Opening View: DJIA Poised to Pull Back; Buyers Cautious Ahead of FOMC Minutes, Data


After extending their Bernanke-inspired gains on Monday, U.S. stocks are trading modestly lower ahead of the next batch of Fed data. Specifically, the Federal Open Market Committee's (FOMC) latest meeting minutes are set to hit the Street at 2 p.m. Eastern, which should provide clues into the central bankers' decision to maintain rock-bottom interest rates into 2013. What's more, the pre-Fed caution could curb any enthusiasm -- or exacerbate any disappointment -- generated from an earlier round of reports, with data on home prices and consumer confidence scheduled for release at 9 a.m. Eastern. Against this anticipatory backdrop, buyers are sitting on the sidelines, with the Dow Jones Industrial Average (DJIA) set to test its mettle in the 11,500 neighborhood.

Dow, S&P and Nasdaq futures

In earnings news, Winn-Dixie Stores (WINN - 7.60) reported a fiscal fourth-quarter profit of $7.3 million, or 13 cents per share, down 48% from its year-ago earnings of $14 million, or 25 cents per share. Earnings from continuing operations arrived at 10 cents per share, while net sales backpedaled 3.8% to $1.62 billion. WINN attributed the year-over-year sales decline to an "extra week in the prior year period and a slight decline in identical store sales." Analysts, on average, were looking for a profit of 9 cents per share on $1.61 billion in revenue. In pre-market trading, the shares of WINN are down 4.6%.

Elsewhere, Dollar General (DG - 33.79) reported second-quarter earnings of $146 million, or 42 cents per share -- up 3% from the $141.2 million, or 41 cents per share, earned in the year-ago quarter. On an adjusted basis, the discount retailer earned 52 cents per share, surpassing the Street's forecast for a per-share profit of 48 cents. Meanwhile, revenue rose a year-over-year 11% to $3.58 billion, just topping analysts' consensus estimate for sales of $3.54 billion. For the fiscal year, DG expects to earn an adjusted profit of $2.22 to $2.30 per share, and predicted sales to rise 12% to 14%. Analysts, on average, were calling for a fiscal-year profit of $2.24 per share, and expect revenue to rise 12%. Ahead of the bell, DG is poised to open roughly 6.2% higher.

In other news, General Dynamics (GD - 63.01) inked a contract with the U.S. Army worth up to $3.7 billion, the Pentagon announced last night. Under the terms of the deal, which spans five years, the firm will provide computer hardware and software to the Department of Defense. The contract is a follow-on to the Army's potential $2 billion, 10-year Command Hardware Systems-3 contract awarded to GD's C4 Systems unit in 2003, Reuters reported. At last check, GD is lingering around the breakeven marker.

Earnings Preview

Today's earnings docket will also feature reports from Barnes & Noble ( BKS ) and Vera Bradley ( VRA ). Keep your browser at for more news as it breaks.

Economic Calendar

As alluded to earlier, the S&P/Case-Shiller 20-city home price index for June, the Conference Board's consumer confidence index for July, and the minutes from the latest meeting of the FOMC are all set to hit the Street today. Employment data starts to trickle in on Wednesday, with the release of ADP's private-sector payrolls report for August and the Challenger, Gray & Christmas update on monthly job cuts. Also due out are July's factory orders and the Chicago purchasing managers index ( PMI ) for August, as well as the usual update on weekly petroleum supplies. Initial jobless claims are due out on Thursday, as is the ISM manufacturing index for August. Also on the day's docket are July's construction spending and auto sales for August. The Labor Department's much-anticipated nonfarm payrolls report for August will be released ahead of the open on Friday, capping off our three-day deluge of jobs data.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,001,277 call contracts traded on Monday, compared to 534,098 put contracts. The resultant single-session put/call ratio arrived at 0.53, while the 21-day moving average was 0.78.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Asian markets ended mostly higher today, following suit with Wall Street's healthy gains. Exporters were lifted by upbeat data on U.S. consumer spending, with Sony and Mazda among the advancing equities. Meanwhile, financial firms were buoyed by news of the tie-up between Greece's Eurobank and Alpha Bank. In fact, even China Construction Bank closed higher, as the stock shrugged off Bank of America's substantial stake sale. By the close, Hong Kong's Hang Seng added 1.7%, Japan's Nikkei rose 1.2%, South Korea's Kospi climbed 0.8%, and China's Shanghai Composite shed 0.4%.

Stocks in London have come roaring back from a long holiday weekend, as British traders play catch-up with their Continental cohorts on the heels of Monday's advance. However, most other European markets have dipped into the red at midday, thanks to a sobering dose of economic data. Specifically, the European Commission's economic sentiment index for August fell to a worse-than-expected 98.3, recording its largest monthly drop in more than two years. At last check, London's FTSE 100 is up 2.4%, the French CAC 40 is flat, and the German DAX is down 0.7%.

Overseas markets

Currencies and Commodities

The greenback is trading higher this morning, with the U.S. dollar index up about 0.5%. Meanwhile, crude oil futures have pulled back after gaining ground on Monday, with the front-month contract down 26 cents, or 0.3%, to trade just north of $87 per barrel. On the other hand, gold futures have recovered from yesterday's retreat, with the malleable metal last seen about $5.60, or 0.3%, higher at $1,797.20 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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This article appears in: Investing , Options

Referenced Stocks: BKS , CBOE , PMI , VRA

Schaeffer's Investment Research

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