Futures are pointing higher this morning, as a round of upbeat
earnings has bolstered the bulls' spirits. More specifically, tech
titan Apple Inc. (AAPL ) reported blowout earnings as a result of
demand for its best-selling iPad, while banking heavyweights U.S.
Bancorp (USB ) and PNC Financial Services (PNC ) reported
better-than-expected profits as a result of less capital devoted to
bad loans. Amid this backdrop, futures on the Dow Jones Industrial
Average (DJIA ) are hovering 33.6 points north of fair value, while
the S&P 500 Index (SPX ) is trading nearly six points above
Jumping right in... Tech titan Apple Inc. (AAPL - 376.85)
unveiled a fiscal third-quarter profit of $7.31 billion, or $7.79
per share, more than doubling its year-ago earnings of $3.25
billion, or $3.51 per share. Revenue for the quarter skyrocketed
82% to $28.57 billion. The results, as usual, crushed analysts'
expectations, which called for a profit of $5.85 per share on $25
billion in revenue. Even more encouraging, gross margin expanded to
41.7% from 39.1%, snapping a four-quarter streak of declines. The
Cupertino, Calif.-based company moved 9.25 million iPads during the
quarter, with Chief Financial Officer Peter Oppenheimer asserting
that Apple "sold every iPad we could make."
VMware (VMW - 106.02) banked a second-quarter profit of 55 cents
per share, on an adjusted basis, while revenue increased 37% to
$921 million. Analysts were looking for earnings of just 47 cents
per share on $873 million in revenue. Looking ahead, VMW predicted
third-quarter revenue of $915 million to $940 million, topping
analysts' consensus estimate of $898 million. "The quarter's strong
performance reflects the continued adoption of virtualization as a
key technology for the next era of computing," said CEO Paul Maritz
in a statement.
Yahoo (YHOO - 14.59) reported a second-quarter profit of $237
million, or 18 cents per share, up 11% from its year-ago earnings
of $213 million, or 15 cents per share. Net revenue dipped 5% to
$1.08 billion. The bottom-line results fell right in line with
analysts' expectations, but YHOO's top-line number missed the
consensus forecast of $1.11 billion. However, CEO Carol Bartz
chalked up the revenue shortfall to her ongoing turnaround efforts.
"We experienced softness in display revenue in the second half of
the quarter due to comprehensive changes we have made in our sales
organization to position ourselves for more rapid display growth in
the future," said Bartz in a company release.
Just moments ago, U.S. Bancorp (USB - 25.03) said its
second-quarter net income rose 57% to $1.2 billion or 60 cents per
share, up from $766 million, or 45 cents per share, a year ago.
Revenue, meanwhile, rose 3.8% to $4.69 billion, as the banking
issue devoted less capital to bad loans, and made more money off
interest income. These figures easily toppled the consensus
estimate for earnings of 45 cents per share on $4.52 billion in
It was a similar story for USB's sector sibling PNC Financial
(PNC - 55.83), as the banking issue also reported
better-than-expected earnings as a result of less capital tied up
in bad loans. In fact, during the latest quarter, credit-loss
provisions arrived at $280 million, compared with $823 million a
year ago and $421 million in the prior quarter. Breaking down the
numbers, PNC reported a profit of $912 million, or $1.67 per share,
up from a year-earlier profit of $803 million, or $1.47 per share.
Total revenue fell 7.9% to $3.6 billion. Analysts had predicted the
financial firm to report a profit of $1.46 per share on $3.62
billion in revenue. PNC is up over 2% ahead of the open.
Today's earnings docket will feature reports from American
), Altria Group (
), Intel (
), Abbott Laboratories (
), Cheesecake Factory (
), eBay (EBAY), F5 Networks (FFIV), Qualcomm (QCOM), and Xilinx
(XLNX). Keep your browser at
for more news as it breaks.
Existing home sales for June will hit the Street on today, along
with the usual update on U.S. petroleum supplies. A flurry of data
will be released Thursday, including weekly jobless claims, the
Philly Fed index for July, and the Conference Board's index of
leading economic indicators for June. There are no major economic
reports scheduled for Friday.
Equity option activity on the Chicago Board Options Exchange
(CBOE) saw 1,466,020 call contracts traded on Tuesday, compared to
760,604 put contracts. The resultant single-session put/call ratio
docked at 0.52, while the 21-day moving average was perched at
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Stocks in Asia closed higher today, as stronger-than-forecast
tech earnings once again provided a lift. Right on the heels of
IBM's upbeat report, Apple unveiled its own robust second-quarter
figures, providing a halo boost for sector cohorts such as Toshiba
and Foxconn. Traders also cheered signs of progress on the U.S.
debt ceiling debate, after President Obama backed a bipartisan
budget proposal from the Senate. However, Chinese-listed equities
sat out the rally amid concerns over slower economic growth and
still-simmering inflation. By the close, Japan's Nikkei and South
Korea's Kospi each rose 1.2%, Hong Kong's Hang Seng added 0.5%, and
China's Shanghai Composite edged 0.1% lower.
Strong Apple earnings and easing U.S. debt concerns are also
propping up investor sentiment in Europe, where markets are trading
higher at midday. Banking stocks are another pocket of strength, as
French President Nicolas Sarkozy and German Chancellor Angela
Merkel meet up to discuss sovereign debt issues ahead of Thursday's
summit of euro-zone leaders in Brussels. At last check, the French
CAC 40 is up 1.7%, London's FTSE 100 is 1.1% higher, and the German
DAX has added 0.4%.
Currencies and Commodities
Crude futures are trading higher this morning, continuing
Tuesday's positive momentum. Specifically, stronger-than-expected
housing data on Tuesday revived hopes for oil demand, sending black
gold barreling into the black by the close. Ahead of the open,
crude oil is hovering 1.3 points, or 1.3%, higher. Meanwhile, the
dollar has slipped 0.4 point, or 0.5%, as economic concerns at home
and abroad continue to weigh on the U.S. currency. Finally, after a
record run, gold futures have slipped 10.7 points, or 0.7%, this
morning, as the recent slew of upbeat earnings reports have
decreased the "safe-haven" asset's appeal.
Unusual Put and Call Activity:
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