The Dow Jones Industrial Average (DJIA) plunged 141 points on
Monday, as traders continue to fret over the loss of momentum in
the economic recovery. With several key reports on tap today,
including the minutes from the most recent Federal Open Market
Committee meeting, Monday's late-session sell-off has plenty of
fuel heading into the open. In fact, futures on the DJIA and
S&P 500 Index (SPX) are trading about 65 points and 7.8 points
below fair value, respectively. With the Dow perched just above
10,000 heading into the open, it is likely that we will see this
psychological level breached in early trading. What's more, the SPX
appears poised to open near its lowest levels since July 7. Support
for the DJIA could materialize near 9,950, while 1,035 is the next
potential floor for the SPX should 1,040 fall. Finally, the CBOE
Market Volatility Index (VIX) could be poised for a breakout above
the 28-29 region - an area that has held the index in check since
July 6.
Merger and acquisition news continues to roll in this morning,
as Deere & Co. (
DE
) announced the sale of its John Deere Renewables unit to Exelon
Corp. (
EXC
) in a deal valued at $900 million. Exelon said that the deal will
help it expand into the wind generation business through the
addition of 735 megawatts of wind energy, including 230 megawatts
which are currently under development. Deere plans to take an
after-tax charge of approximately $25 million in its fourth-quarter
results as part of the sale.
Elsewhere, Cigna Corp. (
CI
) has acquired privately held Vanbreda International in a move to
expand its global presence. Terms of deal were not disclosed.
Vanbreda specializes in insurance and employee benefits for
non-government organizations as well as corporate clients. "There
is little overlap between our current businesses and capabilities
bringing mutual opportunity to both," said William Atwell,
president of CIGNA International.
Finally, in earnings news, Dollar General Corp. (
DG
) reported second-quarter earnings of $141 million, or 41 cents per
share, as sales rose to $3.2 billion from $2.9 billion a year ago.
Analysts were looking for a profit of 39 cents per share on sales
of $3.2 billion. Looking ahead, Dollar General lifted its 2010
adjusted earnings forecast to $1.68-$1.74 per share from
$1.62-$1.69 per share.
Earnings Preview
On the earnings front, DSW Inc. (
DSW
) will release its quarterly earnings report today. Keep your
browser at
SchaeffersResearch.com
for more news as it breaks.
Economic Calendar
The Case-Shiller home price index, the minutes from the most
recent Federal Open Market Committee meeting, the Chicago
Purchasing Managers' Index, and the Conference Board's Consumer
Confidence Index for August will be released today, while the ADP
report on private sector job growth in August will kick off three
days of employment data tomorrow. Also on tap for Wednesday are the
Institute for Supply Management's (
ISM
) manufacturing index for August, the July construction spending
report for July, and August's auto sales. We'll get the weekly
report on new jobless claims on Thursday, along with July reports
on factory orders and pending home sales. The hammer drops on
Friday with the Labor Department's numbers on nonfarm payrolls and
the unemployment rate in August. The ISM will also release its
services index for August.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (
CBOE
) saw 692,508 call contracts traded on Monday, compared to 403,434
put contracts. The resultant single-session put/call ratio arrived
at 0.58, while the 21-day moving average held at 0.63.
**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.**
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Overseas Trading
Overseas trading is in poor shape this morning, as none of the
10 foreign indexes that we track are in positive territory. The
cumulative average return on the collective stands at a loss of
1.20%. Asian markets finished broadly lower, though Japan's Nikkei
outstripped the rest of the region with a plunge of 3.55%. In fact,
Japanese shares closed at a fresh 16-month low, with investors
bailing on exporters due to the continued rise in the yen, as the
nation's currency continued to rise despite the Bank of Japan's
efforts to further ease its monetary policy. In Europe, stocks were
last seen broadly lower, as a weak session on Wall Street and heavy
losses in Tokyo are weighing heavily on investor sentiment.
Economic concerns remain at the forefront, as the euro zone's
unemployment rate remained at 10% in July, despite German reporting
its 14th consecutive month of declining joblessness.
Currencies and Commodities
For maybe the first time in two weeks, the Japanese yen is not
the center of attention among commodities traders, as the euro has
turned higher in the wake of reports that Germany's jobless numbers
fell for the 14th straight month. That's not to say that the yen
didn't continue its rally versus the dollar, as the Japanese
currency shrugged off more comments from the country's top finance
minister. Surprisingly, the U.S. Dollar Index is only off about
0.10% in the midst of this flurry of activity, with the index
holding above support in the 83 region. In commodities, crude
futures are being pummeled once again, dropping $1.01 to $73.69 per
barrel. Finally, gold futures are down $3.40 at $1,235.80 an ounce
in London.
Unusual Put and Call Activity:
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