Opening View: DJIA Futures Slip on Uncertainty Over Fed Stimulus

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Despite suffering a rocky session, the Dow Jones Industrial Average (DJIA) closed Tuesday at its highest point since April 24. However, the DJIA could be poised to retreat again this morning, as a Wall Street Journal report has called into question the scale of the Federal Reserve's much-anticipated quantitative easing measures. With the Journal warning Wall Street not to expect "shock and awe" this time around, futures on the DJIA and the S&P 500 Index (SPX) are trading roughly 30 points and 5 points below fair value, respectively. Technically, the blue chip barometer continues to push higher along support at its 10-day and 20-day moving averages, with short-term support at the 11,150 level gaining strength. Firmer support for the Dow lies at the 11,100 level, though the DJIA has been unable to push past growing resistance at the 11,250 region. As for the SPX, the 1,180 and 1,195 levels should remain focus points for support and resistance.

In earnings news, The Procter & Gamble Co. ( PG ) reported that first-quarter earnings fell 7% to $3.08 billion, or $1.02 per share, from $3.3 billion, or $1.06 a share, in the year-ago period. Sales rose 2% to $20.1 billion. Wall Street analysts expected a profit of $1 per share on revenue of $20.27 billion. Looking ahead to the second quarter, PG expects earnings of $1.05 per share to $1.11 per share and net sales growth of 3% to 5%, versus the consensus estimate for earnings of $1.11 per share. The firm also indicated that it is contending with higher commodity costs and marketing spending in the coming quarter.

BRCM

Also, Novellus Systems Inc. ( NVLS ) reported third-quarter net income of $76.3 million, or 82 cents per share, on revenue of $367.2 million. Excluding charges, Novellus said earnings for the quarter were 88 cents per share. Analysts had expected a profit of 84 cents per share, and $355.8 million in revenue.

Earnings Preview

On the earnings front, Brinker International Inc. ( EAT ), ConocoPhillips ( COP ), P.F. Chang's China Bistro (PFCB), Sprint Nextel Corp. (S), Goldcorp Inc. (GG), and Visa Inc. (V) will release their quarterly reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

September's durable goods orders, September's new home sales, and the weekly report on U.S. petroleum supplies are slated for release today, while tomorrow offers up the usual report on weekly initial jobless claims. Friday rounds out the week 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 1,324,696 call contracts traded on Tuesday, compared to 795,784 put contracts. The resultant single-session put/call ratio arrived at 0.60, 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 mixed this morning, as half of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a loss of 0.43%, mainly due to heavy losses in Asia. Specifically, regional indexes plunged, as investors grew concerned that the Federal Reserve's quantitative easing may not be as aggressive as many had hoped. Meanwhile, European markets are trading cautiously higher heading into midday activity, with the banking sector leading the muted rally.

Overseas markets

Currencies and Commodities

The U.S. dollar continues to inch higher this morning, as the U.S. Dollar Index was last seen up 0.11% at 77.80. The greenback's continued resilience is taking its toll on commodities. For example, the front-month crude contract has fallen 67 cents to $81.88 in electronic trading. Meanwhile, gold futures have slipped $4.70 to $1,333.90 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: BRCM , COP , EAT , NVLS , PG

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