikkei spiraled 1.4% lower, with losses exacerbated by a stronger yen. Also, Hong Kong's Hang Seng and South Korea's Kospi were down 0.7% and 0.6%, respectively. Chinese stocks were the least affected -- though the Shanghai Composite still slipped 0.1%, as regulators introduced rules preventing individuals from buying commercial property in Beijing. Plus, the People's Bank of China declined to inject capital into the banking system, citing "relatively high levels of liquidity."

Trump's healthcare hiccup is taking a toll on European markets, as well. Financial stocks are struggling, in particular, as investors run toward precious metals -- a perceived "safe haven" amid economic uncertainty. The pound is strengthening, too, pressuring London's FTSE 100 nearly 0.7% lower. Meanwhile, despite Germany's Ifo business climate index registering at a nearly six-year high, the DAX is down 1%. Rounding things out, the French CAC 40 has surrendered 0.3%.

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