Opening View: DJIA Pointed Lower as Wall Street Weighs JPMorgan Earnings, Chinese Data

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U.S. stocks are pointed lower today, as Wall Street digests the latest earnings results from blue-chip banking behemoth JPMorgan Chase ( JPM ). While the firm's per-share profit topped expectations, its credit-loss provisions jumped by one-third from the second quarter, reflecting a cautious outlook. Elsewhere, the latest data from China has also set a gloomy tone ahead of the bell, after the country's trade surplus narrowed for a second straight month in September. Against this backdrop, the major market indexes are hovering south of breakeven, with the Dow Jones Industrial Average (DJIA) bracing for a 79-point drop out of the gate.

Dow, S&P and Nasdaq futures

In earnings news, JPMorgan Chase (JPM - 33.20) said third-quarter earnings fell 3.5% to $4.26 billion, or $1.02 per share, while revenue edged 0.1% higher to $24.37 billion. The results surpassed Wall Street's expectations, with analysts calling for a per-share profit of 91 cents on sales of $23.4 billion. Meanwhile, the bank's third-quarter credit-loss provisions rose 33% from the second quarter, which reflects its "more cautious credit outlook," CEO Jamie Dimon told shareholders. Ahead of the bell, JPM is pointed 0.8% lower.


Elsewhere, XL Group (XL - 19.80) last night predicted it will swallow a third-quarter loss, pre-tax and net of reinsurance and reinstatement premiums, of $90 million to $120 million. XL's insurance business generated the bulk of the losses, due to a string of catastrophes during the three-month period -- including Hurricane Irene and Tropical Storm Lee, as well as the Texas wildfires. The Dublin-based insurer is scheduled to report its full third-quarter results in early November.

Finally, Universal Forest Products (UFPI - 25.94) said its third-quarter profit jumped 117% to $5.6 million, or 29 cents per share, from last year's earnings of $2.6 million, or 13 cents per share. Revenue decreased 2.4% to $468.9 million, from $480.6 million. UFPI's results failed to meet analysts' expectations for a profit of 32 cents per share on $471.5 million in revenue. "Our cost-cutting efforts and a more stable lumber market helped us generate a stronger profit in the quarter," claimed CEO Matthew J. Missad. However, he predicted the economy to "remain weak for the near term," and said that uncertainties in the housing market will limit the company's ability to provide meaningful guidance.

Earnings Preview

Today's earnings docket will also feature reports from Google ( GOOG ), Fastenal ( FAST ), Lindsay Corp. ( LNN ), and Valmont Industries ( VMI ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The August trade balance, the holiday-delayed crude inventories report, and the weekly report on initial jobless claims are slated for release today. Meanwhile, 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 1,070,265 call contracts traded on Wednesday, compared to 678,094 put contracts. The resultant single-session put/call ratio arrived at 0.63, while the 21-day moving average was 0.71.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended higher today, as signs of progress in Europe whetted the collective appetite for riskier assets. However, China's trade surplus eased by more than expected in September, marking the second straight monthly decline. Furthermore, exports and imports grew by less than expected last month. Nevertheless, exporters -- along with property developers and resource-related equities -- paced the advance in China and Japan. By the close, Japan's Nikkei added 1%, China's Shanghai Composite tacked on 0.8%, and Hong Kong's Hang Seng gained 2.3%.

On the other hand, European markets are mostly lower at midday, with bank stocks leading the retreat ahead of a highly anticipated Italian debt auction. In France, retailer Carrefour SA has given up more than 5% after cutting its outlook, while Alcatel-Lucent is leading the elite advancers after the Financial Times reported that the firm has agreed to sell its call-center services business. At last check, London's FTSE 100 has given up 0.9%, while both France's CAC 40 and Germany's DAX have shed 1.1%.

Overseas markets

Currencies and Commodities

The greenback is on the rebound this morning, with the U.S. dollar index up 0.4% at last look. Elsewhere, crude futures have continued their retreat ahead of the government's holiday-delayed inventory report, with the front-month contract down $1.52, or 1.8%, to trade near $84.26 per barrel. Finally, gold futures have pared some of their recent gains, with the precious metal last seen $13, or 0.8%, lower at $1,669.60 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

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This article appears in: Investing , Options

Referenced Stocks: FAST , GOOG , JPM , LNN , VMI

Schaeffer's Investment Research

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