Opening View: DJIA, SPX Pointed Higher Ahead of Economic Data; Strauss-Kahn Resigns

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The major market indexes snapped their losing streak on Wednesday, thanks to a combination of relatively robust earnings reports and a round of merger-and-acquisition news. Ahead of the bell today, the bulls are set to resume the reins, with a slew of retailers shining in the earnings spotlight. Furthermore, investors seem optimistic about the looming batch of economic data -- including weekly jobless figures and the Philly Fed index -- on tap, shrugging off lackluster economic reports from Japan and the scandal-prompted resignation of International Monetary Fund (IMF) chief Dominique Strauss-Kahn. Against this backdrop, the Dow Jones Industrial Average (DJIA ) is about 25 points north of fair value, while the broader S&P 500 Index (SPX ) is flirting with a 3.8-point lead out of the gate.

Dow, S&P and Nasdaq futures

In equities news, Williams-Sonoma Inc. (WSM - 43.26) said fiscal first-quarter earnings rose to $31.6 million, or 29 cents per share, from $19.5 million, or 18 cents per share, in the year-ago quarter. Excluding items, the company earned 30 cents per share, surpassing expectations for a profit of 28 cents per share. Net sales rose 7.4% to $771 million, topping the consensus estimate for revenue of $765.4 million. In addition, the home-furnishings concern reiterated its fiscal second-quarter earnings guidance, and raised its fiscal 2012 profit predictions to a range of $2.13 to $2.21 per share. At last check, WSM is headed about 0.4% higher.

Meanwhile, Advance Auto Parts (AAP - 70.66) banked a fiscal first-quarter profit of $109.6 million, or $1.35 per share, up just 0.1% on a year-over-year basis. Revenue for the quarter increased 3.7% to $1.9 billion, while gross margin expanded to 50.5% from 49.8%. The results fell just short of analysts' expectations, which called for a profit of $1.38 per share on revenue of $1.92 billion. "While this quarter's financial performance was below our expectations, we are committed to delivering on our full-year earnings per share outlook," said CEO Darren R. Jackson, with the company's forecast calling for fiscal 2011 earnings of $4.60 to $4.80 per share. In pre-market trading, AAP is down more than 7.5%.

Elsewhere, Hot Topic (HOTT - 7.66) swallowed a first-quarter loss of $7.7 million, or 17 cents per share, but the teen-oriented retailer broke even on an adjusted basis. Sales for the quarter edged slightly lower to $161.3 million. Analysts, on average, were looking for a loss of 1 penny per share on $160.9 million in revenue. Looking ahead, HOTT predicted a second-quarter loss of 9 cents to 11 cents per share, encompassing the Street's view for a 10-cent deficit. Ahead of the bell, HOTT has tacked on about 1.5%.

Finally, Sears Holdings Corp. (SHLD - 75.85) swung to a first-quarter loss of $170 million, or $1.58 per share, compared to a profit of $16 million, or 14 cents per share, a year earlier. On an adjusted basis, the retailer recorded a loss of $1.39 per share -- steeper than the per-share loss of 99 cents expected by analysts. Revenue fell to $9.71 billion from $10.05 billion, falling short of the Street's estimated sales of $9.73 billion. President and CEO Lou D'Ambrosia attributed the lackluster quarter to "unfavorable weather, economic pressures facing our customers, and comparisons to last year's government-sponsored stimulus program relating to the purchase of appliances." At last check, SHLD is up about 0.5%.

Earnings Preview

Today's earnings docket will feature reports from Aeropostale ( ARO ), Aruba Networks ( ARUN ), Autodesk ( ADSK ), Dollar Tree ( DLTR ), GameStop (GME), and Salesforce.com ( CRM ), just to name a few. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic calendar wraps up early today, with a flurry of data on the docket. Traders will hear the weekly report on jobless claims, the Philly Fed index for May, April's existing home sales, and the Conference Board's index of leading economic indicators.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,026,069 call contracts traded on Wednesday, compared to 714,947 put contracts. The resultant single-session put/call ratio docked at 0.70, while the 21-day moving average remained at 0.63.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Markets in Asia ended mostly lower today, pressured by weak economic data out of Japan. The quake-hit country's gross domestic product (GDP) fell 0.9% during the first quarter, marking the second consecutive quarter of economic contraction. Japanese utility stocks also resumed their slide, as Prime Minister Naoto Kan raised the prospect of splitting up power generation and distribution businesses. However, stocks in Hong Kong bucked the regional downtrend, buoyed by strength in property developers. By the close, Japan's Nikkei was off 0.4%, China's Shanghai Composite shed 0.5%, South Korea's Kospi swallowed a 1.9% drop, and Hong Kong's Hang Seng added 0.7%.

European shares are heading higher at midday, with a successful initial public offering from commodity issue Glencore helping to boost investor sentiment. Traders are also responding to the resignation of Dominique Strauss-Kahn from his role as managing director of the International Monetary Fund (IMF). "I want to protect this institution which I have served with honor and devotion, and especially -- especially -- I want to devote all my strength, all my time, and all my energy to proving my innocence," said Strauss-Kahn in a statement. At midday, the French CAC 40 and German DAX have both added 1.3%, while London's FTSE 100 is 1% higher.

Overseas markets

Currencies and Commodities

The greenback is trading lower this morning, with the U.S. dollar index down almost 0.3% at last check. Elsewhere, black gold is higher in pre-market action, despite the International Energy Agency (IEA) expressing "serious concern" about the economic impact of rising oil prices, and calling on oil producers to increase supplies. At last check, June-dated crude futures are up $0.37, or about 0.4%, to trade near $100.93 per barrel. Meanwhile, gold futures have given back a portion of Wednesday's gains, with the front-month contract down $1.40, or roughly 0.1%, at $1,494.40 an ounce.

Currencies and commodities

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This article appears in: Investing , Options

Referenced Stocks: ADSK , ARO , ARUN , CRM , DLTR

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