Opening View: DJIA, SPX Set to Follow Overseas Markets into the Red

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The bears are set to pick up where they left off on Friday , with the major market indexes headed lower ahead of the bell. Despite assurances from Greek Prime Minister George Papandreou that his country would not default, lingering concerns about European debt continue to weigh on sentiment. Meanwhile, the unexpected resignation of Japan's new trade minister has fueled fears about the pace of the country's post-earthquake/tsunami recovery, sending Tokyo stocks to their lowest level since April 2009. Against this backdrop, the Dow Jones Industrial Average (DJIA) and company are set to follow suit, with the blue-chip barometer bracing for yet another triple-digit drop out of the gate.

Dow, S&P and Nasdaq futures

In equities news, McGraw-Hill (MHP - 38.72) this morning announced plans to split into two separate companies -- one focused on global capital and commodities markets, and the other centered on educational services. The company said it hopes to implement the split via a tax-free spinoff of the education business to MHP shareholders. In addition, the firm said it expects to cut costs by $1 billion across the organization, buy back $1 billion of its stock this year, and complete the aforementioned spinoff by the end of 2012.

Elsewhere, Broadcom (BRCM - 33.44) agreed to buy NetLogic Microsystems (NETL - 31.91) for roughly $3.7 billion, or $50 per share, representing a premium of 57% to NETL's settlement price of $31.91 on Friday. The deal, which was approved by both boards, is expected to close in the first half of 2012, and should add about 10 cents per share to BRCM's adjusted earnings next year, the company said. The shares of NETL, unsurprisingly, are poised to open roughly 51% higher.

Finally, Amazon.com (AMZN - 211.39) is in talks to launch a media library service for tablets and digital books, similar to that of Netflix ( NFLX ), The Wall Street Journal reported. Furthermore, the Kindle maker is expected to unveil a tablet to rival Apple Inc.'s ( AAPL ) popular iPad sometime in the next several weeks, the WSJ said, citing sources familiar with the matter. Ahead of the bell, it seems AMZN investors haven't put too much stock in the speculation, with the shares pointed about 0.9% lower at last check.

Earnings Preview

Today's earnings docket will feature reports from Brady Corp. ( BRC ), Pharmacyclics ( PCYC ), pSivida ( PSDV ), Streamline Health Solutions (STRM), and ThermoGenesis (KOOL). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

There are no major economic reports slated for release today. On Tuesday, the government's monthly report on import and export prices, as well as Uncle Sam's latest Treasury budget, is set to hit the Street. On Wednesday, a batch of housing data from the Mortgage Bankers Association (MBA), the producer price index (PPI) for August, last month's retail sales figures, business inventories for July, and the usual crude inventories report are on the docket. Thursday features the weekly jobless figures from the Labor Department, the Empire State manufacturing index, the Philly Fed business index, the consumer price index (CPI), and industrial production and capacity utilization for August. Friday wraps up with the preliminary Reuters/University of Michigan consumer sentiment index for September.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 919,865 call contracts traded on Friday, compared to 794,221 put contracts. The resultant single-session put/call ratio arrived at 0.86, while the 21-day moving average was 0.75.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Asian markets ended broadly lower today, pressured by familiar euro-zone debt woes. Traders were rattled after German politicians raised the possibility of a Greek bankruptcy, particularly on the heels of a shake-up in the ranks of the European Central Bank (ECB) last Friday. However, trading volume was relatively light across the region, with markets in China and South Korea closed for holiday. By the close, Japan's Nikkei fell 2.3%, while Hong Kong's Hang Seng shed 4.2%.

European indexes are also wallowing in red ink, with investors pricing in some disappointment over a relatively unproductive summit of G-7 financial leaders over the weekend. Meanwhile, concerns about a potential Moody's downgrade of French banks only served to exacerbate the jittery mood. At last check, the French CAC 40 is down 4.9%, the German DAX is off 4.1%, and London's FTSE 100 is 0.7% lower.

Overseas markets

Currencies and Commodities

The greenback has muscled slightly higher this morning, with the U.S. dollar index up 0.1% at last look. Elsewhere, crude oil futures have extended Friday's retreat, with the front-month contract down $1.33, or 1.5%, at $85.91 per barrel. Finally, gold futures have pared some of their recent gains; at last check, the malleable metal has backpedaled $16.90, or 0.9%, to trade near $1,842.60 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

Every morning, our research staff analyzes the prior day and the overnight markets, and monitors the morning wires to give you an accurate preview of the day to come. If you enjoyed today's edition of Opening View, sign up here for free daily delivery, straight to your inbox, before the opening bell.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: AAPL , BRC , NFLX , PCYC , PSDV

Schaeffer's Investment Research

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