Opening View: DJIA Cautious Ahead of Payrolls, New Austerity Measures for Greece

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reclaimed 12,000 level first-time jobless claims

Turning our attention now to the ever-so-popular European debt drama, investors cheered European Central Bank (ECB) President Mario Draghi's choice to cut the interest rate as his first official policy decision. However, the majority of the attention is still focused on Greece. As one Greek-led catalyst for a week's worth of volatile market movement -- the bailout referendum call -- is now defunct, uncertainty still remains on the fate of Greece's status in the euro-zone and Prime Minister George Papandreou's future as leader of the struggling country. Against this backdrop, the DJIA finds itself trading 21 points south of fair value, while the broader S&P 500 Index (SPX) is set to open about 4 points lower.

Dow, S&P and Nasdaq futures

In equity news, shares of Groupon ( GRPN ) are due to make their public trading debut on the Nasdaq today, after the online phenomenon priced its initial public offering (IPO) at $20 per share last night. The IPO price was just north of the expected $16-$18 range. Additionally, Groupon hiked the number of shares offered to 35 million from 30 million. The IPO values Groupon at nearly $13 billion, and is expected to generate some $700 million in proceeds for the daily deals site.

In earnings news, Starbucks (SBUX - 41.40) proved that java drinkers are remaining loyal to their brand, as it served up its fiscal fourth-quarter earnings after last night's close. Specifically, the Seattle-based coffee concern reported a quarterly profit of $358.5 million, or 47 cents per share, representing a 29% increase from last year's profit of $278.9 million, or 37 cents per share. Revenue was also on the rise, jumping 6.8% to $3.03 billion. These results came in much better than expected, as analysts, on average, were anticipating earnings of 36 cents per share on revenue of $2.95 billion. Looking ahead, SBUX expects full-year 2012 earnings per share to fall in the $1.75-to-$1.82 range. Analysts, meanwhile, are looking for earnings to fall on the high end of that spectrum, at $1.82 per share. SBUX also announced a 31% dividend increase -- raising its quarterly payout to 17 cents per share -- and added 20 million shares to its buyback authorization. SBUX is looking at a 3% jump right out of the gate.

Meanwhile, American International Group (AIG - 24.63) confessed to a third-quarter operating loss of $3.04 billion, or $1.60 per share, falling woefully short of Wall Street's forecast for a loss of 63 cents per share. The quarterly results were impacted by a number of negative developments, including a $1.5-billion write-down for AIG's plane-leasing unit, as well as a $2.3-billion decline in the value of its AIA stake. However, AIG attempted to ease the pain of its dismal quarterly performance by launching a $1-billion stock buyback. Shares of AIG are down over 3% in pre-market trading.

Finally, LinkedIn (LNKD - 34.64) swallowed a third-quarter loss of $1.6 million, or 2 cents per share, compared to a profit of $4.0 million, or 2 cents per share, in the year-ago period. Excluding items, LNKD earned 6 cents per share, while revenue rose by 126% to $139.5 million. Analysts, on average, were expecting a steeper loss of 4 cents per share on revenue of $127.6 million. The online professional networking giant also raised its full-year revenue estimate to a range between $508 million and $512 million, compared to its previous guidance of $475 million to $485 million. Separately, LNKD announced plans to issue roughly $100 million of shares "to raise capital for the company, facilitate an orderly distribution of shares and increase the company's public float." LNKD is looking at a 10% loss ahead of the bell.

Earnings Preview

Today's earnings docket will also feature reports from Plains Exploration and Production ( PXP ), Washington Post ( WPO ), Olympic Steel ( ZEUS ), YRC Worldwide ( YRCW ), Broadwind Energy (BWEN), Genpact (G), Horsehead Holding (ZINC), and Madison Square Garden (MSG). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

We round out the week with the the Labor Department's nonfarm payrolls report for October.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 929,767 call contracts traded on Thursday, compared to 593,716 put contracts. The resultant single-session put/call ratio arrived at 0.64, while the 21-day moving average was 0.67.

NYSE and Nasdaq summary


Volatility indices


Overseas Trading

Stocks in Asia ended higher today, after Greece opted to abandon its controversial referendum call. Traders also had a chance to react to Thursday's accommodative policy move by the ECB, which indicated that new president Mario Draghi is serious about fostering economic growth in the euro zone. Fresh optimism about the state of the global economy proved particularly supportive for miners and financial stocks, and exporters also capitalized on the news. However, Sony bucked the uptrend after forecasting a substantial annual loss. By the close, South Korea's Kospi and Hong Kong's Hang Seng added 3.1% apiece, Japan's Nikkei jumped 1.9%, and China's Shanghai Composite climbed 0.8%.

The major European indexes are mixed at midday, with traders on edge as the Greek government faces a confidence vote. The impending nonfarm payrolls report out of the U.S. has also incited some anxiety, as investors look for the next major clue about the state of the economic recovery. Meanwhile, a few notable earnings misses are weighing on sentiment, with German banking stalwart Commerzbank AG and Franco-American telecom concern Alcatel-Lucent both backpedaling on the heels of their quarterly reports. At last check, the German DAX is down 0.4%, the French CAC 40 has gained 0.1%, and London's FTSE 100 is up 0.8%.

Overseas markets

Currencies and Commodities

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

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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.



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This article appears in: Investing , Options

Referenced Stocks: GRPN , PXP , WPO , YRCW , ZEUS

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