Opening View: DJIA Futures Slip Ahead of GDP

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The Dow Jones Industrial Average (DJIA) rallied back from a nearly 75-point slide on Thursday, but still finished below its 10-day moving average. What's more, premarket activity is pointing to a rough session today, as futures on the DJIA and the S&P 500 Index (SPX) are trading roughly 52 points and 6.5 points below fair value, respectively. Wall Street is understandably jittery today, and not just because it's the anniversary of "Black Tuesday," the Oct. 29, 1929 stock market crash that started the Great Depression. Economic data will flood Wall Street this morning, with reports on third-quarter gross domestic product ( GDP ), Chicago's purchasing managers' index, and consumer sentiment slated for release. What's more, President Obama will speak later today on the state of the U.S. economy. Watch for the DJIA to hold support at the 11,000-11,050 region today, while resistance should hold firm near the 11,200-11,250 area. The SPX, meanwhile, should remain between 1,170 and 1,195.

In earnings news, Merck & Co. Inc. ( MRK ) posted a 90% decline in third-quarter earnings, with profit for the quarter plunging to $341.6 million, or 11 cents per share, from $3.4 billion, or $1.61 per share, last year. Excluding a $950 million legal reserve payment, restructuring costs and other items, Merck earned 85 cents per share in the latest quarter, as revenue soared 84% to $11.1 billion. Wall Street analysts expected Merck to earn 83 cents per share on revenue of $11.47 billion. Looking ahead, the company lifted the low end of its adjusted 2010 earnings outlook to a range of $3.31 per share to $3.39 per share.

Elsewhere, the reports of Microsoft Corp.'s ( MSFT ) demise were greatly exaggerated. After the close last night, the software giant reported a 55% jump in first-quarter profit to $5.4 billion, or 62 cents per share, with revenue rising 25% to $16.2 billion. Analysts were expecting a profit of 55 cents per share and $15.8 billion in revenue. Microsoft said that it benefited from widespread adoption of Windows 7, the newest version of its Windows operating system, and Office suite of tools.

First Solar ( FSLR ) reported third-quarter net income rose 16% to $177 million, or $2.04 a share, compared with net income of $153 million, or $1.79 a share, in the year-ago period. Sales jumped 66% to $798 million. Analysts had forecast First Solar to earn $1.94 a share on sales of $779 million.

Earnings Preview

On the earnings front, Arch Coal Inc. ( ACI ), Chevron Corp. (CVX), The Estee Lauder Companies Inc. (EL), and Sony Corp. (SNE) will release their quarterly reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

We round out the week today with an advance look at third-quarter gross domestic product, October's Chicago purchasing managers' index, and the final reading for the October University of Michigan consumer sentiment index.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,336,102 call contracts traded on Thursday, compared to 822,521 put contracts. The resultant single-session put/call ratio arrived at 0.62, while the 21-day moving average held at 0.60.

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 is broadly lower this morning, with only one of the 10 foreign indexes that we track in positive territory. The cumulative average return on the collective stands at a loss of 0.58%. In Asian trading, investors remained cautious ahead of next week's decision on monetary policy and likely quantitative easing by the U.S. Federal Reserve. Japan's Nikkei was hit fairly hard on Friday, as a rising yen and disappointing earnings from the likes of exporters such as Sharp applied heavy selling pressure. Meanwhile, European shares are broadly lower, with miners leading the decline on lower metals prices.

Overseas markets

Currencies and Commodities

The U.S. dollar is trading higher versus nearly all of its major foreign rivals this morning, with the exception of the Japanese yen. The greenback usually dips ahead of key Federal Open Market Committee meetings, but most analysts believe that currency traders have already priced in next week's quantitative easing. As a result, the U.S. Dollar Index is up 0.32% at 77.56 in premarket trading this morning. Not surprisingly, commodities are under pressure, with crude futures down 57 cents at $81.61 per barrel, while gold futures have slipped $1.50 to $1,341 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: ACI , FSLR , GDP , MRK , MSFT

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