Dow Jones Industrial Average Futures Up After Two-Day Stock Slump

How Short Sellers Could Fuel Higher Stock Prices

May 31, 2017 at 9:04 AM
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Dow Jones Industrial Average (DJIA) futures are trading above fair value this morning, as stocks could again take their direction from the latest economic data. The Fed's Beige Book highlights today's schedule, with the Chicago purchasing managers index (PMI) and pending home sales data also set for release. The energy sector should remain in focus, too, as oil prices continue to slide. July-dated crude futures were last seen 2.2% lower at $48.56 per barrel. Despite this, the Dow looks ready to snap its two-session losing streak. 

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

  • Schaeffer's Senior Equity Analyst Joe Bell, CMT explains how short sellers could fuel more gains for stocks. 
  • 2 bank stocks with attractive options. 
  • Why you should avoid the Financial Select Sector SPDR Fund (XLF) right now. 
  • Plus, EXACT Sciences' comeback; analysts anticipate a Broadcom rally; and Michael Kors disappoints again. 

stock futures

5 Things You Need to Know Today
  1. The Chicago Board Options Exchange (CBOE) saw 772,623 call contracts traded on Tuesday, compared to 526,611 put contracts. The resultant single-session equity put/call ratio moved up to 0.68, while the 21-day moving average stayed at 0.63.
  2. EXACT Sciences Corporation (NASDAQ:EXAS) is up almost 10% ahead of the opening bell, and could touch record highs, thanks to news health insurer UnitedHealth will begin covering its Cologuard product. EXAS stock fell sharply earlier this month after Citron Research said it was shorting the stock, but the shares remain within striking distance of their May 8 record high of $36.14, closing last night at $32.65. 
  3. Apple supplier Broadcom Ltd (NASDAQ:AVGO) doesn't report earnings until tomorrow after the close, but analysts are already adjusting their outlooks on the shares. Specifically, RBC and Loop Capital raised their respective price targets to $260 and $270 -- pointing to expectations for a new AVGO record high. The stock closed yesterday at $239.82, and is up 1.3% before the bell.
  4. High-end apparel stock Michael Kors Holdings Ltd (NYSE:KORS) is set to sell off after earnings for the fourth straight quarter, with the shares pointed 7.6% lower in pre-market trading. KORS stock has already dropped 15.6% year-to-date, and is on track to open at an annual low. 
  5. Box (BOX), Daktronics (DAKT), Palo Alto Networks (PANW), Semtech (SMTC), and Vera Bradley (VRA) will also report earnings

Buzz Stocks May 31

Overseas Trading

It was a mixed finish in Asia today, as traders digested a round of regional economic reports. In China, the official PMI rose by a wider-than-expected margin in May, while the non-manufacturing PMI edged up on a month-over-month basis. Additionally, data showed Beijing's trade deficit narrowed in April. This was enough to send the Shanghai Composite 0.2% higher, though Hong Kong's Hang Seng closed down 0.2%. Elsewhere, industrial production in Japan came in below the consensus estimate last month, which sent the Nikkei down 0.1%. Rounding things out, South Korea's Kospi added 0.2%, even as factory output unexpectedly declined.

European stocks are higher at midday, brushing off a continued decline in Italian bank shares. Economic data is also in focus, with reports showing unemployment in the eurozone hit a seven-year low in May and inflation in the currency bloc fell by a faster-than-expected rate. Traders are also keeping a close eye on the latest political updates from the U.K., which suggest Prime Minister Theresa May's Conservative Party could lose its majority in Parliament in next week's election. At last check, London's FTSE 100 is up 0.7%, the French CAC 40 is 0.5% higher, and the German DAX is flirting with a 0.8% lead after the country's unemployment rate dropped to a new low.


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