Opening View: DJIA, SPX Edge Lower Ahead of ADP Employment Data

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The Dow Jones Industrial Average (DJIA) slipped 38 points yesterday, as traders found very little excitement in the day's economic and earnings reports. That lack of excitement should change later this morning, as the ADP employment report is slated to hit the Street, offering up a preview of Friday's non-farm payrolls and unemployment rate. Ahead of the report, U.S. stock futures are treading water just below breakeven, with the DJIA and S&P 500 Index (SPX) hovering about 7 points and 1.2 points below fair value, respectively. The Dow held above support in the 10,600 region yesterday, despite a solid dose of malaise on the session. Look for this region to hold up again today, with the 10,450 level providing a backstop if the ADP report is worse than expected. Meanwhile, the SPX should find support in the 1,115 region, which is home to its 200-day moving average, with the 1,100 level providing a floor during a steeper sell-off.

In equity news, Time Warner Inc. ( TWX ) posted second-quarter net income of $562 million, or 49 cents per share, as net revenue rose 8% to $6.4 billion. Wall Street analysts were expecting earnings of 45 cents per share and revenue of $6.2 billion. Looking ahead, TWX said it expects an adjusted 2010 earnings growth rate of at least 20% compared to 2009 earnings of $1.83 per share.

Elsewhere, Garmin Ltd. ( GRMN ) reported second-quarter earnings of $134.8 million, or 67 cents per share. On an adjusted basis, the company earned 85 cents per share, blowing past the consensus estimate for 73 cents per share. Total revenue rose 9% to $729 million, versus Wall Street's view for sales of $677.3 million. For the full year, Garmin forecast pro forma earnings in the range of $2.75 to $3.15 per share, surrounding the current consensus target of $2.90 per share.

Finally, Sirius XM Radio ( SIRI ) said that it swung to second-quarter net income of $15.3 million, or breakeven per share, from a loss of $159.6 million, or 4 cents per share, last year. Adjusted revenue rose 16% to $705.6 million. The company ended the quarter with 19.5 million subscribers, an increase of more than 1.1 million from the year prior. Analysts were expecting breakeven results on revenue of $690 million.

Earnings Preview

On the earnings front, Agrium Inc. ( AGU ), AOL Inc. ( AOL ), IntercontinentalExchange Inc. ( ICE ), Polo Ralph Lauren Corp. ( RL ), Qwest Communications International Inc. ( Q ), TRS Automotive Holdings Corp. ( TRW ), Transocean Ltd. ( RIG ), and Yamana Gold Inc. ( AUY ) are scheduled to release their quarterly earnings report today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The market will be graced with the weekly report on U.S. petroleum supplies later this morning, along with the Institute of Supply Management ( ISM ) services index. But, the Street will likely pay the most attention to the ADP report on private sector employment, the first of three days worth of employment data. The weekly report on initial jobless claims will be released on Thursday. On Friday, the Labor Department will release the month's highly anticipated non-farm payrolls and unemployment reports.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,057,768 call contracts traded on Tuesday, compared to 629,432 put contracts. The resultant single-session put/call ratio arrived at 0.60, while the 21-day moving average slipped to 0.60.

Volatility indices

NYSE and Nasdaq summary

**The volume data shown above is from the Nasdaq and NYSE exchanges only. It does not include regional volume activity, which means that other daily volume quotes you see may be higher.**

Dow, S&P and Nasdaq futures

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Overseas Trading

Overseas trading is a little worse for wear this morning, as only three of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a loss of 0.41%. In Asia, Japanese markets were pummeled as a strengthening yen negatively impacted exporters. In fact, the U.S. dollar fell to an eight-month low versus the Japanese currency. Meanwhile, China's service-sector growth accelerated in July, marking the fastest rate of growth in three months and helping to lift Shanghai and Hang Seng stock out of the red. Meanwhile, euro zone retail sales were flat in June, according to Eurostat, while Markit reported that the region's purchasing mangers' index expanded at its fastest pace in three months. The mixed data has offered little help, as regional indexes across the euro zone are trading broadly lower.

Overseas markets

Currencies and Commodities

For the first time this week, the U.S. Dollar Index is not trading in negative territory heading into the open on Wall Street. In fact, it would seem that the index has found a spot of short-term support in the 80.50 region, gaining about 0.01% at last check. Elsewhere, after putting in a strong performance yesterday, crude futures are pulling back this morning, as traders prepare for the latest report on U.S. petroleum supplies. In electronic trading, the front-month crude contract is down 54 cents at $82.01 per barrel. Finally, the front-month gold contract is once again flirting with the psychologically important $1,200 level. In London trading, the malleable metal has added $10.60 to trade at $1,198.10 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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Unusual options activity - puts

Unusual options activity - calls

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This article appears in: Investing , Options


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