Opening View: DJIA Set to Start June with a Dip on Ominous ADP Data


Though they couldn't claw their way out of the red for the month, the major market indexes sent May off with a bang on Tuesday. Ahead of the bell today, the bears are attempting to snap stocks' four-session winning streak, as investors digest ADP's employment data -- a much-dissected report ahead of the government's highly anticipated nonfarm payrolls figures, slated for release on Friday. Specifically, ADP said the U.S. added just 38,000 private-sector jobs in May, falling short of expectations for an additional 175,000 jobs. Against this ominous backdrop, the Dow Jones Industrial Average (DJIA ) is lingering almost 28 points south of fair value, while the S&P 500 Index (SPX ) is down roughly 2 points.

Dow, S&P and Nasdaq futures

In equities news, Yahoo! Inc. (YHOO - 16.55) has settled a dispute with Alibaba Group over its Chinese partner's abrupt transfer of Alipay to CEO Jack Ma , according to media reports. A source said the duo came to an agreement before YHOO's analyst meeting last week, though the deal still requires the consent of Alibaba board member Masayoshi Son. Ahead of the bell, YHOO is flirting with a 0.6% drop.

On the earnings front, Lions Gate Entertainment (LGF - 5.93) said it swung to a fiscal fourth-quarter profit of $46.1 million, or 33 cents per share, from a loss of $22.3 million, or 19 cents per share, in the year-ago quarter. Revenue, meanwhile, fell 6% to $377 million. Analysts, on average, were calling for a profit of 18 cents per share on sales of $395 million. At last check, LGF is poised to start the session about 0.8% higher.

Meanwhile, Philips-Van Heusen (PVH - 65.97) reported a first-quarter profit of $57.7 million, or 79 cents per share, reversing its year-ago loss of $27.6 million, or 53 cents per share. Excluding items, PVH earned $1.23 per share, surpassing expectations for an adjusted profit of $1.16 per share. Sales for the quarter docked at $1.37 billion, compared to the Street's forecast for revenue of $1.33 billion. Looking ahead, PVH said it now expects adjusted full-year earnings of $4.80 to $5 a share on revenue of $5.7 billion to $5.75 billion. Analysts, on average, were calling for a full-year profit of $4.90 per share on sales of $5.66 billion. In pre-market trading, PVH has tacked on roughly 2%.

Finally, Dollar General (DG - 35.07) reported a first-quarter profit of $157 million, or 45 cents per share, up from $136 million, or 39 cents per share, a year earlier. Excluding items, net income came in at 48 cents per share, while sales rose 10.9% to $3.45 billion. Analysts, on average, were anticipating a per-share profit of 50 cents on revenue of $3.42 billion. Going forward, DG reiterated its adjusted full-year forecast for earnings between $2.20 and $2.30 per share, encompassing the Street's projections for a profit of $2.26 per share. Ahead of the bell, DG has added about 0.7%.

Earnings Preview

Today's earnings docket will also feature reports from Coldwater Creek ( CWTR ), Daktronics ( DAKT ), and Vera Bradley ( VRA ), to name a few. Keep your browser at for more news as it breaks.

Economic Calendar

Today, reports on construction spending and vehicle sales, as well as the Institute for Supply Management's (ISM) survey of manufacturers, will hit the Street. On Thursday, the government's weekly jobless figures will take center stage, along with reports on April factory orders and first-quarter productivity. Finally, the economic calendar goes out with a bang on Friday, with the highly anticipated release of Uncle Sam's nonfarm payrolls report.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 886,206 call contracts traded on Tuesday, compared to 489,762 put contracts. The resultant single-session put/call ratio docked at 0.55, while the 21-day moving average remained at 0.64.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Markets in Asia ended mixed today, with Japanese stocks rising to a three-week high and Hong Kong shares breaking their six-day winning streak. Traders across the region weighed the latest manufacturing data from China, which showed a continued slowdown in economic growth during the month of May. Solar stocks extended gains on news of Germany's abandonment of nuclear energy, but Chinese banks slipped after Reuters reported that regulators are looking to move 2 trillion to 3 trillion yuan of debt from the balance sheets of local governments. By the close, Japan's Nikkei gained 0.3%, China's Shanghai Composite settled fractionally higher, South Korea's Kospi shed 0.05%, and the Hong Kong Hang Seng lost 0.2%.

Stocks in Europe have slipped into the red at midday, but the losses are relatively modest as traders digest data on the U.S. jobs market. In the telecom sector, Finnish handset specialist Nokia is extending Tuesday's decline, with analysts at Goldman Sachs, Bernstein, and Canaccord Genuity piling on with downgrades in the wake of the firm's freshly slashed sales guidance. However, Ericsson rose after winning a $1.2-billion contract from NBN Co. At last check, London's FTSE 100 is off 0.2%, while France's CAC 40 and the German DAX are both trading about 0.1% lower.

Overseas markets

Currencies and Commodities

The greenback has continued its slide this morning, with the U.S. dollar index down about 0.1%. Elsewhere, black gold has given back yesterday's modest gains. At last check, the front-month contract has backpedaled $0.15, or almost 0.2%, to linger near $102.55 per barrel. Meanwhile, gold futures have continued their retreat, with the front-month contract down $3.80, or nearly 0.3%, to trade around the $1,533-per-barrel marker.

Currencies and commodities

Unusual Put and Call Activity:

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Unusual options activity - puts

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This article appears in: Investing , Options

Referenced Stocks: CBOE , CWTR , DAKT , DG , VRA

Schaeffer's Investment Research

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