Dow, S&P 500 Edge Higher

By
A A A

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 ( SPX ) 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 ( SPY ), with traders preferring calls on the former, and puts on the latter.
  • a report on leading economic indicators from the Conference Board.
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...

Dow, S&P and Nasdaq futures

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) 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.

NYSE and Nasdaq summary

Volatility indices

Currencies and Commodities

  • The U.S. dollar index is up 0.1% at $79.61.
  • Crude oil is on the rebound following yesterday's better-than expected inventories report, with oil for May delivery 0.3% higher at $103.39 per barrel.
  • Gold futures are trading 0.1% north of breakeven, with the malleable metal last seen at $1,641.10 per barrel.

Currencies and commodities

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 ( CBOE ), 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.

Finally, 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 ( DD ), Microsoft ( MSFT ), 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 SchaeffersResearch.com for more news as it breaks.

Overseas Trading

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 0.6% lower.

Overseas markets

Unusual Put and Call Activity:

For an explanation of how to use this information, check out our Education Center topics on Option Volume and Open Interest Configurations .

Unusual options activity - puts

Unusual options activity - calls

Every morning, our research staff analyzes the prior day and the overnight markets, and monitors the morning wires to give you an accurate preview of the day to come. If you enjoyed today's edition of Opening View, sign up here for free daily delivery, straight to your inbox, before the opening bell.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options

Referenced Stocks: CBOE , DD , MSFT , SPX , SPY

Schaeffer's Investment Research

Schaeffer's Investment Research
  • See all for Schaeffer's Investment Research
  • View Print Version

More from Schaeffer's Investment Research:

Related Videos

Stocks

Referenced

Most Active by Volume

64,776,012
  • $117.60 ▼ 0.86%
53,107,118
  • $10.39 ▼ 1.05%
42,226,525
  • $17.10 ▼ 0.47%
36,916,182
  • $11.02 ▼ 0.36%
34,901,621
  • $40.75 ▼ 0.10%
31,489,542
  • $15.68 ▲ 0.06%
31,037,743
  • $75.63 ▲ 2.19%
29,604,587
  • $10.11 ▼ 0.69%
As of 11/25/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com