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Dow Braces for Second Day of Sharp Losses

The VIX has spiked to levels not seen since early December

Jan 30, 2018 at 9:11 AM
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Stock futures are signaling a second straight day of sharp losses, as the 10-year Treasury yield holds near a three-year high of 2.7%. Traders are also reacting to news Amazon (AMZN), Berkshire Hathaway (BRK.A), and JPMorgan Chase (JPM) are teaming up to tackle rising healthcare costs for their U.S. employees, with blue-chip insurance giant UnitedHealth (UNH) down more than 6% ahead of the bell -- pointing to painful day for the sector. Against this backdrop, the Dow Jones Industrial Average (DJI) is bracing for a 183-point drop out of the gate, while the CBOE Volatility Index (VIX) is hovering near its early December highs.

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

  • Schaeffer's Senior V.P. of Research Todd Salamone deciphers the rare VIX signal that's been a green light for stocks.
  • 3 chip stocks smacked on Apple's iPhone X woes.
  • Facebook options traders are bracing for a post-earnings volatility crush.
  • Plus, McDonald's earnings beat; Pfizer retreats; and PulteGroup revenue misses.

us stock futures jan 30

5 Things You Need to Know Today

  1. The Chicago Board Options Exchange (CBOE) saw 1.11 million call contracts traded on Monday compared to 627,804 put contracts. The single-session equity put/call ratio jumped to 0.57, while the 21-day moving average stayed at 0.54.
  2. McDonald's Corporation (NYSE:MCD) reported fourth-quarter adjusted earnings of $1.71 per share on $5.34 billion in revenue, beating the consensus estimates. The fast-food chain also said it would open 1,000 new restaurants this year, and include digital upgrades in its $2.4 billion capital expenditures plan. MCD stock is set to open the session down 0.3%, after topping out at a record high of $178.70 yesterday.
  3. Pfizer Inc. (NYSE:PFE) said its fourth-quarter profit swelled to $2.02 per share -- up from 13 cents one year ago -- thanks to strong Prevnar sales and the new tax law. Excluding items, earnings arrived at a better-than-expected 62 cents per share, while revenue of $13.70 billion came in just above analysts' expectations. PFE has been a strong Dow stock this year -- hitting a nearly 16-year high of $39.43 yesterday -- but is down 1.5% in electronic trading on sector headwinds.
  4. A strengthening housing market helped PulteGroup, Inc. (NYSE:PHM) post a fourth-quarter adjusted profit beat of 85 cents per share. Revenue, however, fell short of the consensus estimate, arriving at $2.79 billion. To the delight of PHM options traders, the stock is 1.3% lower in pre-market trading.
  5. Consumer confidence and the S&P CoreLogic Case-Shiller home price index will be released. Advanced Micro Devices (AMD), AK Steel (AKS), Corning (GLW), Electronic Arts (EA), Harley-Davidson (HOG), and Nucor (NUE) will report earnings.

stock market news january 30

Tech Shares Pressure Asia Stocks

In Asia, the major indexes suffered sharp losses, with technology stocks among the biggest underperformers. Japan's Nikkei dropped 1.4%, led lower by a pullback in shares of Sony and SoftBank. The Shanghai Composite and Hang Seng, meanwhile, suffered respective losses of 1% and 1.1%. In South Korea, a steep decline in Samsung Electronics had the Kospi 1.2% lower at the close.

It's a similar setup for stocks in Europe. Traders there are also digesting a preliminary report on fourth-quarter eurozone gross domestic product (GDP) which matched forecasts, while France's GDP update showed the best economic growth in six years. Still, the French CAC 40 was down 0.5% at last check. The FTSE 100 and German DAX are also lower, down 0.7% and 0.6%, respectively.


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