Opening View: DJIA Braces for Another Triple-Digit Drop on Uninspiring Earnings, China GDP


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U.S. stocks are poised to extend Monday's slide today, thanks to uninspiring gross domestic product ( GDP ) data out of China and a few lackluster big-cap earnings reports. Among the notable pre-market decliners are blue chips IBM Corp. ( IBM ) and Bank of America ( BAC ), which are both set to start the session in the red. Meanwhile, lingering concerns about the fiscal health of Europe have also fueled the bears ahead of the bell, with Moody's warning that France's triple-A credit rating could be in danger. Against this pessimistic backdrop -- and ahead of an afternoon speech from Federal Reserve Chairman Ben Bernanke -- the Dow Jones Industrial Average (DJIA) is flirting with a second straight triple-digit drop .

Dow, S&P and Nasdaq futures

In earnings news, IBM (IBM - 186.59) banked a third-quarter profit of $3.84 billion, or $3.19 per share -- up 7% from its year-ago earnings of $3.59 billion, or $2.82 per share. Operating earnings improved to $3.28 per share, while revenue rose 7.8% to $26.16 billion. The results were mixed, as Wall Street was looking for a profit of just $3.22 per share on a slightly more robust $26.26 billion in revenue. Big Blue also hiked its full-year forecast, with the tech giant now predicting at least $13.35 per share in operating earnings -- just north of the average analyst estimate of $13.32 per share. At last check, IBM is bracing for a 4.3% drop.

Meanwhile, VMware (VMW - 89.52) reported a third-quarter profit of $177.5 million, or 41 cents per share, compared to $84.6 million, or 20 cents per share, a year ago. On an adjusted basis, VMW earned 53 cents per share, while revenue jumped 32% year-over-year to $941.9 million. Analysts were projecting earnings of 50 cents per share on revenue of $929.4 million. "Demand was especially strong in the Asia-Pacific markets and we also experienced the seasonal impact of sales to the U.S. Federal Government," explained Chief Financial Officer Mark Peek. As a result of the strong third-quarter results, VMW is now predicting its fourth-quarter revenue to range between $1.03 billion and $1.06 billion, compared to the average analyst estimate of $1.03 billion. In pre-market trading, VMW is poised to open 1.5% lower.

EMC Corp. (EMC - 22.68) said third-quarter earnings rose 28% to $605.6 million, or 27 cents per share. Excluding items, earnings increased to 37 cents per share, compared to 30 cents per share a year earlier. Revenue, meanwhile, jumped 18% to $4.98 billion - a company record. The results topped expectations, with Wall Street calling for an adjusted per-share profit of 36 cents on sales of $4.91 billion. Furthermore, EMC said it's still on track to beat its full-year profit projections, thanks to solid demand. Ahead of the bell, EMC is on track for a 0.8% gain.

Finally, Bank of America (BAC - 6.03) swung to a third-quarter profit of $6.2 billion, or 56 cents per share, from its year-ago loss of $7.3 billion, or 77 cents per share. Net revenue for the quarter edged up 6% to $28.7 billion. The quarterly results were impacted by "a number of significant items," including a pre-tax gain of $3.6 billion from the sale of BAC's stake in China Construction Bank. Analysts, on average, were looking for the Charlotte-based financial firm to bank a profit of 20 cents per share on $25.95 billion in revenue. At last look, BAC is headed for a 1% drop out of the gate.

Earnings Preview

Today's earnings docket will also feature reports from Apple ( AAPL ), Coca-Cola ( KO ), Cree (CREE), Domino's Pizza (DPZ), Goldman Sachs (GS), Harley Davidson (HOG), Intel (INTC), Intuitive Surgical (ISRG), Johnson & Johnson (JNJ), Juniper Networks (JNPR), State Street (STT), UnitedHealth Group (UNH), and Yahoo (YHOO). Keep your browser at for more news as it breaks.

Economic Calendar

Inflation data starts to roll in today, with the release of the producer price index (PPI) and core PPI for September. Additionally, Fed Chairman Ben Bernanke is scheduled to speak at a conference in Boston. Wednesday's docket features the consumer price index (CPI) and core CPI for September, along with last month's housing starts, weekly crude inventories, and the Fed's Beige Book report for October. The usual report on weekly jobless claims is due out Thursday, as well as existing home sales for September, the October Philadelphia Fed index, and the Conference Board's index of leading economic indicators. There are no major economic reports scheduled for Friday.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 844,008 call contracts traded on Monday, compared to 598,331 put contracts. The resultant single-session put/call ratio arrived at 0.71, while the 21-day moving average was 0.71.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Asian markets ended lower across the board today, following suit with Wall Street's Monday decline. Traders priced in some anxiety after German Finance Minister Wolfgang Schaeuble warned that "we won't have a definitive solution" to Europe's debt crisis anytime soon. Even more troubling, China's GDP slowed to a 9.1% growth rate during the third quarter, falling short of consensus expectations for a 9.2% rise. By the close, Hong Kong's Hang Seng tumbled 4.2%, China's Shanghai Composite fell 2.3%, Japan's Nikkei dropped 1.6%, and South Korea's Kospi slipped 1.4%.

Downbeat GDP data from China is also dragging on Europe at midday, with miners taking the brunt of the impact. Meanwhile, banking stocks came under pressure in Paris, after Moody's warned that France's triple-A credit rating could be in jeopardy. Elsewhere, Royal Bank of Scotland backpedaled after a downgrade to "underweight" at Morgan Stanley, while Dexia declined amid concerns that stakeholder Holding Communal could be forced to declare bankruptcy. At last check, the French CAC 40 is off 2.1%, London's FTSE 100 is 1.5% lower, and the German DAX has declined 0.9%.

Overseas markets

Currencies and Commodities

The greenback is trading higher this morning, with the U.S. dollar index up 0.3% at last look. Elsewhere, crude futures have extended their retreat, with the front-month contract down 0.6% at $86.44 per barrel. Similarly, gold futures have also continued their decline, with the precious metal down $17.30, or 1%, at $1,659.30 an ounce.

Currencies and commodities

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This article appears in: Investing , Options
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