While stocks struggled to pick a direction on Wednesday, the
bears have emerged in full force ahead of the bell this morning.
Lingering concerns about the economic health of Europe were
exacerbated by comments from economists at Morgan Stanley, who
cautioned that the U.S. and the euro zone are flirting with a
recession, and slashed their gross domestic product (
) forecasts for this year and next. On the home front, the latest
batch of tech-sector earnings have failed to impress, with both JDS
) and NetApp (
) pacing the post-earnings decliners. Against this backdrop -- and
ahead of another round of inflation data and the latest jobless
figures -- the Dow Jones Industrial Average (DJIA ) is headed for a
triple-digit drop out of the gate.
As alluded to earlier, economists at Morgan Stanley are
expecting the European Central Bank (ECB) to cut interest rates in
2012, which they expect to present a "dire growth backdrop."
Furthermore, thanks to lackluster GDP growth across the pond in the
second quarter, as well as the prospect of fiscal tightening both
at home and overseas, the economists slashed their 2012 global
growth forecast to 3.8% from 4.5%, and cut their current-year
growth outlook to 3.9% from 4.2%.
In earnings news, JDS Uniphase (JDSU - 11.70) reported fiscal
fourth-quarter earnings of $9.3 million, or 4 cents per share,
compared to net income of $1.5 million, or a penny per share, a
year earlier. On a non-GAAP basis, the company said it earned $53.9
million, or 23 cents per share, matching analysts' expectations.
Meanwhile, revenue rose a year-over-year 21% to $471.8 million,
topping estimates for sales of $466.4 million. However, JDSU
predicted current-quarter revenue between $400 million and $425
million, on an adjusted basis, falling short of the Street's
forecast for fiscal first-quarter sales of $470.3 million. At last
check, the shares of JDSU are poised for a 2% dip out of the
NetApp (NTAP - 41.66) reported an adjusted per-share profit of
55 cents for its fiscal first quarter, matching analysts' average
estimate. However, while quarterly revenue rose to $1.46 billion
from $1.15 billion in the year-ago quarter, the figures missed the
Street's expectations for sales of $1.51 billion. Meanwhile, the
company also forecast current-quarter revenue of $1.5 billion to
$1.6 billion, compared to analysts' projections for sales of $1.61
billion, and announced the retirement of CFO Steve Gomo. In
pre-market trading, NTAP is lingering about 13% south of
PetSmart (PETM - 41.56) posted a second-quarter profit of $61.2
million, or 54 cents per share, up from $48.4 million, or 41 cents
per share, a year earlier. In May, the company predicted
second-quarter earnings of 47 cents to 51 cents per share.
Meanwhile, revenue increased 7% to $1.49 billion, just topping the
Street's forecast for sales of $1.48 billion. In addition, PETM
upwardly revised its full-year earnings guidance to a range of
$2.40 to $2.48 per share, from its previous outlook for a per-share
profit of $2.32 to $2.42. Ahead of the bell, the shares of PETM
were last seen roughly 0.9% lower.
Today's earnings docket will feature reports from
), Salesforce.com (
), Brocade Communications Systems (BRCD), Autodesk (ADSK), Marvell
Technology (MRVL), Aeropostale (ARO), Dollar Tree (DLTR), GameStop
(GME), Foot Locker (FL), Children's Place (PLCE), Buckle (BKE), JA
Solar (JASO), and J.M. Smucker (SJM). Keep your browser at
for more news as it breaks.
Initial and continuing jobless claims are on the calendar for
today, along with the consumer price index (CPI) and core CPI for
July. Traders will also hear about existing home sales and the
Conference Board's index of leading economic indicators for July,
as well as the August Philadelphia Fed index. There are no major
economic reports on Friday.
Equity option activity on the Chicago Board Options Exchange
(CBOE) saw 913,260 call contracts traded on Wednesday, compared to
757,149 put contracts. The resultant single-session put/call ratio
arrived at 0.83, while the 21-day moving average was 0.75.
The summer 2011 issue of
magazine is now available here.
Asian markets ended lower today, pressured by lackluster
earnings and economic data from around the globe. In China, traders
were dismayed by data showing another uptick in annual housing
inflation, which raised the prospect of additional
policy-tightening measures. As a result, property stocks led the
laggards in Hong Kong and on the mainland. Meanwhile, the yen's
continued strength against the U.S. dollar pressured Japanese
exporters, such as Nissan and Toshiba. By the close, South Korea's
Kospi gave up 1.7% and China's Shanghai Composite lost 1.6%, while
Hong Kong's Hang Seng and Japan's Nikkei each fell 1.3%.
Stocks in Europe are getting hammered at midday, thanks in part
to Morgan Stanley's warning that the euro zone is "hovering
dangerously close to recession." Elsewhere, weak quarterly results
from Swiss cement producer Holcim weighed on its sector peers,
including Germany's HeidelbergCement AG. At last check, the German
DAX is down 3.7%, the French CAC 40 is off 2.6%, and London's FTSE
100 is 2.3% lower.
Currencies and Commodities
The greenback is gaining ground this morning, with the U.S.
dollar index last seen about 0.4 point, or 0.6%, higher. Meanwhile,
crude oil futures have retreated, with the front-month contract
down $1.50, or 1.7%, to trade around $86.23 per barrel. Finally,
gold futures have extended their recent quest for record highs,
with the malleable metal up $16.20, or 0.9%, to flirt with $1,810
Unusual Put and Call Activity:
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