Opening View: DJIA Futures Flat ahead of Fourth-Quarter GDP


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The Dow Jones Industrial Average (DJIA) is headed toward another uncertain start, as traders brace for a first look at fourth-quarter U.S. gross domestic product. Corporate earnings haven't exactly set a bullish tone, either, with Microsoft Corp.'s ( MSFT ) report falling flat, and Inc. ( AMZN ) selling off on weak operating margins. Still, Wall Street remains in a wait-and-see mode, as futures on the DJIA and the S&P 500 Index (SPX) are trading roughly 7 points above and 0.6 point below fair value, respectively.

The 12,000 level is becoming quite a thorn in the Dow's side, capping the DJIA throughout the past week. The 12,050-12,100 region could be the next area of resistance, if traders react well to today's economic data, while support remains firm near 11,900 and the Dow's 10-day moving average. The SPX, meanwhile, made a run at the 1,300 level yesterday, but was rebuffed late in the session. The 1,310 level is the next potential hurdle, while support for the broad-market index resides near 1,290 - site of its 10-day moving average.

In equity news, Honeywell International Inc. ( HON ) reported fourth-quarter net income of $369 million, or 47 cents per share. On a pro forma basis, the company said it earned 87 cents per share, edging past Wall Street's expectations by a penny per share. Sales rose 12% to $9.04 billion, versus analyst estimates for $8.84 billion.

Elsewhere, Ford Motor Co. ( F ) said that its fourth-quarter net income fell to $190 million, or 5 cents per share, from $886 million, or 25 cents a share, in the year-ago period. Adjusted income came in at 30 cents per share, missing Wall Street's expectations for 48 cents per share. Ford said it reduced outstanding automotive debt by more than $1.9 billion during the quarter, and by a total of $14.5 billion in 2010.

After the close last night, Microsoft Corp. ( MSFT ) said its fiscal second-quarter net income fell to $6.63 billion, or 77 cents per share, as revenue rose to $19.95 billion. Analysts were expecting earnings of 68 cents per share on $19.2 billion in revenue. Microsoft said it sold 8 million units of its Xbox Kinect motion-sensing video game controller, though Windows revenue fell to $5.1 billion, despite solid sales of the new Windows 7 operating system.

Finally, Inc. ( AMZN ) posted a fourth-quarter profit of $416 million, or 91 cents per share, as sales jumped by 36% to $12.95 billion. Analysts were expecting earnings of 88 cents per share on revenue of $13 billion. However, Amazon said that its fourth-quarter operating margins were 3.8%, below the 4.2% Wall Street was looking for. What's more, the company forecast first-quarter operating income of between $260 million and $385 million, implying a margin range of 2.9% to 3.9%. The current consensus estimate for first-quarter operating margins is 5%.

Earnings Preview

On the earnings front, American Electric Power Co. Inc. ( AEP ), Chevron Corp. (CVX), and Oshkosh Corp. (OSK) are slated to release their quarterly earnings reports today. Keep your browser at for more news as it breaks.

Economic Calendar

We round out the week today with a first look at fourth-quarter gross domestic product (GDP), November's s pending homes sales, and the University of Michigan's final look at January consumer sentiment.

Market Statistics

Equity option activity on the CBOE saw 1,455,766 call contracts traded on Thursday, compared to 820,946 put contracts. The resultant single-session put/call ratio arrived at 0.56, while the 21-day moving average held at 0.53.

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

Trading the News: A Contrarian View. Check out this special report from Bernie Schaeffer here.

Overseas Trading

Overseas trading has a bearish slant this morning, with only four of the 10 foreign indexes that we track in positive territory. The cumulative average return on the collective stands at a loss of 0.29%. In Asian trading, regional markets folded under the weight of Standard & Poor's downgrade for Japan, which cut the country's sovereign debt rating to AA- from AA after the close of trading yesterday. European stocks are following Asia's lead, with Sanofi-Aventis spearheading the decline after the company said a Phase III trial for its breast cancer drug iniparib didn't slow the progression of the disease or aid in survival rates.

Overseas markets

Currencies and Commodities

The U.S. Dollar Index is hovering just above breakeven this morning, rising 0.04% to 77.76. The greenback continued to edge higher versus the Japanese yen overnight, providing some lift for the index. Meanwhile, commodities are mixed in premarket trading. Crude futures have added 24 cent to $85.88 per barrel, rebounding from a near two-month low on Thursday. Finally, gold has slipped $4.80 to $1,315 an ounce in London, with the malleable metal pressured by a pledge from European Central Bank (ECB) President Jean-Claude Trichet to keep euro-zone prices at bay.

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 Nasdaq, Inc.

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This article appears in: Investing Options
Referenced Stocks: AEP , AMZN , F , HON , MSFT

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