Wall Street is heading into the session with bated breath, as
earnings season and the results of Spain's bond auction remain in
focus. The bulls seem determined to keep the Dow Jones Industrial
Average (DJIA) and the broader S&P 500 Index (
) above water, with futures sitting just north of breakeven. With a
number of market movers set to emerge, traders will be keeping
their eye on:
- key technical marks for the DJIA and SPX. Will the 13,000 and
1,375 levels hold as support?
- option activity on the CBOE Market Volatility Index (VIX) and
SPDR S&P 500 ETF (
), with traders preferring calls on the former, and puts on the
- a report on leading economic indicators from the Conference
Among equities in focus, short sellers reduced their exposure on
VMware (VMW ) ahead of earnings, while calls were the options of
choice on Yum Brands (YUM ) in the previous 10 sessions.
And now, on to the numbers...
Equity option activity on the Chicago Board Options Exchange (
) saw 1,246,864 call contracts traded on Wednesday, compared to
737,083 put contracts. The resultant single-session put/call ratio
arrived at 0.59, while the 21-day moving average was 0.64.
Currencies and Commodities
U.S. dollar index
is up 0.1% at $79.61.
is on the
following yesterday's better-than expected inventories report,
with oil for May delivery 0.3% higher at $103.39 per
are trading 0.1% north of breakeven, with the malleable metal
last seen at $1,641.10 per barrel.
In earnings news,
American Express (AXP - 58.04)
said its first-quarter profit rose 7% to $1.26 billion, or $1.07
per share, as net revenue improved 8% to $7.61 billion. Analysts
were looking for a profit of just $1 per share on $7.57 billion in
revenue. Options players showed a preference for near-term puts
ahead of last night's earnings, as evidenced by the stock's
Schaeffer's put/call open interest ratio of 1.55. AXP is trading
0.4% lower ahead of the bell.
VMware (VMW - 111.29)
banked an adjusted first-quarter profit of 66 cents per share,
while revenue jumped 25% to $1.06 billion. Wall Street expected a
profit of 60 cents per share on $1.03 billion in revenue. However,
VMW predicted full-year revenue of $4.53 billion to $4.63 billion,
with the low end arriving below analysts' consensus estimate of
$4.57 billion. Short sellers were jumping ship before Wednesday's
announcement. In the latest reporting period, short interest
backpedaled 25.6%, and now accounts for a low 2.6% of the stock's
float. VMW is up 2% in pre-market trading.
Yum Brands (YUM - 72.94)
reported a first-quarter profit of $458 million, or 96 cents per
share, up 73% from the year-ago period. Excluding items, earnings
arrived at 76 cents per share, while revenue rose 13% to $2.74
billion. The results surpassed analysts' expectations for a profit
of 73 cents per share on sales of $2.70 billion. However,
same-restaurant sales in China rose just 14%, falling just short of
analysts' expectations. In the two weeks leading up to last night's
announcement, traders on the International Securities Exchange
(ISE), Chicago Board Options Exchange (
), and NASDAQ OMX PHLX (PHLX) bought to open nearly three calls for
every put. YUM is set to drop 2% right out of the gate.
Bank of America Corporation (BAC - 8.92)
said its first-quarter profit fell 68% to $653 million, or 3 cents
per share, while revenue backpedaled 17% to $22.28 billion. The
first-quarter results included negative valuation adjustments of 28
cents per share. Analysts were looking for a per-share profit of 12
cents on $22.51 billion in sales. Analysts remain timid toward the
financial firm, with 74% maintaining a "hold" recommendation toward
the stock. BAC is on pace to start the session with a 4% lead.
Earnings and Economic Data
Today's docket includes
weekly jobless claims
, existing home sales, the
Philadelphia Fed's manufacturing index
, and the Conference Board's index of leading economic indicators.
Earnings season kicks into high gear, with quarterly results due
out from DuPont (
), Microsoft (
), Travelers (TRV), Verizon (VZ), Advanced Micro Devices (AMD),
Alaska Air Group (ALK), Southwest Airlines (LUV), Capital One
(COF), Chipotle Mexican Grill (CMG), Freeport-McMoRan Copper &
Gold (FCX), Philip Morris (PM), SanDisk (SNDK), Nokia (NOK),
Peabody Energy (BTU), Blackstone Group (BX), EMC Corp. (EMC),
Morgan Stanley (MS), New York Times (NYT), Rambus (RMBS), and
Riverbed Technology (RVBD). Keep your browser at
for more news as it breaks.
European equities are mixed at midday, as investors' relief over
respectable demand for an auction of Spain's two- and 10-year notes
has been offset by rising bond yields. Traditionally defensive
stocks, such as pharmaceuticals, have managed to claw their way
higher, with Roche leading the pack after the company said it will
drop its bid for Illumina. At last check, London's FTSE 100 is up
0.5%, while the German DAX is down 0.5%, and the French CAC 40 is
Unusual Put and Call Activity:
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Open Interest Configurations
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