The Dow Jones Industrial Average (DJIA) kicked off August with a
bang on Monday, soaring some 200 points, or 2%, to close just shy
of former support in the 10,700 area. However, in the face ofa
mixed bag of earnings from Dow components Procter & Gamble Co.
and Pfizer Inc., the blue-chip barometer is taking a breather this
morning, with futures pointing toward an opening drop of about 35
points. Look for support to hold near 10,600 for the Dow should
selling pressure gain momentum. The S&P 500 Index (SPX) also
put on quite a show on Monday, closing firmly above its 200-day
moving average. The index also closed above the 1,125 level for the
first time since May 17. Like the Dow, however, the SPX is
digesting yesterday's gains, slipping about 3 points heading into
the open. Still, the broad-market index should find support near
1,120-1,115 if the bears manage to gain any momentum today.
Finally, the CBOE Market Volatility Index (VIX) plunged 6% to close
at a three-month low yesterday. The "fear" index has now plummeted
approximately 33% since the beginning of July.
In equity news, Procter & Gamble Company (
PG
) reported a 12% decline in fourth-quarter net income to $2.19
billion, or 71 cents per share. Analysts had been expecting
earnings of 73 cents per share. Sales for the quarter rose 5% to
$18.9 billion. "We are executing on all three dimensions of our
growth strategy," said CEO Bob McDonald. Looking ahead of fiscal
2011, P&G said it expects net sales to rise 2% to 4%, with net
earnings from continuing operations seen in a range of $3.91 to
$4.0 per share.
Elsewhere, Pfizer Inc. (
PFE
) said that its adjusted second-quarter profit came in at $4.96
billion, or 62 cents per share, as revenue jumped 58% to $17.3
billion. Wall Street was expecting earnings of 52 cents per share
on revenue of $16.63 billion. "Pfizer's more balanced global
portfolio...and diversified products generated strong performance
in a period of notable worldwide economic uncertainty," said Chief
Executive Jeff Kindler in a statement. Looking ahead, the company
expects to earn $2.10 to $2.20 per share on an adjusted basis for
the full year.
Finally, Coach Inc. (
COH
) posted a fourth-quarter profit of $195.5 million, or 64 cents per
share, with sales rising 22% to $950.5 million. Excluding one-time
gains, Coach earned 56 cents per share, falling in line with the
consensus estimate. The company said it expects to increase sales
and per-share profit this year at a double-digit pace.
Earnings Preview
On the earnings front, Archer Daniels Midland Co. (
ADM
), ArvinMeritor Inc. (
ARM
), D.R. Horton Inc. (
DHI
), Duke Energy Corp. (
DUK
), The Dow Chemical Co. (
DOW
), Marathon Oil Corp. (
MRO
), MasterCard Inc. (
MA
), MGM Resorts International (
MGM
), Molson Coors Brewing Co. (
TAP
), OfficeMax Inc. (
OMX
), Rowan Companies Inc. (
RDC
), Solarfun Power Holdings Co. Ltd. (
SOLF
), Tenet Healthcare Corp. (
THC
), Anadarko Petroleum Corp. (
APC
), AvalonBay Communities Inc. (
AVB
), CBS Corp. (
CBS
), Force Protection Inc. (
FRPT
), Leap Wireless International Inc. (
LEAP
), Novatel Wireless Inc. (
NVTL
), priceline.com Inc. (
PCLN
), STEC Inc. (
STEC
), True Religion Apparel Inc. (
TRLG
), and Whole Foods Market Inc. (
WFMI
) 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 weigh in this morning with reports
on personal income, personal spending and factory orders for June.
We'll learn about July auto sales in the afternoon. The market will
be graced with the weekly report on U.S. petroleum supplies on
Wednesday, along with the Institute of Supply Management (
ISM
) services index, but the Street will likely pay the most attention
to the ADP report on private sector employment, the first of three
days worth of employment data. The weekly report on initial jobless
claims will be released on Thursday. On Friday, the Labor
Department will release the month's highly anticipated nonfarm
payrolls and unemployment reports.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (
CBOE
) saw 1,167,750 call contracts traded on Monday, compared to
664,131 put contracts. The resultant single-session put/call ratio
arrived at 0.57, while the 21-day moving average slipped to
0.60.
**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.**
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Overseas Trading
Overseas trading is divided this morning, with only five of the
10 foreign indexes that we track in positive territory. The
cumulative average return on the collective stands at a loss of
0.06%. Asian trading ended mixed, with Japanese stocks following
Wall Street's lead despite the strengthening yen, while Chinese
markets slipped on concerns over economic growth. Traders also
digested news from the Reserve Bank of Australia, which kept its
benchmark interest rate unchanged at 4.5%. Across the pond in
Europe, profit taking dominated the landscape, as stocks pulled
back from a three-month high.
Currencies and Commodities
The U.S. Dollar Index has continued to plunge this morning, with
the index down 0.53% at 80.51. The dollar has not traded this low
against its major foreign rivals since mid-April. The next level of
support for the index should appear near the 80 level. Meanwhile,
crude futures broke out above the $80 per barrel mark yesterday,
and black gold has continued its advance in Asian trading. Heading
in to the open, crude future are up 44 cents at $81.78 per barrel.
Finally, the front-month gold contract is moving higher this
morning, rallying $4.80 to trade at $1,190.20 an ounce. The
malleable metal is still staring up at its falling 20-day moving
average, as well as potential psychological resistance near the
$1,200 an ounce region.
Unusual Put and Call Activity:
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