Opening View: DJIA Poised to Rally as European Anxieties Lessen

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After all three major market indexes suffered sharp declines last week -- including the Dow Jones Industrial Average's (DJIA) worst weekly drop since October 2008 -- stocks are set to open higher today. At first, it looked as though it would be another down day for Wall Street, as Asian markets fell on concerns about Greece, but European markets have shifted gears to a more optimistic light. Following the International Monetary Fund's ( IMF ) meeting in Washington over the weekend, there is word that a possible interest-rate cut by the European Central Bank could be in store for the region. As the bulls make their way back to the Street, the DJIA is readying for a 132-point gain at the open, and both the S&P 500 Index (SPX) and Nasdaq Composite (COMP) are heading for a positive start, as well.

Dow, S&P and Nasdaq futures

In earnings news, Cal-Maine Foods (CALM - 30.43) reported a fiscal first-quarter profit of $3.1 million, or 13 cents per share, down 35% from its year-ago earnings of $4.8 million, or 20 cents per share. Revenue for the quarter climbed 28% to $243.8 million, but feed costs ramped up by 45%. Analysts, on average, were looking for a profit of 20 cents per share on $227 million in revenue. Ahead of the bell, CALM is set to open with a 0.4% lead.


In equities news, UBS AG (UBS - 11.25) reported that Oswald Gruebel resigned as CEO on Saturday, in the wake of the $2.3-billion rogue trading scandal that has plagued the Swiss bank. The new CEO is Sergio Ermotti, who joined UBS after losing out on the top position at the Italian bank UniCredit. At last check, the shares of UBS are poised to open about 3.6% higher.

Netflix (NFLX - 129.36) reported that it struck a content deal on Sunday with DreamWorks Animation SKG ( DWA ). NFLX will pay $30 million for each title from DreamWorks, and will be allowed to stream the production company's films and television specials beginning in 2013. This new partnership will also sever NFLX's ties with cable network HBO. In pre-market action, NFLX is headed 4.7% higher.

Earnings Preview

Today's earnings docket will also feature a report from Ferrellgas Partners ( FGP ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic calendar kicks off today with the release of new home sales data for August. On Tuesday, the Street will be graced with the S&P/Case-Shiller home price index for July, the Conference Board's gauge of consumer confidence for September, and the Richmond Fed manufacturing index. Last month's durable goods data will be released on Wednesday, along with the regularly scheduled crude inventories report. On Thursday, the economic agenda heats up with the final second-quarter gross domestic product ( GDP ) figures, pending home sales data for July, and the usual weekly jobless claims on tap. Finally, we'll wrap up the week with reports on personal income and spending for August, the latest Reuters/UMich sentiment index, and the Chicago purchasing managers index ( PMI ).

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 988,705 call contracts traded on Friday, compared to 643,688 put contracts. The resultant single-session put/call ratio arrived at 0.65, while the 21-day moving average was 0.71.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Conversely, European markets are pointed higher at midday. Stocks erased early losses on speculation that officials may expand the scope of the European Financial Stability Fund (EFSF), which gave banking stocks a boost. Meanwhile, European Central Bank (ECB) official Ewald Nowotny hinted that a potential rate cut is not out of the question, further fueling the relief rally. At last look, the German DAX has jumped 3.3%, the French CAC 40 is up 2.8%, and London's FTSE 100 is 1.1% higher.

Overseas markets

Currencies and Commodities

Surrendering earlier gains, the greenback is down fractionally this morning, with the U.S. dollar index 0.3% lower at last check. Crude futures, on the other hand, have reversed a portion of last week's heavy losses, with the front-month contract up 13 cents, or 0.2%, to trade near $79.98 per barrel. Gold futures are extending their pullback, after suffering their worst single-session drop in over five years on Friday. At last look, the malleable metal was down $10.90, or 0.7%, at $1,628.90 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.

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This article appears in: Investing , Options

Referenced Stocks: DWA , FGP , GDP , IMF , PMI

Schaeffer's Investment Research

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