The Dow Jones Industrial Average (DJIA) slipped fractionally on
Monday, as Wall Street bulls came out in force to defend support in
the 10,300 region. This morning, the bulls' hard work appears to
have paid off, as the blue-chip barometer could be headed toward an
end of its five-session losing streak. At last check, DJIA futures
were indicating an opening gain of about 52 points, with strong
quarterly results from retailing giant Wal-Mart Stores Inc. (
WMT
) and home-improvement retailer Home Depot Inc. (
HD
) providing rally fuel. Meanwhile, the S&P 500 Index (SPX) is
trading about 7.4 points above fair value, as the broad-market
index looks to reclaim the 1,080 level and its 50-day moving
average. Finally, the CBOE Market Volatility Index (VIX)
experienced an outside day on Monday. An "outside day" is a
technical formation where a stock or index hits a higher high and a
lower low than the previous day. With the VIX closing lower
yesterday, this technical formation could indicate that the index
is set to reverse course and decline once again, potentially
breaching short-term support near the 25 level in the process.
In equity news, Potash Corporation of Saskatchewan Inc. (
POT
) announced that its board unanimously rejected an unsolicited
takeover bid from BHP Billiton Ltd. (
BHP
). BHP offered $130 per share in cash for POT; POT's board declared
the offer "grossly inadequate." POT has soared some 19% in
pre-market trading following the news.
Wal-Mart Stores Inc. (
WMT
) posted a second-quarter profit of $3.75 billion, or 97 cents per
share. Net sales rose 2.8% to $103 billion. Analysts were looking
for earnings of 96 cents per share on sales of $105.46 billion. For
the third quarter, Wal-Mart forecast earnings in the range of 87
cents to 91 cents per share, while raising its full-year guidance
to $3.95 to $4.05 per share. The consensus is expecting
third-quarter earnings of 91 cents per share and 2010 earnings of
$4.01 per share.
Finally, The Home Depot Inc. (
HD
) reported a second-quarter profit of $1.19 billion, or 72 cents
per share, on net sales of $19.41 billion. Analysts had expected
earnings of 71 cents per share on revenue of $19.62 billion.
Comparable-store sales for the quarter rose 1.7%. For fiscal 2011,
Home Depot expects to earn $1.90 per share from continuing
operations as sales rise 2.6%. The consensus profit estimate stands
at $1.92 per share for the year.
Earnings Preview
On the earnings front, Abercrombie & Fitch Co. (
ANF
), Saks Inc. (
SKS
), and Analog Devices Inc. (
ADI
) are scheduled to release their quarterly earnings report today.
Keep your browser at
SchaeffersResearch.com
for more news as it breaks.
Economic Calendar
The Commerce Department will release reports on housing starts
and building permits for July today, while the Labor Department
will supply July readings on the Producer Price Index (PPI) and the
core PPI. Meanwhile, the Federal Reserve will report on industrial
production in July. The usual weekly report on U.S. petroleum
supplies is due on Wednesday. The weekly report on initial jobless
claims will be released on Thursday, along with the Conference
Board's Leading Indicators Index for July, and the Philadelphia Fed
Index for August. There are no major economic reports scheduled for
Friday.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (
CBOE
) saw 815,446 call contracts traded on Monday, compared to 586,308
put contracts. The resultant single-session put/call ratio arrived
at 0.72, while the 21-day moving average held at 0.61.
**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.**
Every morning, our research staff analyzes the prior day and
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Overseas Trading
Overseas trading is looking strong this morning as eight of the
10 markets that we follow are in positive territory. The cumulative
average return on the group stands at a gain of 0.50%. In Asia,
stocks finished mixed, with Japan's Nikkei falling to its lowest
close in more than eight months. Exporters suffered the most, as
the yen held its ground versus the U.S. dollar. Meanwhile, European
shares edged up, buoyed by miners as metals prices rose on a softer
dollar, and insurer Aegon after it said it would repay state
aid.
Currencies and Commodities
The U.S. Dollar Index is continuing to pull back this week, with
the yen gaining strength on news that the Bank of Japan is
considering a stimulus package. Currently, the index has slipped
0.30% to trade at 82.59, below former support in the 82.50 region.
In commodities, gold remains a favorite among investors looking for
a safe haven. In London, the malleable metal has gained $2.60 to
trade at $1,228.80 an ounce. Finally, crude prices continue to
rebound by trading inversely to the U.S. dollar. At last check, the
front-month crude contract was up 83 cents at $76.43 per
barrel.
Unusual Put and Call Activity:
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