Watch out below! Futures on the Dow Jones Industrial Average
(DJIA) are trading more than 100 points below fair value heading
into the open this morning, pointing toward a negative start to the
day. While Wall Street cheered early earnings reports on Monday,
last night's disappointing results from technology bellwethers IBM
Corp. and Texas Instruments Inc. have swept away any lingering
bullish investor sentiment. The S&P 500 Index (SPX) is also
poised for an opening drop, with futures on the broad-market index
off 12.5 points versus fair value. For those of you looking for a
backstop, the DJIA could find immediate support near 10,000, with
firmer support near 9,800 on a deepening pullback. As for the SPX,
technical analysts will be harping on the 1,065 level today, as it
is home to the index's "flash crash" lows, while support for a
steeper decline could manifest near 1,045, which is home to the
SPX's May and June lows. Finally, the CBOE Market Volatility Index
(VIX) has trended lower during the past couple of weeks. Given
today's prospects for a sharp sell-off, look for the VIX to pop
back above the 30 level, and potentially hold there through
Friday.
In earnings news, Harley-Davidson Inc. (
HOG
) reported this morning that its second-quarter net income rose to
$71.16 million, or 59 cents per share, as revenue remained flat at
$1.14 billion. Wall Street was expecting 42 cents per share on
revenue of $1.12 billion. Looking ahead, Harley-Davidson said it
expects to ship 201,000 to 212,000 motorcycles to dealers and
distributors worldwide in 2010, down 5% to 10% from 2009.
After the close last night, Texas Instruments Inc. (
TXN
) reported a second-quarter profit of $769 million, or 62 cents per
share, with revenue rising to $3.5 billion. Analysts had expected
earnings of 62 cents per share, on revenue of $3.52 billion.
Finally, IBM Corp. (
IBM
) said its second-quarter net income rose to $3.4 billion, or $2.61
per share. Revenue for the quarter rose 2% to $23.7 billion. The
company said foreign currency exchange rates reduced its revenue by
roughly $500 million in the quarter. Analysts had expected IBM to
post second-quarter earnings of $2.58 per share, and $24.17 billion
in revenue.
Earnings Preview
On the earnings front, Biogen Idec Inc. (
BIIB
), Goldman Sachs Group Inc. (
GS
), Johnson & Johnson (
JNJ
), PepsiCo Inc. (
PEP
), Boston Scientific Corp. (
BSX
), Juniper Networks Inc. (
JNPR
), Seagate Technology (
STX
), VMware Inc. (
VMW
), and Yahoo! Inc. (
YHOO
) are scheduled to release their quarterly earnings reports today.
Keep your browser at
SchaeffersResearch.com
for more news as it breaks.
Economic Calendar
June's building permits and housing starts will hit the Street
today, while the market will be graced with the weekly report on
U.S. petroleum supplies tomorrow. Weekly initial jobless claims
will be joined by June's existing home sales and June's leading
economic indicators on Thursday. Friday ends the week as it began,
with no reports slated for release.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (
CBOE
) saw 1,377,514 call contracts traded on Monday, compared to
722,787 put contracts. The resultant single-session put/call ratio
arrived at 0.52, while the 21-day moving average slipped to
0.64.
**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.**
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
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Overseas Trading
Overseas trading is in poor shape this morning, as only three of
the 10 foreign indexes that we track are in positive territory. The
cumulative average return on the collective stands at a loss of
0.23%. In Asia, most stock indexes climbed, finding support from
firmer Chinese shares as investors looked past disappointing
earnings by tech bellwethers IBM and Texas Instruments. European
shares fell, with banks lower after Hungary sold less of its debt
than expected. Overseas market information comes to you courtesy of
Schaeffer's Daily Bulletin
.
Currencies and Commodities
Uncertainty regarding a wave of key earnings reports has sent
some investors retreating to the safe haven of the U.S. dollar this
morning. At last check, the U.S. Dollar Index was up 0.32% at
84.78. Commodities, meanwhile, are taking the predicable path lower
in response to the rising dollar. For instance, gold futures are
down $4.00 at $1,177.90 in London, while crude oil has slipped 12
cents to trade at $76.78 per barrel in electronic trading.
Unusual Put and Call Activity:
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