Opening View: DJIA Futures Fall on Fears of Chinese Interest-Rate Hike

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The Dow Jones Industrial Average (DJIA) appears to be headed for a repeat performance of Thursday's 74-point plunge, as Chinese media reports are hinting at a potential interest rate increase. Additionally, European Union officials are scrambling to deny rumors of an Irish bailout, casting more doubt on sovereign debt in the euro zone. On the home front, futures on the DJIA and the S&P 500 Index (SPX) are trading roughly 48 points and 7.2 points below fair value, respectively. For the week, the DJIA is sitting on a loss of about 1.4%, while the SPX is off roughly 1%, with both giving back nearly all of last Friday's relief rally gains. Look for the Dow to find support near the 11,200 region, which is home to the Dow's 20-day moving average, while the SPX should find a floor near the 1,205 region and its 10-day moving average.

NVDA

Finally, Walt Disney Co. ( DIS ) has added roughly 2.5% in premarket activity after the firm said its fiscal fourth-quarter profit fell 7% on charges and decreased earnings at its cable channels and theme parks. Disney said it earned $835 million, or 43 cents per share, compared to a profit of $895 million, or 47 cents, in the year-ago period. Results in the latest three months include restructuring and impairment charges of $58 million, or 2 cents per share. Revenue slipped 1% to $9.74 billion. Analysts were expecting a profit of 46 cents per share on sales of $9.95 billion.

Earnings Preview

On the earnings front, Agilent Technologies Inc. ( A ), D.R. Horton Inc. ( DHI ), J.C. Penney Company Inc. ( JCP ) and Wendy's Arby's Group Inc. (WEN) will release their quarterly reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

We end the week with the University of Michigan's first reading on November consumer sentiment. Looking ahead to next week, Monday offers up October's retail sales, November's Empire State manufacturing index, and September's business inventories report. On Tuesday, the October producer price index (PPI) and core PPI will be accompanied by the twin reports on industrial production and capacity utilization for October.

Wednesday brings the usual weekly report on U.S. petroleum supplies, as well as the October consumer price index (CPI), core CPI reading, October's housing starts, and building permits. We end next week early on Thursday, with weekly initial jobless claims, October's leading economic indicators, and November's Philadelphia Fed manufacturing index.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,628,409 call contracts traded on Thursday, compared to 921,560 put contracts. The resultant single-session put/call ratio arrived at 0.57, while the 21-day moving average held at 0.58.

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

Overseas Trading

Overseas trading looks abysmal this morning, as only one of the 10 foreign indexes that we track is in positive territory. The cumulative average return on the collective stands at a loss of 1.15%. The wave of selling pressure started in Asian trading overnight, as fears of interest rate hikes in Beijing sent traders scrambling for the sidelines. The concerns were raised after China's consumer price index surged a greater-than-expected 4.4% in October. Furthermore, Chinese media reported overnight that new rules out of Beijing limit foreign property rights. As a result, China's Shanghai Composite suffered its biggest single-session loss in 14 months.

Regional markets in Europe were quick to follow suit, but euro-zone leaders stepped up to calm rising fears concerning Irish debt, helping stocks to rise from session lows. In a joint statement, the finance ministers of France, Germany, Italy, Spain, and the U.K. said there would be "no impact whatsoever" on existing sovereign bondholders if new measures were taken to shore up struggling countries.

Overseas markets

Currencies and Commodities

This morning's sell-off isn't limited to just the equities market, as currencies and commodities are also feeling the pinch. After rallying together on Thursday, the U.S. dollar, gold, and crude oil have hit the skids in overseas trading. At last check, the U.S. Dollar Index was down 0.20% at 78.06, putting a dent in the greenback's weekly gains. Meanwhile, crude futures have dropped $1.70 to $86.58 per barrel in electronic trading, while gold futures have plunged $17.80 to trade at $1,385.50 an ounce in London.

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.



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This article appears in: Investing , Options

Referenced Stocks: A , DHI , DIS , JCP , NVDA

Schaeffer's Investment Research

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