Opening View: DJIA Braces for Another Drop Amid Escalating Concerns About Euro-Zone Debt


Shutterstock photo

Wall Street is bracing for another negative start today, thanks to escalating concerns about the euro-zone debt crisis. Fueling the bears is the latest report from Eurostat, which indicated that the combined gross domestic product ( GDP ) of the 17-nation euro zone rose a meager 0.2% in the third quarter, exacerbating fears of a stalling regional economy. Echoing that angst, Italian bond yields have continued their rise above the benchmark 7% level, while 10-year Spanish bonds have soared 17 basis points amid re-emerging questions about the nation's fiscal fate. Against this backdrop -- and thanks to a lackluster earnings report from blue-chip bigwig Wal-Mart Stores ( WMT ) -- the Dow Jones Industrial Average (DJIA) is headed for another double-digit drop out of the gate.

Dow, S&P and Nasdaq futures

In earnings news, Home Depot (HD - 38.25) said third-quarter net income improved a year-over-year 12% to $934 million, or 60 cents per share. Revenue, meanwhile, rose 4.4% to $17.33 billion. The results exceeded expectations, with analysts calling for a per-share profit of 59 cents on sales of $17.11 billion. Meanwhile, HD also declared a dividend of 29 cents per share -- up 16% from its previous dividend -- and upped its fiscal 2012 earnings projection to $2.38 per share. Analysts, on average, are expecting a fiscal-year profit of just $2.36 per share. In pre-market action, HD is up 1.4%.

Wal-Mart Stores (WMT - 58.89) collected a third-quarter profit of $3.34 billion, or 96 cents per share, down 2.7% from its year-ago earnings of $3.44 billion, or 95 cents per share. Meanwhile, revenue ramped up 8.1% to $110.23 billion. The mega-retailer fell short of analysts' bottom-line estimates, as Wall Street was anticipating a profit of 98 cents per share on $108.22 billion in revenue. Looking ahead, WMT predicted fourth-quarter earnings of $1.42 to $1.48 per share, and a full-year profit of $4.45 to $4.51 per share. Analysts are projecting a profit of $1.45 per share for the fourth quarter, and $4.50 per share for the full year. At last check, WMT is bracing for a 2% retreat.

Elsewhere, Zagg Incorporated (ZAGG - 12.19) last night reported a third-quarter profit of $2.2 million, or 7 cents per share, compared to its year-ago profit of $3.9 million, or 16 cents per share. On an adjusted basis, earnings arrived at 16 cents per share. Revenue, meanwhile, soared 99% to $45.9 million. Analysts, on average, were expecting earnings of 7 cents per share on revenue of $44.7 million. Heading into the holiday season, ZAGG upwardly revised its full-year revenue guidance to $170 million. By comparison, analysts are expecting full-year sales to total $168.5 million. Ahead of the bell, ZAGG is down 2.4%.

Specialty retailer Urban Outfitters (URBN - 26.83) said its third-quarter earnings fell to $50.7 million, or 33 cents per share, down 31% from its year-ago profit of $73.1 million, or 43 cents per share. Despite a 7% decrease in same-store sales, net sales rose 6.3% to $610 million. URBN's results were mixed, however, as analysts were looking for a profit of 32 cents per share on sales of $626.2 million. At last look, URBN is headed for a 6.1% plunge out of the gate.

Earnings Preview

Today's earnings docket will also feature reports from Agilent Technologies ( A ), Autodesk ( ADSK ), Beazer Homes ( BZH ), Concur Technologies (CNQR), Covidien (COV), Dell (DELL), Dick's Sporting Goods (DKS), and Saks (SKS). Keep your browser at for more news as it breaks.

Economic Calendar

Inflation data starts to hit the Street today, with the release of the producer price index (PPI) and core PPI. Also due out are reports on retail sales and business inventories, along with the Empire State manufacturing index. On Wednesday, the consumer price index (CPI), core CPI, and NAHB housing market index are on the docket, as well as the latest stats on industrial production and capacity utilization. Thursday brings us the regularly scheduled weekly report on jobless claims, the Philadelphia Fed manufacturing index, and housing starts. The economic calendar concludes on Friday with the Conference Board's index of leading indicators.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 711,047 call contracts traded on Monday, compared to 550,879 put contracts. The resultant single-session put/call ratio arrived at 0.77, while the 21-day moving average was 0.69.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended mostly lower today, bogged down by all-too-familiar anxieties about euro-zone debt. Italian bond yields rose to a euro-era high of 6.2% during a Monday auction, suggesting that newly appointed technocrat Mario Monti has been saddled with quite a task in leading the country from the brink of default. The ongoing euro drama propelled the safe-haven yen higher, which weighed heavily on Japanese exporters. By the close, South Korea's Kospi declined 0.9%, Hong Kong's Hang Seng shed 0.8%, Japan's Nikkei fell 0.7%, and China's Shanghai Composite managed to gain 0.04%.

The major equity benchmarks are pointed south in Europe, with bond yields on Italian and Spanish debt both creeping toward uncomfortably high levels. Also weighing on sentiment is a dismal earnings report from Italy's UniCredit, which confessed to a hefty third-quarter loss of 10.64 billion euros. Against this backdrop, traders were none too impressed by GDP data showing modest expansion in France and Germany during the recently concluded quarter. At last check, the French CAC 40 is down 2.1%, the German DAX has dipped 2%, and London's FTSE 100 is 1% lower.

Overseas markets

Currencies and Commodities

The greenback is on the rebound this morning, with the U.S. dollar up 0.4%. On the other hand, crude futures have extended yesterday's retreat, with the front-month contract down 36 cents, or 0.4%, to linger near $97.86 per barrel. Likewise, gold futures have also continued their recent pullback, with the malleable metal last seen $8.40, or 0.5%, lower at $1,770 an ounce.

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

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.

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 Headlines for: A , ADSK , BZH , GDP , WMT

More from Schaeffer's Investment Research


Schaeffer's Investment Research

Schaeffer's Investment Research

Market News
Follow on:

Find a Credit Card

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