The highly anticipated vote from the U.S. House of
Representatives regarding a solution to the pressing debt default
dilemma... was cancelled. After several hours of deliberation (and
) the House decided late Thursday night to cancel the vote over
Speaker John Boehner's deficit-reduction plan. As of now, it's
unclear what this means for the future of the U.S. economy. What
will come first: a vote to essentially increase the debt ceiling
and avoid default, or the Aug. 2 deadline?
As you can probably guess, this news hasn't had a positive
effect on stocks, with futures on all three major indexes pointing
lower this morning. More specifically, the Dow Jones Industrial
Average (DJIA ) is hovering 52 points south of fair value, while
futures on the S&P 500 Index (SPX ) are trading 5 points lower.
While there are several key economic and earnings reports on the
docket for today, with such a dark cloud cast over the Street this
morning, it seems unlikely that any of this news will have much of
a positive effect on the market; however, any negative news could
help fuel the bearish cause.
Weyerhaeuser Company (WY - 20.05) reported second-quarter
earnings bright and early this morning, boasting a profit of $10
million, or 2 cents per diluted share, on net sales of $1.8
billion. Excluding items, the company reported net earnings of $32
million, or 6 cents per diluted share. "We are confident that our
ongoing efforts to sharpen our focus and reduce costs are
positioning us to achieve our goal of generating superior
sustainable returns for our shareholders," said President and Chief
Executive Dan Fulton. Shareholders seem pleased with this news,
with the stock up nearly 2% ahead of the open.
Chesapeake Energy (CHK - 33.43) reported a second-quarter profit
of $510 million, or 68 cents per share, doubling its year-ago
earnings of $255 million, or 37 cents per share. Excluding items,
earnings arrived at 76 cents per share, while revenue surged 65% to
$3.32 billion. The results surpassed expectations, with the
consensus estimate calling for a profit of 72 cents per share on
$2.77 billion in revenue. Output rose 9.3% during the quarter, said
the natural gas giant.
Java king Starbucks (SBUX - 39.98) banked a fiscal third-quarter
profit of $279.1 million, or 36 cents per share, up 34% on a
year-over-year basis. Net revenue ramped up 12% to $2.93 billion,
as same-store sales increased 8% in the U.S. and 5% overseas. Wall
Street was expecting a slimmer profit of 34 cents per share on
$2.84 billion in revenue. Looking ahead, SBUX upped its full-year
earnings forecast to a range between $1.50 and $1.51 per share, up
from its prior guidance of $1.46 to $1.48 per share. Additionally,
the coffee chain said it's looking to add 600 net new stores in
fiscal 2011, with another net addition of 800 stores in fiscal
STEC, Inc. (STEC - 16.70) unveiled second-quarter earnings of
$9.7 million, or 18 cents per share, while revenue improved 34% to
$82.5 million. Excluding items, STEC earned 23 cents per share. The
results fell just short of consensus expectations, which called for
earnings of 24 cents per share on $83.3 million in revenue.
However, it was the firm's third-quarter forecast that really hit
the Street with a thud. STEC anticipates an adjusted profit of 8
cents to 10 cents per share, with revenue ranging between $70
million and $72 million. Analysts, on the other hand, were
predicting a profit of 31 cents per share on $96 million in
revenue. Chairman and CEO Manouch Moshayedi attributed the downbeat
guidance to "several market challenges." The Street has not
responded well to this news, with the stock down nearly 36% ahead
of the open.
Today's earnings docket will feature reports from Amgen (
), Meritage Homes (
), Newmont Mining (
), American Axle (
), and Arch Coal (
). Keep your browser at
for more news as it breaks.
The week's marquee economic report -- the advance estimate of
second-quarter gross domestic product (GDP) -- hits the Street
today. Also on the day's docket are the Chicago PMI and the final
Reuters/University of Michigan consumer sentiment index for
Equity option activity on the Chicago Board Options Exchange
(CBOE) saw 941,868 call contracts traded on Thursday, compared to
654,886 put contracts. The resultant single-session put/call ratio
docked at 0.70, while the 21-day moving average remained at
The summer 2011 issue of
magazine is now available here.
Asian markets retreated today, thanks to another stumbling block
on Capitol Hill. The House of Representatives' cancelled vote
exacerbated concerns about a resolution to the U.S. debt crisis,
and sent Hong Kong financial stocks like HSBC Holdings down more
than 1%. Elsewhere, Sony Corp. surrendered 3.3% after slashing its
fiscal-year forecast, while Nintendo plummeted 13% after trimming
its own fiscal-year profit outlook. By the close, Japan's Nikkei
fell 0.7%, Hong Kong's Hang Seng index dipped 0.6%, and South
Korea's Kospi backpedaled 1.05%.
European markets are also lower at midday, with banking stocks
pacing the retreat in the wake of growing fears of a U.S. default.
Furthermore, Moody's Investors Service issued a downgrade warning
for cash-strapped Spain, which added to the broad-market selling
pressure. In Paris, Credit Agricole was down more than 2.5% after
warning of an earnings hit stemming from losses at its Greek
business, while BNP Paribas was down more than 1.5% in sympathy
with its sector peer. At last check, France's CAC 40 is trading
1.3% lower, Germany's DAX has surrendered 0.9%, and London's FTSE
100 is down 1%.
Currencies and Commodities
Oil has had a rough week, as ongoing concerns over the U.S. debt
situation and a string of discouraging economic data have taken
their toll on black gold. As a result, crude futures are trading
lower this Friday morning, down 0.7 point, or 0.7%, ahead of the
open. On the other hand, the uncertain economic backdrop has done
nothing but boost the demand for gold, with the precious metal
tacking on 1.9 points, or 0.1%, to hover around $1,618.10 an ounce.
Finally, despite everything working against it, the dollar has
gained a bit of ground against its rivals this morning, adding 0.2
point, or 0.3%.
Unusual Put and Call Activity:
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