Opening View: DJIA Headed Higher as Germany and France Try to Stabilize European Banks


U.S. stocks are looking to shrug off Friday's losses in the face of a stabilization plan for the struggling European Union banking sector. After much anticipation and without giving specifics, German Chancellor Angela Merkel and French President Nicolas Sarkozy said they will reveal further details about recapitalizing EU banks over the coming weeks. On the home front, it could be a volatile, low-volume session on Wall Street today, as there are no major economic or earnings reports due out, while government offices and bond markets are closed for Columbus Day. Against this backdrop, futures are headed higher across the board, with the Dow Jones Industrial Average (DJIA) sitting 147 points above breakeven, and the broader S&P 500 Index up over 19 points ahead of the bell.

Dow, S&P and Nasdaq futures

In earnings news, Natus Medical (BABY - 8.63) confessed its preliminary fiscal third-quarter results this morning, with the firm predicting revenue of approximately $51.5 million -- below its July forecast for $58 million. In a company statement, CEO Jim Hawkins attributed the shortfall to delayed orders in the neurology and newborn care divisions. Additionally, BABY updated its fourth-quarter forecast, with the company now anticipating an adjusted profit of 15 cents per share on revenue of $65 million. The healthcare concern's previous outlook called for earnings of 19 to 20 cents per share on $61 million, while analysts were looking for a profit of 19 cents per share on $67.5 million in revenue. Shares of BABY are headed 3% lower in pre-market trading.

Elsewhere, Scotts Miracle-Gro (SMG - 46.95) slashed its full-year earnings forecast to a range between $2.70 and $2.75 per share, down from its August guidance of $2.95 to $3.05 per share. The firm also said it anticipates a 2% sales decline for fiscal 2011, with the complete full-year results scheduled to hit the Street on Tuesday, Nov. 8. The lawn-care specialist attributed the downwardly revised outlook to "an unexpected year-over-year decline in consumer purchases in the U.S. during September." Analysts were expecting SMG to bank a full-year profit of $2.98 per share on $2.85 billion in revenue.

In equities news, Superior Energy Services (SPN - 27.41) and Complete Production Services (CPX - 20.38) confirmed their deal to merge, combining the two businesses into a single oilfield services company. Under the terms of the agreement, SPN will shell out 0.945 share of stock and $7 in cash for each CPX share, representing a healthy 61% premium to Friday's close at $20.38. SPN and CPX shareholders will hold about 52% and 48% of its outstanding shares, respectively. Ahead of the bell, CPX is looking to start the trading day with a 50.2% boost, while SPN is staring at a 9% deficit.

Earnings Preview

Today's earnings docket will feature a report from Mistras Group ( MG ). Keep your browser at for more news as it breaks.

Economic Calendar

The economic calendar is bare today, as government offices are closed in honor of Columbus Day. On Tuesday, the central bank will take the spotlight, with the release of the Federal Open Market Committee's (FOMC) latest meeting minutes on tap. The economic agenda is relatively light on Wednesday, with the MBA mortgage index slated for release. Meanwhile, Thursday heats up with the August trade balance, the holiday-delayed crude inventories report, and the weekly report on initial jobless claims. Friday winds down with September retail sales data, the Reuters/UMich consumer sentiment index, business inventories, and import/export prices.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 820,148 call contracts traded on Friday, compared to 566,876 put contracts. The resultant single-session put/call ratio arrived at 0.69, while the 21-day moving average was 0.72.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Asian benchmarks ended mostly higher today, buoyed by optimism over a potential plan to shore up the European banking sector. Despite speculation about a rift between Merkel and Sarkozy, the duo said they're in "total" agreement regarding a plan to recapitalize banks. However, property stocks were a pocket of weakness in China, after data revealed a monthly decline in home prices. By the close, South Korea's Kospi added 0.4%, Hong Kong's Hang Seng edged up 0.02%, and China's Shanghai Composite slipped 0.6%. Markets in Japan are closed for holiday.

The united front presented by Merkel and Sarkozy has also inspired some bullish tidings over in Europe, although details about a banking rescue won't be available until later this month. In the meantime, Greek financials have taken a turn for the worse after the Bank of Greece moved to nationalize struggling Proton Bank, while the Belgian government agreed to acquire certain assets from troubled lender Dexia. At midday, London's FTSE 100 is up 1.1 %, the French CAC 40 is 1% higher, and the German DAX has gained 0.3%.

Overseas markets

Currencies and Commodities

The greenback is trading modestly lower this morning, with the U.S. dollar index down 1.2% at last look. Elsewhere, crude futures have extended their recent gains, with the front-month contract up 1.8% to trade near $84.46 per barrel. Gold futures are also on the rise, reversing Friday's loss. At last check, the malleable metal has added on $30.10, or 1.8%, to flirt with $1,665.90 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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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: BABY , CBOE , MG

Schaeffer's Investment Research

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