Opening View: DJIA, SPX Head Modestly Lower as Bulls Take a Breather

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After ushering in the New Year on a high note , the bulls are poised to take a breather this morning. Europe has once again emerged as a focal point, as Wall Street eyes rising bond yields in Spain, and preparation for a visit by international debt inspectors in Greece. Just yesterday, the latter country cautioned that it could exit the euro zone, should a second bailout fall through, and warned that more austerity measures could be on the horizon. On the home front, meanwhile, Americans have turned their attention to Iowa, where Mitt Romney eked out a victory over Rick Santorum in last night's Republican caucus. Ahead of the bell, the Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) are set to give back a portion of yesterday's gains.

Dow, S&P and Nasdaq futures

In earnings news, Acme Packet (APKT - 31.81) offered relatively weak fourth-quarter and full-year guidance, citing "uncertainty in the North American service provider market." Specifically, the company projected an adjusted quarterly profit of 26 cents to 28 cents per share on revenue of $84 million to $86 million. Analysts, on average, were calling for a per-share profit of 37 cents on sales of $93 million. Likewise, APKT cut its full-year earnings guidance to a range of $1.03 to $1.05 per share, and trimmed its revenue outlook to $308 million to $310 million. Previously, the firm had forecast earnings of $1.14 to $1.18 per share on sales of $315 million to $320 million. At last look, APKT is bracing for a 20% drop out of the gate.

Team, Inc. (TISI - 29.90) banked a fiscal second-quarter profit of $10.3 million, or 50 cents per share, an impressive 28% jump over last year's profit of $8.1 million, or 41 cents per share. Excluding items, earnings arrived at 53 cents per share. Revenue was also on the rise, jumping 19% to $158.3 million. The results came in stronger than forecast, as analysts, on average, projected a profit of 49 cents per share on $154.1 million in sales. Furthermore, the Texas-based construction company raised its full-year 2012 guidance to a range of $1.55 to $1.70 per share on $585 million to $610 million in revenue. As a point of contrast, analysts are calling for earnings of $1.61 per share on sales of $589.2 million. In pre-market trading, TISI is pointed 4.4% higher.

Finally, Progress Software (PRGS - 19.80) reported fourth-quarter net income of $11.7 million, or 18 cents per share, down 45% from $21.3 million, or 31 cents per share, in the year-ago period. Excluding items, earnings came in at 34 cents per share, compared to 47 cents per share in the year prior. Meanwhile, revenue fell by 6.1% to $136.3 million. Analysts, on average, were expecting an adjusted profit of 33 cents per share on revenue of $133.5 million. Looking ahead, PRGS is expecting fiscal first-quarter earnings of approximately 25 cents per share on revenue of around $120 million, falling short of Wall Street's prediction for a profit of 38 cents per share on revenue of $132 million. Ahead of the bell, PRGS is pointed 8.6% lower.

Earnings Preview

Today's earnings docket will also feature reports from Sonic ( SONC ), Resources Connection ( RECN ), UniFirst ( UNF ), and WSI Industries ( WSCI ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Factory orders are slated for release today. Thanks to Monday's holiday, the ADP private-sector payrolls report and weekly crude inventories will hit the Street one day later than usual, on Thursday. Also on tap are the ISM services index and weekly jobless claims. Finally, we wrap up the holiday-shortened week on Friday with the Labor Department's monthly report on nonfarm payrolls and the unemployment rate for December.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,101,665 call contracts traded on Tuesday, compared to 605,685 put contracts. The resultant single-session put/call ratio arrived at 0.55, while the 21-day moving average was 0.70.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Asian markets ended mostly lower today, even as upbeat economic data from the U.S. and Europe served as a boon for Japanese exporters. Seoul-listed stocks retreated after racking up healthy gains on Tuesday, while equities in mainland China turned south amid weakness in property and financial issues. By the close, Japan's Nikkei added 1.2%, South Korea's Kospi fell 0.5%, Hong Kong's Hang Seng lost 0.8%, and China's Shanghai Composite shed 1.4%.

The major European indexes are in the red at midday, with traders pricing in some jitters ahead of a German bond auction. A newspaper report today suggested that Spain might be considering a bailout plea, which applied pressure to euro-zone banks -- particularly after Italy's UniCredit priced a share offering at a steep discount. At last look, the French CAC 40 is 0.9% lower, the German DAX is down 0.6%, and London's FTSE 100 is about 0.1% in the red.

Overseas markets

Currencies and Commodities

The greenback is on the rebound this morning, with the U.S. dollar index up 0.4%. Elsewhere, crude oil futures are taking a respite from their quest for multi-month highs , with the front-month contract last seen 0.6% lower at $102.32 per barrel. Finally, gold futures are also fractionally lower, with the malleable metal clinging to $1,600 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: CBOE , RECN , SONC , UNF , WSCI

Schaeffer's Investment Research

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