Opening View: DJIA Cautiously Higher on Caterpillar Earnings, Euro-Zone Optimism

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U.S. stocks are cautiously higher ahead of the bell, as investors digest the latest reports from the euro zone. After a Sunday meeting, European Union ( EU ) leaders vowed to unveil a detailed financial plan for the debt-strapped region on Wednesday, following a second summit. On the home front, meanwhile, the latest quarterly results from Caterpillar ( CAT ) are bolstering the blue chips in pre-market action, with the Dow Jones Industrial Average (DJIA) trading about 28 points north of fair value.

Dow, S&P and Nasdaq futures

In earnings news, Caterpillar (CAT - 87.39) said third-quarter earnings jumped to $1.14 billion, or $1.71 per share, from $792 million, or $1.22 per share, a year earlier. Excluding items, the blue chip said it earned $1.93 per share, topping analysts' estimates for a per-share profit of $1.63. Meanwhile, revenue climbed to $15.72 billion from $10.45 billion, just surpassing the Street's forecast for sales of $15.03 billion. Looking ahead, CAT said it expects full-year earnings to be in the top range of its guidance of $6.25 to $6.75 per share. At last check, CAT is headed for a 4.7% surge out of the gate.

Elsewhere, Lorillard (LO - 115.64) said third-quarter net income fell a year-over-year 2.6% to $267 million. Meanwhile, adjusted earnings rose 7.2% to $1.94 per share, as shares outstanding depleted by 9.6% to 137 million. Revenue, meanwhile, increased 3.5% to $1.62 billion. The results were mixed, as analysts were looking for a per-share profit of $2.03 on sales of $1.14 billion. Looking ahead, Murray S. Kessler -- chairman, president, and chief executive -- said strong fundamentals and normalized wholesale inventories "bode well for a strong fourth quarter." Ahead of the bell, LO is bracing for a 7.5% slide.

In equities news, Mattel (MAT - 27.69) announced plans to buy HIT Entertainment -- which owns pre-school brands like Barney, Bob the Builder, and Thomas & Friends -- for $680 million. Pending regulatory approval, the acquisition is expected to close in the first quarter of 2012. Furthermore, MAT said the deal should add to its income starting in 2013. In pre-market trading, MAT is up 1.6%.

Earnings Preview

Today's earnings docket will also feature reports from Kimberly Clark ( KMB ), Petmed Express ( PETS ), VF Corp ( VFC ), Amgen (AMGN), Netflix (NFLX), STMicroelectronics (STM), Texas Instruments (TXN), Veeco Instruments (VECO), and Zions Bancorp (ZION). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Today, New York Fed President William C. Dudley will offer his two cents on the economic outlook at Fordham University. Meanwhile, the economic calendar kicks off on Tuesday with the release of the Conference Board's consumer confidence index, as well as housing data from both Case-Shiller and the Federal Housing Finance Agency (FHFA). On Wednesday, the Census Bureau will unveil its latest figures on new home sales and durable goods, while the Energy Information Administration (EIA) will release its regularly scheduled report on crude stockpiles. Thursday will bring us the latest gross domestic product (GDP) estimates, as well as the weekly jobless data from the Labor Department. The economic agenda will wrap up on Friday with the personal income and spending figures for September, the government's third-quarter employment cost index, and the final Thomson Reuters/University of Michigan consumer sentiment index for October.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,454,046 call contracts traded on Friday, compared to 727,112 put contracts. The resultant single-session put/call ratio arrived at 0.50, while the 21-day moving average was 0.70.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Asian markets ended higher today, thanks to optimism for a resolution to the euro-zone debt crisis. Furthermore, encouraging data from China added fuel to the fire, after a report showed that a Chinese manufacturing survey climbed to a five-month high in October. By the close, Hong Kong's Hang Seng advanced 4.1%, South Korea's Kospi climbed 3.3%, Shanghai stocks added 2.3%, and Japan's Nikkei tacked on 1.9%.

European indexes are mixed at midday, after French President Nicolas Sarkozy and German Chancellor Angela Merkel said EU leaders should have a comprehensive fiscal plan in place by Wednesday. At last check, London's FTSE 100 has added 0.2%, France's CAC 40 has surrendered 0.3%, and Germany's DAX is trading about 0.1% lower.

Overseas markets

Currencies and Commodities

The greenback has reclaimed some ground this morning, with the U.S. dollar index fractionally higher at last look. Meanwhile, crude futures have extended their upward momentum, tacking on 0.4% to explore the $87.72 level. Finally, gold futures have muscled noticeably higher, advancing $20.20, or 1.2%, to flirt with $1,656.30 an ounce.

Currencies and commodities

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This article appears in: Investing , Options

Referenced Stocks: CAT , EU , KMB , PETS , VFC

Schaeffer's Investment Research

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