Opening View: Dow Poised for Mid-Week Slump

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Stock futures are pointed lower this morning, with the major market indexes poised to give back some of Tuesday's healthy gains. Fresh concerns about the Greek fiscal crisis are inspiring a Street-wide case of jitters, as euro zone finance ministers failed to reach an agreement on how to handle an additional aid package for the debt-crippled country. Even more troubling, a trio of French banks were singled out by Moody's for a downgrade warning, due to their exposure to Greek debt. Meanwhile, traders are also bracing for another round of U.S. economic data, with reports on consumer-level inflation and New York-area manufacturing due out later this morning.

Dow, S&P and Nasdaq futures

Scotts Miracle-Gro (SMG - 52.34) slashed its full-year profit and revenue forecast, citing unusually cold and stormy weather across the U.S. as the culprit. The company now expects fiscal 2011 earnings of $3.10 to $3.20 per share, while sales are expected to be flat with 2010 levels. Previously, SMG predicted full-year earnings of $3.60 to $3.70 per share, and year-over-year sales growth of 4% to 6%. "Clearly, we're disappointed with how the season has turned out. The breadth and length of the unfavorable weather patterns has been unusually challenging and we simply don't have enough time left in the season to offset that impact," said Chairman and CEO Jim Hagedorn in a statement. Ahead of the open, SMG is down nearly 5%.


Retailer Tuesday Morning (TUES - 4.65) also trimmed its full-year financial guidance, with CEO Kathleen Mason explaining, "Food and fuel inflation, combined with the challenging housing market, has affected our customers' disposable income." TUES now anticipates 2011 earnings of 25 cents to 30 cents per share, with sales ranging between $820 million and $830 million. Same-store sales are now expected to be "slightly negative." Previously, the retailer had predicted a full-year profit of 30 cents to 34 cents per share on $830 million to $836 million in revenue. This is the second time this year TUES has cut its fiscal-year forecast, with the last downward revision occurring in April. At last check, the stock has shed about 5.4% in electronic trading.

Korn/Ferry International (KFY - 21.52) reported an adjusted fourth-quarter profit of 39 cents per share, surpassing analysts' expectations for 32 cents per share. Fee revenue for the quarter arrived at $197.3 million, while analysts, on average, were anticipating quarterly revenue of $191.0 million. For the first quarter, KFY predicted earnings of 30 cents to 36 cents per share on fee revenue of $190 million to $205 million. KFY is set to open on a gain of about 10% this morning.

Earnings Preview

Today's earnings docket will feature reports from Finisar Corporation ( FNSR ) and WSP Holdings ( WH ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

As usual, we'll hear the weekly update on domestic petroleum inventories today. Also scheduled are May's consumer price index ( CPI ), the Empire State manufacturing index for June, and reports on industrial production and capacity utilization. On Thursday, the Labor Department will release the latest data on weekly jobless claims. Also, we'll hear reports on May's housing starts and building permits, and the Philly Fed index for June. Finally, we'll finish the week with the Reuters/University of Michigan consumer confidence index for June, as well as the Conference Board's leading economic indicators for May.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 897,458 call contracts traded on Tuesday, compared to 591,109 put contracts. The resultant single-session put/call ratio docked at 0.66, while the 21-day moving average was perched at 0.71.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Stocks in Asia ended mixed today, as the latest policy-tightening move from Beijing pressured banks in China and Hong Kong. Property developers were also a pocket of weakness, after Standard & Poor's warned of a potential downgrade for the group. On the other hand, well-received U.S. retail data provided a minor lift for Tokyo-listed shares, as did progress on a compensation plan for those affected by the Fukushima Daiichi nuclear crisis. Meanwhile, airlines and shipping stocks spearheaded a minor advance in Korea. By the close, South Korea's Kospi added 0.5%, Japan's Nikkei tacked on 0.3%, Hong Kong's Hang Seng lost 0.7%, and China's Shanghai Composite gave up 0.9%.

A possible ratings downgrade is also weighing heavily on European markets, after Moody's issued a cautious note regarding the Greek debt exposure of French banks BNP Paribas, Societe Generale, and Credit Agricole. A failure by euro zone finance ministers on Tuesday to reach an accord over how to handle the Greek debt crisis is also sparking anxiety, as irate citizens of the cash-strapped country prepare for public demonstrations in Athens tonight. At last check, the French CAC 40 was off 0.8%, the German DAX declined 0.8%, and London's FTSE 100 added 0.5%.

Overseas markets

Currencies and Commodities

European officials met on Tuesday to discuss a second aid package for debt-stricken Greece, but were unable to come to a decision. As a result, the euro is currently down 1.1% -- and the dollar has coincidentally enjoyed a nice boost. In pre-market trading, the U.S. dollar index has added 0.66 point, or 0.9%. Meanwhile, crude oil has continued its recent slide, down 0.5 points, or 0.5%, at last check. Similarly, gold futures are trading lower this morning, down 5.8 points, or 0.4%.

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

Referenced Stocks: CBOE , CPI , FNSR , SMG , WH

Schaeffer's Investment Research

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