China's Slashed Growth Forecast Weighs on Stock Futures

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Wall Street is taking a cautious stance ahead of today's session, with futures on all three major market indexes pointed south of breakeven. International news has edged its way back into the spotlight, with traders digesting Chinese Premier Wen Jiabao's downwardly revised growth target. The 7.5% rate represents China's lowest growth target in eight years. Elsewhere, disappointing manufacturing data out of the euro zone has investors on edge. Meanwhile, factory orders and the Institute for Supply Management's ( ISM ) non-manufacturing index are on the domestic agenda. Against this backdrop, the Dow Jones Industrial Average (DJIA) is looking at a 28-point drop, while the broader S&P 500 Index (SPX) is trading 4 points lower.

Dow, S&P and Nasdaq futures

In equities news, American International Group, Inc. (AIG - 29.80) moved forward with plans to sell 1.7 billion shares of its remaining stake in AIA Group Ltd. on the Hong Kong market. The shares -- expected to garner approximately $6 billion for the insurer -- will be formally priced on Tuesday. The majority of the proceeds will be used to pay down AIG's outstanding debt to the U.S. government from its 2008 bailout. AIG is down 0.3% in pre-market trading.


Advanced Micro Devices (AMD - 7.46) said it will take a $703-million charge in the first quarter after restructuring its relationship with key manufacturer GlobalFoundries. The amount includes a $425-million payment to GlobalFoundries, as well as an additional non-cash charge. Under the terms of the revised agreement, AMD will also transfer its 8.8% equity stake in the company back to GlobalFoundries. However, AMD reiterated its first-quarter gross margin guidance of roughly 45%, as well as its fiscal 2012 gross margin forecast of 44% to 48%. AMD has added 0.1% ahead of the bell.

iSoftStone Holdings Limited (ISS - 10.59) swung to a fourth-quarter profit of $2.3 million, or 4 cents per share, from last year's loss of $3.9 million, or 25 cents per share. Excluding items, earnings arrived at 19 cents per share, while revenue jumped 38.9% to $85.8 million. The bottom-line results beat analysts' expectations for adjusted earnings of 18 cents per share, while revenue fell in line with the Street's forecast.

Earnings Preview

Today's earnings docket will also feature reports from AMAG Pharmaceuticals ( AMAG ), Arcos Dorados ( ARCO ), Fuel Tech ( FTEK ), Giant Interactive ( GA ), NutriSystem (NTRI), and VeriFone Systems (PAY). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic calendar kicks off today with factory orders, as well as the ISM's non-manufacturing index. While there are no economic reports of note on Tuesday, Wednesday's jam-packed docket brings us weekly crude inventories, ADP's private-sector payrolls figure for February, fourth-quarter productivity, and the Federal Reserve's consumer credit report. Jobs data continues to trickle in on Thursday, when we'll hear the regularly scheduled update on initial unemployment claims. We'll wrap up the week on a busy note, with the delayed release of the Labor Department's nonfarm payrolls report for February, as well as the latest unemployment rate, the trade deficit, and wholesale inventories.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,056,836 call contracts traded on Friday, compared to 659,777 put contracts. The resultant single-session put/call ratio arrived at 0.62, while the 21-day moving average was 0.61.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Asian markets ended in the red today, pressured by concerns about China's economy. The country's downwardly revised growth prompted selling in financials and resource stocks across the region. Meanwhile, trading in AIA Group was halted in Hong Kong, following reports that AIG is planning to unload its $6-billion stake at a discount. By the close, Hong Kong's Hang Seng lost 1.4%, South Korea's Kospi gave up 0.9%, Japan's Nikkei shed 0.8%, and China's Shanghai Composite lost 0.6%.

That gloomy economic outlook out of Beijing is also dragging on Europe at midday, and the negative mood has been compounded by a disappointing report on euro-zone factory activity. Markit's composite purchasing managers index (PMI) dropped to 49.3 in February, down from 50.4 in January, and below the preliminary result of 49.7. Italy and Spain suffered particularly drastic contractions last month, sending 10-year bond yields for both countries higher. At last check, the German DAX is down 0.9%, the French CAC 40 is off 0.4%, and London's FTSE 100 is 0.2% lower.

Overseas markets

Currencies and Commodities

The U.S. dollar index is higher this morning, with the greenback last seen up 0.06% at $79.46. Conversely, crude oil has continued to pull back , with the front-month contract last seen 0.4% lower at $106.27 per barrel. Gold futures are also pointed lower, with the malleable metal down 0.7% at $1,697.80 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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Unusual options activity - puts

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This article appears in: Investing , Options

Referenced Stocks: AMAG , ARCO , FTEK , GA , ISM

Schaeffer's Investment Research

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