Market Update: DJIA Rebounds Despite Falling Consumer Confidence


Shutterstock photo

It's been a rocky morning on Wall Street, with the Dow Jones Industrial Average (DJIA) bouncing back from an 80-point loss to trade just shy of the 10,850 level at last check. The blue-chip barometer quickly plunged on the open, after the Conference Board reported that the consumer confidence gauge fell to 48.5 in September, hitting its lowest level since February. The news overshadowed a rise in the Case-Shiller home price index. The Dow rebounded from growing support in the 10,750 region, but has been unable gain a foothold above 10,850 in intraday trading.

Intraday DJIA Chart

Overall, two thirds of the Dow's 30 components are trading in positive territory, with The Travelers Companies Inc. ( TRV ) and The Home Depot Inc. ( HD ) rising to the top, while Alcoa Inc. ( AA ) and Cisco Systems Inc. ( CSCO ) are sinking to the bottom.

In equity news, shares of Walgreen Co. ( WAG ) have soared more than 10% to hit a four-month high, as traders cheered the company's stronger-than-expected fourth-quarter earnings report . Specifically, Walgreen said that its fourth-quarter earnings, excluding items, came in at 54 cents per share, as revenue rose to $16.9 billion. Analysts were looking for a profit of 44 cents per share. Looking ahead, Walgreen said it was "confident" that earnings would continue to grow.

Taking a closer look at this morning's economic data, the prices of single-family homes rose a non-seasonally unadjusted 0.6% in July, according to the Case-Shiller home price index. Prices have added 3.2% in the past year. Prices rose in 12 of the 20 metropolitan areas tracked by Case-Shiller. Economists expect home prices to moderate in coming months as demand slows.

However, the rise in home prices was overshadowed by a sharp drop in consumer confidence. Specifically, the Conference Board's consumer confidence index fell to 48.5 in September, hitting the lowest level since February. Economists were expecting a reading of 51.5. Within the report, consumers' expectations dropped to 65.4 in September, while the current conditions index fell to 23.1 - both readings were at their lowest levels since February.

Unusual Put and Call Activity:

On the options front, the iShares Russell 200 Index Fund ( IWM ) exchange-traded fund ( ETF ) is dominating the put side of the coin today, with more than 153,000 of these bearishly oriented contracts changing hands. Volume has more than doubled IWM's daily average of 76,648 contracts. Digging deeper, we find that the out-of-the-money November 59 strike is the most popular, attracting more than 51,000 contracts at last check.

On the call side, Baidu Inc. ( BIDU ) is popular once again, with volume of 47,000 contracts more than tripling the stock's daily average of just 14,928 contracts. Traders have zeroed in on the stock's out-of-the-money October 105 call, as peak volume of 7,522 contracts has changed hands at this strike so far today. Earlier in the session, BIDU tagged yet another all-time high of $107.19 per share.

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

Click here for the new summer issue of SENTIMENT magazine

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

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

This article appears in: Investing Options

More from Schaeffer's Investment Research


Schaeffer's Investment Research

Schaeffer's Investment Research

Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by