Opening View: DJIA Set to Drop on Fading EU Enthusiasm, Moody's Threat

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U.S. stocks are set to start the week on a semi-sour note, thanks to waning enthusiasm over last week's European Union ( EU ) summit . What's more, despite a belt-tightening pact among euro-zone nations, Moody's Investors Service said it's not impressed. Specifically, the agency said it still intends to review the ratings of each EU country in the first quarter of next year, citing "the continued absence of decisive policy measures." Against this backdrop -- and with little equities and economic data to digest -- the Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) are headed for modest losses out of the gate.

Dow, S&P and Nasdaq futures

In equities news, Ingersoll-Rand (IR - 33.06) upped its quarterly dividend by 33% to 16 cents per share, marking the firm's second such increase this year. The dividend is payable March 30 to shareholders of record on March 12.

Elsewhere, Nasdaq OMX Group (NDAQ - 25.52) late Friday announced changes to its Nasdaq-100 Index (NDX). Specifically, the exchange operator said Fossil ( FOSL ), Avago Technologies ( AVGO ), Randgold Resources ( GOLD ), Hansen Natural ( HANS ), and Nuance Communications (NUAN) will be added to the index before the market opens on Dec. 19. The firms will replace Flir Systems (FLIR), Illumina (ILMN), NII Holdings (NIHD), Urban Outfitters (URBN), and Qiagen NV(QIA).

Earnings Preview

Today's earnings docket will feature reports from Avanir Pharmaceuticals (AVNR), FuelCell Energy (FCEL), and Quanex Building Products (NX). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic calendar kicks off today with the release of the Treasury Budget for November. On Tuesday, reports are due out on retail sales and business inventories. Then, at 2:15 p.m. Eastern, the Federal Open Market Committee (FOMC) will announce its latest policy decision. Wednesday's docket features data on import and export prices, as well as the usual update on domestic petroleum supplies. A slew of economic reports are due out on Thursday, including the producer price index (PPI), the Empire State manufacturing index, the Philadelphia Fed index, industrial production and capacity utilization, and weekly jobless claims. Finally, the week's slate of economic events wraps up on Friday with the release of the consumer price index (CPI).

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 737,740 call contracts traded on Friday, compared to 521,789 put contracts. The resultant single-session put/call ratio arrived at 0.71, while the 21-day moving average was 0.71.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended mostly higher today, following suit with Wall Street's Friday rally. Traders were relieved after European leaders agreed to an inter-governmental pact to address the region's fiscal woes, but Shanghai-listed equities sat out the day's advance. New data indicates that Chinese export growth slowed in November, suggesting that the euro-zone crisis is weighing on demand. By the close, Japan's Nikkei rose 1.4%, South Korea's Kospi added 1.3%, China's Shanghai Composite shed 1%, and Hong Kong's Hang Seng fell 0.06%.

European shares are wallowing in the red at midday, thanks in part to a negative note from Moody's. Despite some progress at last week's EU summit, the ratings agency reiterated the threat of potential downgrades, as "sovereign and bank debt markets [are] prone to acute dislocation which policy makers will find increasingly hard to contain." As a result, financial stocks are pacing the decline, with Societe Generale losing ground in Paris and Royal Bank of Scotland backpedaling in Britain. At last check, the German DAX is down 2.1%, the French CAC 40 is off 1.2%, and London's FTSE 100 is 0.7% lower.

Overseas markets

Currencies and Commodities

The greenback is on the rebound this morning, with the U.S. dollar index up 0.7%. Crude oil, meanwhile, is on the decline, with the front-month contract last seen 1.1% lower at $98.35 per barrel. Finally, gold futures have also retreated in early action, surrendering 1.9% to breach the $1,700-an-ounce marker. At last check, the front-month contract was trading at $1,684.50 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: AVGO , EU , FOSL , GOLD , HANS

Schaeffer's Investment Research

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