Opening View: DJIA Hovers South of Breakeven on Tempered Euro-Zone Optimism

By
A A A

In parity with Europe, U.S. stocks have explored both sides of breakeven ahead of the bell this morning. Investors initially cheered a pledge from European finance leaders to find a solution to the debt crisis prior to the Oct. 23 European Union ( EU ) summit. However, German Finance Minister Wolfgang Schaeuble has tempered the collective optimism, warning that this weekend's meeting will not be a cure-all for the euro zone's financial woes. On the home front, meanwhile, Wall Street is digesting the latest batch of earnings reports, with reports from Hasbro ( HAS ) and Halliburton ( HAL ) peppering a notably banking-centered docket. In addition, the energy sector has taken center stage, thanks to a major merger between Kinder Morgan ( KMI ) and El Paso Corp. ( EP ). At last check, the Dow Jones Industrial Average (DJIA) is headed for a 14.5-point drop out of the gate, while the S&P 500 Index (SPX) is bracing for a 4.1-point retreat.

Dow, S&P and Nasdaq futures

In earnings news, Halliburton (HAL - 37.43) said third-quarter earnings rose 26% to $683 million, or 74 cents per share, which included an 18-cent charge related to discontinued operations. Revenue, meanwhile, increased 40% to $6.54 billion -- a new quarterly record -- thanks to an accelerated drilling rebound in North America. Analysts, on average, were anticipating a per-share profit of 92 cents on sales of $6.39 billion. At last check, HAL is hovering about 0.8% above breakeven.


Meanwhile, Hasbro (HAS - 34.75) reported a third-quarter profit of $171 million, or $1.27 per share, compared to $155.2 million, or $1.09 per share, a year earlier. Net revenue jumped 5% to $1.38 billion. The results fell short of Wall Street's expectations, with analysts, on average, calling for a per-share profit of $1.30 on sales of $1.45 billion. In pre-market action, HAS is pointed 2.2% lower.

In equities news, Kinder Morgan (KMI - 26.89) last night announced plans to buy El Paso Corp. (EP - 19.59) for $38 billion in cash and stock, or $26.87 per share, representing a premium of 37% to EP's closing price on Friday. The combined enterprise will be worth roughly $94 billion, and will have 80,000 miles of pipeline, the company said. Ahead of the bell, KMI is down 3.3%, while EP is poised to open nearly 30% higher.

Earnings Preview

Today's earnings docket will also feature reports from Citigroup (C), Charles Schwab (SCHW), First Horizon National (FHN), Gannett (GCI), McMoRan Exploration (MMR), Stanley Black & Decker (SWK), Steel Dynamics (STLD), VMware (VMW), and Wells Fargo (WFC). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic calendar kicks off today with the Empire State manufacturing index for October, as well as September's industrial production and capacity utilization. Inflation data starts to roll in Tuesday, with the release of the producer price index (PPI) and core PPI for September. Additionally, Federal Reserve Chairman Ben Bernanke is scheduled to speak at a conference in Boston. Wednesday's docket features the consumer price index (CPI) and core CPI for September, along with last month's housing starts, weekly crude inventories, and the Fed's Beige Book report for October. The usual report on weekly jobless claims is due out Thursday, as well as existing home sales for September, the October Philadelphia Fed index, and the Conference Board's index of leading economic indicators. There are no major economic reports scheduled for Friday.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,036,262 call contracts traded on Friday, compared to 616,890 put contracts. The resultant single-session put/call ratio arrived at 0.60, while the 21-day moving average was 0.71.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Asian stocks ended higher today, after European finance leaders vowed over the weekend to find a solution to the debt crisis prior to the Oct. 23 EU summit. Among resource issues, energy stocks gained ground amid higher crude prices, while metals giant Rio Tinto rallied after unveiling plans to unload some of its aluminum assets. However, the gains were relatively modest in Shanghai, where traders are on edge ahead of the release of gross domestic product (GDP) data on Tuesday. By the close, Hong Kong's Hang Seng rose 2%, South Korea's Kospi climbed 1.6%, Japan's Nikkei added 1.5%, and China's Shanghai Composite tacked on 0.4%.

Over in Europe, German Finance Minister Schaeuble has injected a dose of cold, sobering reality, warning that this weekend's EU summit will not be a cure-all for the euro zone's financial woes. As a result, the benchmark indexes have pared their early gains at midday. At last check, London's FTSE 100 is up 0.2%, the French CAC 40 has added 0.1%, and the German DAX is down 0.4%.

Overseas markets

Currencies and Commodities

The greenback is trading higher this morning, with the U.S. dollar index up 0.5% at last look. Elsewhere, after tagging a three-week best on Friday, crude futures are hovering just north of breakeven, with the front-month contract up 3 cents at $87.03 per barrel. On the other hand, gold futures are fractionally lower at last check, with the malleable metal down 20 cents at $1,682.80 an ounce.

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 The NASDAQ OMX Group, Inc.

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


This article appears in: Investing , Options

Referenced Stocks: EP , EU , HAL , HAS , KMI

Schaeffer's Investment Research

Schaeffer's Investment Research
  • See all for Schaeffer's Investment Research
  • View Print Version

More from Schaeffer's Investment Research:

Related Videos

Stocks

Referenced

Most Active by Volume

33,974,386
  • $17.98 ▲ 0.28%
20,763,901
  • $91.29 ▲ 2.06%
19,110,793
  • $7.26 ▼ 1.22%
18,528,869
    $8.33 unch
18,014,920
  • $4.19 ▼ 1.18%
16,448,919
  • $25.83 ▼ 0.19%
14,748,190
  • $7.60 ▼ 1.43%
14,144,383
  • $112.01 ▼ 0.47%
As of 12/24/2014, 02:12 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com