Bulls Stay Put Ahead of Consumer Confidence


After Monday's Bernanke-fueled session ended with a triple-digit bang for the Dow Jones Industrial Average (DJIA), the Street's buying mood has been tempered heading into today's trading. U.S. economic data continues to roll in, providing some possible market movers as investors look ahead to the latest S&P/Case-Shiller home-price index, as well as the Conference Board's most recent reading of consumer confidence. Despite yesterday's hot-and-cold data from the National Association of Realtors (NAR), this morning's promising earnings results from homebuilder Lennar (LEN ) could put a fresh gust of wind into the bulls' sails. Against this cautiously optimistic backdrop, all three major market indexes are pointed north of breakeven.

Dow, S&P and Nasdaq futures

In earnings news, Apollo Group (APOL - 43.20) swung to a fiscal second-quarter profit of $63.9 million, or 51 cents per share, from its year-ago loss of $64 million, or 45 cents per share. Excluding items, earnings arrived at 58 cents per share. Meanwhile, consolidated revenue fell 7.5% to $969.6 million, pressured by slower growth in new student enrollments. Analysts, on average, were expecting earnings of 37 cents per share on sales of $932.8 million. Looking ahead, the company is predicting full-year consolidated revenue of $4.1 billion to $4.3 billion, while analysts are forecasting sales of $4.24 billion. APOL is off 6% ahead of the bell.

Lennar Corporation (LEN - 26.40) reported a fiscal first-quarter profit of $15 million, or 8 cents per share, down 45% from its year-ago profit of $27.4 million, or 14 cents per share. Revenue soared 30% to $724.9 million, as homebuilding sales surged 34% to $624.4 million. The results easily beat Wall Street's forecast, with analysts calling for a per-share profit of 4 cents on $699.4 million in sales. LEN is up 3.6% in pre-market trading.

Finally, Walgreen Co. (WAG - 34.37) reported a fiscal second-quarter profit of $683 million, or 78 cents per share, a decline of 7.7% from last year's earnings of $739 million, or 80 cents per share. Net sales improved 0.8% to $18.7 billion, even as same-store sales dropped 2.1% amid weakness in prescriptions. The drugstore chain said its break-up with Express Scripts ( ESRX ) took a roughly 7-cent bite out of its bottom line during the quarter. Nevertheless, WAG narrowly edged past analysts' expectations for a profit of 77 cents per share on $18.5 billion in revenue. WAG is on track to start the session 3.3% higher.

Earnings Preview

Today's earnings docket will also feature reports from Charming Shoppes ( CHRS ), McCormick ( MKC ), Neogen ( NEOG ), Christopher & Banks ( CBK ), Oxford Industries (OXM), Robbins & Myers (RBN), Sealy (ZZ), and Synnex (SNX). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Today features the S&P/Case-Shiller home price index, as well as the Conference Board's latest consumer confidence report. On Wednesday, durable goods data and the regularly scheduled crude inventories report will hit the Street. Thursday's round-up will include weekly jobless claims and the final report on fourth-quarter GDP. The week wraps up on Friday with personal income and spending data, the Chicago purchasing managers index (PMI), and the final March reading of the Thomson Reuters/University of Michigan consumer sentiment index.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,096,840 call contracts traded on Monday, compared to 812,612 put contracts. The resultant single-session put/call ratio arrived at 0.74, while the 21-day moving average was 0.62.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended mostly higher today, following suit with Wall Street's Monday rally. Traders were encouraged by the prospect of a continued accommodative stance from the U.S. central bank, with the dollar's ensuing weakness supporting metals and mining stocks. However, Shanghai-listed issues finished modestly lower, pressured by a downbeat report on industrial earnings. By the close, Japan's Nikkei surged 2.4%, Hong Kong's Hang Seng rose 1.8%, South Korea's Kospi gained 1%, and China's Shanghai Composite retreated 0.2%.

European equities are wobbling around breakeven at midday, with strength in banking stocks providing a positive edge. Royal Bank of Scotland is pacing the sector rally, thanks to reports that Abu Dhabi may be looking to buy a stake. At last check, the German DAX is up 0.6%, the French CAC 40 has advanced 0.1%, and London's FTSE 100 is off 0.3%.

Overseas markets

Currencies and Commodities

With Federal Reserve Chairman Ben Bernanke not quite putting the kibosh on the possibility for an additional round of quantitative easing, the U.S. dollar index is pointed lower heading into today's session. At last check, the greenback was down 0.05% at $78.94. Crude oil, meanwhile, is trading 0.1% higher at $107.11 per barrel. Gold futures are also on pace to continue their recent gains, with the malleable metal up 0.3% at $1,693.30 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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This article appears in: Investing , Options

Referenced Stocks: CBK , CHRS , ESRX , MKC , NEOG

Schaeffer's Investment Research

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