Opening View: DJIA Ready to Rally on Alcoa Revenue, Chinese Trade Data

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The major market indexes are pointed decisively higher ahead of the bell, with Wall Street applauding Alcoa's ( AA ) unofficial start to the corporate earnings season. Specifically, traders are celebrating the aluminum giant's stronger-than-expected top-line results, as well as its forecast for growing global demand. Elsewhere, solid data from China is also fueling the bulls, after Beijing saw its December trade surplus widen by more than expected last month. Against this backdrop, the Dow Jones Industrial Average (DJIA) is set to start the session with a triple-digit lead.

Dow, S&P and Nasdaq futures

In earnings news, Alcoa (AA - 9.43) last night reported its first quarterly loss since early 2010, thanks to ebbing demand and lower aluminum prices. Specifically, the blue-chip bigwig unofficially kicked off earnings season by confessing to a fourth-quarter loss of $193 million, or 18 cents per share, sharply reversing its year-ago profit of $258 million, or 24 cents per share. Excluding items, AA said it lost $34 million, or 3 cents per share - a penny steeper than analysts' expectations for a per-share loss of 2 cents. Revenue, meanwhile, edged 6% higher to $5.99 billion, topping expectations for sales of $5.72 billion. For 2012, the aluminum giant predicted demand growth of 7%, marking a sequential decline from the 10% growth recorded last year. However, the firm said it still expects global aluminum demand to double by 2020. Ahead of the bell, AA is set to open 2.8% higher.

WD-40 Company (WDFC - 41.08) said its fiscal first-quarter profit fell 25% to $6.8 million, or 42 cents per share, from last year's profit of $9.1 million, or 53 cents per share. Revenue rose a slight 5% to $84.9 million. Net income was negatively affected by higher commodity prices, with gross margin contracting 2.2% to 48.7%. The results came in lower than forecast, as analysts, on average, were calling for earnings of 54 cents per share on $86 million in sales. Looking ahead, WDFC reiterated its full-year fiscal outlook for earnings of $2.28 to $2.40 per share on revenue of $353 million to $370 million. By comparison, analysts are targeting a 2012 profit of $2.35 per share on $359.4 million in sales. In pre-market trading, WDFC is bracing for a 6.8% drop.

Finally, Standard Microsystems (SMSC - 24.98) reported a third-quarter loss of $3.3 million, or 15 cents per share, up from a loss of $4.6 million, or 20 cents per share, in the year-ago period. Excluding items, earnings came in at 21 cents per share, down from 52 cents per share in the previous year. Meanwhile, revenue fell 0.8% to $106.2 million. Analysts, on average, were expecting earnings of 34 cents per share on revenue of $107.5 million. Looking ahead, SMSC is expecting an adjusted current-quarter loss of 13 cents to 21 cents per share on revenue of $89 million to $93 million. Conversely, Wall Street offered a much bolder prediction for a profit of 30 cents per share on $104.5 million in revenue. At last check, SMSC is set to open 7.9% lower.

Earnings Preview

Today's earnings docket will also feature reports from RF Monolithics ( RFMI ) and Synnex ( SNX ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The Commerce Department's wholesale trade report is due out today, along with the NFIB's small-business optimism index. The Fed's Beige Book report will hit the Street Wednesday, and traders will also be treated to speeches from central bankers Charles Evans, Dennis Lockhart, and Charles Plosser. Thursday brings us the weekly update on jobless claims, accompanied by Commerce Department reports on business inventories and December retail sales. The week wraps up with the mid-month Thomson Reuters/University of Michigan consumer sentiment index, plus the Labor Department's report on the trade deficit and import/export prices.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,024,201 call contracts traded on Monday, compared to 668,941 put contracts. The resultant single-session put/call ratio arrived at 0.65, while the 21-day moving average was 0.70.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended higher today, with Shanghai-listed equities extending their winning streak on escalating hopes for more relaxed policies out of Beijing. Meanwhile, resource-related stocks paved the path higher, thanks to a generally well-received earnings report from aluminum giant Alcoa. Plus, the General Administration of Customs said China's trade surplus widened by more than expected in December, thanks to climbing exports and softer imports. By the close, Japan's Nikkei added 0.4%, South Korea's Kospi advanced 1.5%, Hong Kong's Hang Seng tacked on 0.7%, and China's Shanghai Composite rose 2.7%.

Meanwhile, the major European benchmarks are higher at midday, with Alcoa's stronger-than-expected top-line figures bolstering global miners. In addition, luxury-goods makers are among the notable advancers, after Switzerland's Swatch Group AG unveiled solid sales for 2011. At last look, the German DAX has soared 2.5%, the French CAC 40 has climbed 2.4%, and London's FTSE has added 1.2%.

Overseas markets

Currencies and Commodities

The greenback has continued its retreat this morning, with the U.S. dollar index down about 0.2%. As a result, dollar-denominated crude futures are on the rebound, with the front-month contract last seen 1.4% higher at $102.70 per barrel. Likewise, gold futures are also in the black, with the malleable metal up 1.5% at $1,632.80 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

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This article appears in: Investing , Options

Referenced Stocks: AA , CBOE , RFMI , SNX

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