Opening View: DJIA Futures Rally as Caterpillar and Travelers Guide Higher


Shutterstock photo

The Dow Jones Industrial Average (DJIA) rebounded from support at its 20-day moving average to reclaim the psychologically important 11,000 level on Wednesday, as Wall Street cheered a round of positive corporate earnings reports. Looking at premarket activity this morning, we may be headed toward a repeat performance, as futures on the DJIA and the S&P 500 Index (SPX) are trading roughly 72 points and 6.8 points above fair value, respectively. Dow components Caterpillar Inc. ( CAT ) and Travelers Companies Inc. ( TRV ) have set a bullish tone for the Street this morning, while traders await the latest jobless claims data, September's leading economic indicators, and the Philly Fed's manufacturing index. Look for the DJIA to hold support near 11,050, with resistance in the 11,150-11,200 region. As for the SPX, the broad market index should continue to trade between 1,165 and 1,185.

In earnings news, Caterpillar Inc. ( CAT ) said its third-quarter profit jumped 96% to $792 million, or $1.22 per share, from $404 million, or 64 cents per share, in the year-ago period. Sales rose 53% to $11.13 billion. Wall Street analysts expected earnings of $1.09 per share and revenue of $10.5 billion. Looking ahead, CAT boosted its 2010 profit outlook to a range of $3.80 per share to $4 per share. "2010 is shaping up to be one of the most significant year-over-year increases in sales and revenues in our history," the company said. Analysts expected earnings of $3.76 per share for 2010.

Elsewhere, Travelers Companies Inc. ( TRV ) reported third-quarter net profit of $1.01 billion, or $2.11 per share, compared to $935 million, or $1.65 per share, in the same period a year ago. Travelers said that it sees 2010 operating income of $5.75 to $5.95 per share, up from its previous range of $5.20 to $5.45 per share.

EBay ( EBAY ) reported non-GAAP earnings of $531 million, or 40 cents per share. Revenue rose 1% to $2.25 billion. Analysts were expecting earnings of 37 cents per share on revenue of $2.18 billion.

Netflix ( NFLX ) announced that its third-quarter profit jumped 26% as the company's streaming service gathered further momentum. The company noted that in the fourth quarter, a majority of its subscribers will watch more streamed content as opposed to DVD. Excluding items, Netflix said it earned $42.2 million, or 78 cents per share, in the latest three months. Sales rose to $553.2 million from $423.1 million. Analysts expected a profit of 71 cents per share on sales of $549.7 million.

Earnings Preview

On the earnings front, AT&T Inc. ( T ), Freeport-McMoran Copper & Gold Inc. (FCX), Fifth Third Bancorp (FITB), Huntington Bancshares Inc. (HBAN), ITT Educational Services Inc. (ESI), PNC Financial Services (PNC), United Parcel Service Inc. (UPS), Xerox Corp. (XRX), Inc. (AMZN), American Express Co. (AXP), Capital One Financial Corp. (COF), and SanDisk Corp. (SNDK) will release their quarterly reports today. Keep your browser at for more news as it breaks.

Economic Calendar

The Labor Department's weekly initial jobless claims figures are on tap today, alongside the Conference Board's September leading indicators, and the Philadelphia Fed's manufacturing index. We end the week on a quiet note, as there are no major economic reports scheduled for Friday.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,298,649 call contracts traded on Wednesday, compared to 897,683 put contracts. The resultant single-session put/call ratio arrived at 0.69, while the 21-day moving average held at 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

Overseas Trading

Overseas trading looks strong this morning, as seven of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.60%. Asian markets finished mixed, with Hong Kong insurers rallying on expectations that Beijing's interest rate increase will improve their investment returns. However, mainland China was in retreat following news that the country's third-quarter gross domestic product rose 9.6% from the same period a year earlier, slowing from 10.3% growth rate in the second quarter. Across the pond in Europe, regional indexes are trading broadly higher in the wake of strong earnings from Nokia Corp. (NOK), Fiat, and Pernod Ricard.

Overseas markets

Currencies and Commodities

A rebound in the U.S. dollar in Asian trading and concerns about a slip in China's economy are pressuring crude futures this morning. At last check, the front-month contract was down 22 cents at $82.32 per barrel. However, while the greenback is up versus the Japanese yen, the euro is holding firm. In fact, the U.S. Dollar Index is off 0.30% in premarket trading, as the greenback declines versus most of its foreign competitors. Finally, gold futures are edging higher in London, gaining $2.80 to trade at $1,347 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 Nasdaq, Inc.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

This article appears in: Investing Options
Referenced Stocks: CAT , EBAY , NFLX , T , TRV

More from Schaeffer's Investment Research


Schaeffer's Investment Research

Schaeffer's Investment Research

Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by