Opening View: Chinese Data Sends Futures Reeling; DJIA Heads for Triple-Digit Loss

By
A A A

The Dow Jones Industrial Average (DJIA) rebounded from a loss of nearly 150 points yesterday to settle on a decline of roughly 50 points by the close, after the Fed attempted to reassure Wall Street that it still had tools left to help stimulate the U.S. economy. However, another round of poor economic data out of China has trumped the Fed's pledge in pre-market trading this morning, sending futures on the DJIA some 122 points below fair value. Similarly, futures on the S&P 500 Index (SPX) are trading nearly 15 points below fair value. If the major market indexes hold their pre-market course, we could see the DJIA break out of its recent trading range to the downside, while the SPX would end its seven-day stint above its widely watched 200-day moving average. Furthermore, the CBOE Market Volatility Index (VIX) could be headed toward its first daily close above both its 10-day and 20-day moving average since July 2, not to mention the potential for a move above its 200-day trendline.

In equity news, Walt Disney Co. ( DIS ) earned $1.33 billion, or 67 cents per share, in the third quarter, compared with a profit of $954 million, or 51 cents per share, in the year-ago period. The company citied improved results at ESPN and strong box-office proceeds from "Toy Story 3," "Iron Man 2," and "Alice In Wonderland" for the strong performance. Sales for the quarter rose 16% to $10 billion. Analysts were expecting a profit of 59 cents per share on sales of $9.37 billion.

Elsewhere, LDK Solar Co. Ltd. ( LDK ) swung to a second-quarter profit of $45 million, or 36 cents per American Depositary share, from a loss of $216.9 million, or $2.03 per ADS, in the same quarter last year. Revenue increased to $565.3 million from $228.3 million a year earlier. Analysts had forecast earnings of 22 cents per share on revenue of $461.8 million.

Finally, Aflac Inc.'s ( AFL ) board lifted its quarterly dividend 7.1% to 30 cents per share and resumed a suspended share buy-back program. The dividend is payable on Dec. 1 to shareholders of record as of Nov.

Earnings Preview

On the earnings front, Computer Sciences Corp. ( CSC ), IAMGOLD Corp. ( IAG ), Cisco Systems Inc. ( CSCO ), Pan Am Silver Corp. ( PAAS ), and Silver Wheaton Corp. ( SLW ) are scheduled to release their quarterly earnings report today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Today, the market will be graced with the weekly report on U.S. petroleum supplies, along with June's trade balance and July's Treasury budget. The weekly report on initial jobless claims will be released on Thursday, as will July's import/export prices. On Friday, we get a peek at the latest inflation data, with the release of the consumer price index ( CPI ) and the core CPI reading. Also on the docket are July's retail sales, August's University of Michigan consumer sentiment index, and June's business inventories index.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 932,585 call contracts traded on Tuesday, compared to 587,596 put contracts. The resultant single-session put/call ratio arrived at 0.63, while the 21-day moving average held at 0.60.

Volatility indices

NYSE and Nasdaq summary

**The volume data shown above is from the Nasdaq and NYSE exchanges only. It does not include regional volume activity, which means that other daily volume quotes you see may be higher.**

Dow, S&P and Nasdaq futures

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.

Overseas Trading

Overseas trading is in poor shape this morning, as only one of the 10 foreign indexes that we track is in positive territory. The cumulative average return on the collective stands at a loss of 1.26%. In Asia, stocks tumbled after Chinese data showed moderating economic growth and tame inflationary pressures. While this news helped bolster trading in China, easing worries over further tightening of monetary policy, the rest of Asia wasn't as lucky. Furthermore, heavy losses throughout most of Asia have spilled over into Europe, where the mining sector is leading the decline on fears of decreased demand.

Overseas markets

Currencies and Commodities

Safe-haven buying lifted the U.S. dollar and the Japanese yen in Asian trading, as investors fled equities in the wake of another round of poor Chinese economic data. As a result, the U.S. Dollar Index has jumped 1.11% in pre-market trading, as the index rebounds from multi-month lows set late last week. Despite the resurgent greenback, gold is edging higher, as traders diversify their safe-haven holdings. In London, gold futures have added 70 cent to trade at $1,198.70 an ounce. Finally, crude prices have taken a nose dive, with the lead contract dropping below the round-number $80 region. At last check, crude futures were off 77 cents at $79.48 per barrel.

Currencies and commodities

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

Follow Schaeffer's to the San Francisco MoneyShow Aug. 19 -- 21, 2010! Click here for details, including a list of scheduled presentations and how to register.



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


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

80,375,726
  • $42.25 ▲ 0.39%
53,756,113
  • $5.26 ▼ 2.77%
38,794,934
  • $17.005 ▼ 0.21%
33,680,619
  • $39.55 ▼ 4.81%
33,276,346
  • $46.8864 ▲ 0.44%
30,441,821
  • $101.47 ▼ 0.31%
21,200,187
  • $35.08 ▼ 0.26%
19,157,020
  • $26.305 ▲ 0.36%
As of 9/19/2014, 11:49 AM

Find a Credit Card

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