Opening View: DJIA Clings to Four-Month Peak Ahead of Fed

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The Dow Jones Industrial Average (DJIA) rallied more than 1% to close at a four-month high on Monday, as Wall Street cheered the official end of the recession (in June 2009). The blue chip barometer enters today trading firmly above potential support in the 10,700 region, a region that had previously provided stiff technical resistance. Meanwhile, the S&P 500 Index (SPX) has potential support at the 1,135 level, and at 1,130 below that. Today, traders may overlook this morning's reports on building permits and housing starts in favor of the Federal Open Market Committee's (FOMC) decision on interest rates and monetary policy later this afternoon. Some Fed watchers are expecting signs of quantitative easing from the central bank, while others don't expect the FOMC to move until November. This uncertainty has pushed futures lower heading into the open, with the DJIA and the SPX trading 7.6 points and 1.3 points below fair value in premarket activity, respectively.

In equity news, ConAgra Inc. ( CAG ) reported first-quarter earnings of $146.3 million, or 33 cents per share, as revenue slipped 2.4% to $2.82 billion. Analysts were expecting a profit of 38 cents per share on revenue of $2.97 billion. ConAgra also said it now expects fiscal 2011 adjusted earnings per share to grow 5% to 7% from its fiscal 2010 level of $1.74. Additionally, the company lifted its dividend 15%, to 92 cents per share on an annualized basis, from 80 cents per share, effective in December.

Finally, Boeing Co. ( BA ) said that it is anticipating $80 billion in commercial aircraft purchases from African customers over the next 20 years. "As the demand for African commodities grows and foreign development and tourism increase, African carriers will require a modernized fleet in order to compete on routes historically dominated by foreign carriers," said Mike Warner, senior market analyst for Boeing Commercial Airplanes. Warner added that the current fleet of African aircraft is nearly 20 years old, on average.

Earnings Preview

On the earnings front, AutoZone Inc. ( AZO ), Adobe Systems Inc. ( ADBE ), Cintas Corp. ( CTAS ) and Darden Restaurants Inc. ( DRI ) are slated to release their quarterly earnings reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The Commerce Department will release August data on housing starts and building permits this morning, while the Federal Open Market Committee will weigh in shortly after 2 p.m. this afternoon with its decision on interest rates. We'll get the usual weekly report on U.S. petroleum supplies on Wednesday. The report on new jobless claims will be available early on Thursday, while August existing home sales and leading indicators will arrive after the open. Rounding out the week, durable goods orders for August and new homes sales for August are on tap on Friday.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,475,119 call contracts traded on Monday, compared to 704,247 put contracts. The resultant single-session put/call ratio arrived at 0.48, while the 21-day moving average slipped to 0.59.

Volatility indices

NYSE and Nasdaq summary

**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.**

Dow, S&P and Nasdaq futures

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Overseas Trading

Overseas trading is in fine shape this morning, as nine of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.35%. In Asian trading, regional indexes finished mostly higher ahead of the U.S. FOMC decision on interest rates and monetary policy. However, Japanese stocks slipped, as the yen advanced. Meanwhile, European markets have rebounded from session lows, after the Irish government's auctions of 1 billion euros of eight-year bonds and 500 million euros of three-year bonds received strong demand.

Overseas markets

Currencies and Commodities

The U.S. dollar is headed lower this morning, as the euro gained strength in the wake of a strong Irish bond auction. Furthermore, currency traders were also positioning themselves ahead of today's monetary policy decision from the FOMC. Despite the dollar's advance, gold has failed to rally in overseas trading, with the December contract up a mere $1.00 at $1,281.80 an ounce in London. Finally, crude futures are pulling back from yesterday's gains, slipping 23 cents to hover just below $76 per barrel.

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

Unusual options activity - calls

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.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: ADBE , AZO , BA , CAG , CBOE , CTAS , DRI

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