Opening View: Dow Set for Strong Open Ahead of Fed Address

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Futures are pointing higher this morning, as traders react to a promising economic report out of China. A report out last night revealed that the Chinese economy grew 9.5% in the second quarter from the year-ago period -- beating analysts' expectations, and bolstering China's stock markets. Back at home, U.S. investors are marking time until 10 a.m. Eastern, when Federal Reserve Chairman Ben Bernanke will take the stage to address the House Financial Services Committee. On Tuesday, minutes from the Fed's meeting in June suggested that some representatives supported additional stimulus measures -- and analysts are hopeful that's something Bernanke could address. Amid this backdrop, futures on the Dow Jones Industrial Average (DJIA ) are trading some 92 points higher while the S&P 500 Index (SPX ) is hovering nearly 10 points north of fair value.

Dow, S&P and Nasdaq futures

Capital One Financial Corp. (COF - 52.24) said that its second-quarter income arrived at $911 million, or $1.97 per share, up from $608 million, or $1.33 per share, in the year-ago quarter. Revenue, meanwhile, arrived at $3.99 billion. Analysts had expected the financial issue to post a slimmer profit of $1.73 per share. COF also announced plans for a $2 billion stock offering, with the proceeds going toward its acquisition of ING Direct. Ahead of the open, COF has tacked on 0.5%.

Healthcare Services Group (HCSG - 17.57) announced that its second-quarter profit climbed 13% to $9.8 million, or 15 cents per share, from its year-ago earnings of $8.7 million, or 13 cents per share. Revenue for the quarter rose 9.6% to $211.5 million. The results were mixed, with Wall Street looking for a profit of 15 cents per share on $215 million in revenue. However, HCSG added that its board approved a dividend increase of 4% to $0.15875 per common share, which is payable Aug. 19 to shareholders of record at the close on July 29.

ASML Holding N.V. (ASML - 34.88) is down 1.7% this morning, as traders react to a particularly disappointing earnings report. While the tech firm posted a consensus-beating second-quarter net profit of 432 million euros, ASML's lackluster sales forecast overshadowed this data. Specifically, ASML said that orders will decline in the third quarter as a result of the lagging economy, with the company projecting sales of just 500 million euros -- well below last year's numbers, as well as the firm's original forecast for sales between 900 million and 1 billion euros.

Finally, in M&A news, Kinetic Concepts, Inc. (KCI - 64.49) announced that it will be bought by a consortium of bidders in a deal worth $6.3 billion. The buyers, which include Apax Partners and members of Canada pension firms, will be paying $68.50 per share for the medical equipment issue -- a notable premium to KCI's Tuesday close at $64.49. Ahead of the open, the shares have added 5.2%.

Earnings Preview

Today's earnings docket will feature reports from Adtran ( ADTN ), Bank of the Ozarks ( OZRK ), Emmis Communications ( EMMS ), Marriott International ( MAR ), and Yum Brands ( YUM ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Today, we'll hear reports on import/export prices for June, the Treasury budget, and weekly crude inventories. A round of inflation data kicks off on Thursday, with the producer price index (PPI) and core PPI for June. The weekly update on jobless claims will also be released, along with retail sales for June and May's business inventories. The economic calendar wraps up on Friday with the consumer price index (CPI) and core CPI for June, the preliminary Reuters/University of Michigan consumer sentiment index for July, the Empire State manufacturing index, and reports on industrial production and capacity utilization.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 928,232 call contracts traded on Tuesday, compared to 647,039 put contracts. The resultant single-session put/call ratio docked at 0.70, while the 21-day moving average was perched at 0.69.

NYSE and Nasdaq summary

Volatility indices

The spring 2011 issue of SENTIMENT magazine is now available here.

Overseas Trading

Asian markets ended higher today, thanks to a well-received gross domestic product (GDP) report out of China. The economy expanded 9.5% during the second quarter -- marking the tamest growth since the third quarter of 2009, but narrowly exceeding the consensus estimate of 9.4%. The upside surprise helped to offset news that Moody's cut its rating on Ireland to junk territory, which had sparked jitters earlier in the session. Elsewhere, Agricultural Bank of China paced a financials rally in Hong Kong after offering a solid first-half forecast, but a strong yen continued to limit gains in Japan. By the close, China's Shanghai Composite added 1.5%, Hong Kong's Hang Seng rose 1.2%, South Korea's Kospi climbed 0.9%, and Japan's Nikkei tacked on 0.4%.

Stocks in Europe are cautiously higher at midday, as China's upbeat economic data has boosted beaten-down investor sentiment. Irish banks are taking a drubbing after that Moody's downgrade, even as Italian financial firms rebound from heavy losses. Meanwhile, cosmetics giant L'Oreal and chip issue ASML both declined amid concerns about softening demand, with L'Oreal confessing to weak second-quarter sales and ASML predicting a slowdown in orders. At last check, the German DAX was up 0.6%, London's FTSE 100 was up 0.2%, and the French CAC 40 added 0.2%.

Overseas markets

Currencies and Commodities

Ongoing economic concerns have had an adverse effect on the dollar, with the greenback down 0.3 point, or 0.3%, in pre-market activity. However, the global debt dilemma has bolstered gold's "safe haven" status, with the precious metal ascending to record levels this morning. Specifically, gold futures have added 11.9 points, or 0.8%, to hover around $1,574.20 an ounce. Elsewhere, crude futures are sitting on fractional losses this morning, down 0.05 point, or 0.1%.

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.

Futures are pointing higher this morning, as traders react to a promising economic report out of China. A report out last night revealed that the Chinese economy grew 9.5% in the second quarter from the year-ago period -- beating analysts' expectations, and bolstering China's stock markets. Back at home, U.S. investors are marking time until 10 a.m. Eastern, when Federal Reserve Chairman Ben Bernanke will take the stage to address the House Services Financial Committee. On Tuesday, minutes from the Fed's meeting in June suggested that some representatives supported additional stimulus measures -- and analysts are hopeful that's something Bernanke could address. Amid this backdrop, futures on the Dow Jones Industrial Average (DJIA ) are trading some 92 points higher while the S&P 500 Index (SPX ) is hovering nearly 10 points north of fair value.

Dow, S&P and Nasdaq futures

Capital One Financial Corp. (COF - 52.24) said that its second-quarter income arrived at $911 million, or $1.97 per share, up from $608 million, or $1.33 per share, in the year-ago quarter. Revenue, meanwhile, arrived at $3.99 billion. Analysts had expected the financial issue to post a slimmer profit of $1.73 per share. COF also announced plans for a $2 billion stock offering, with the proceeds going toward its acquisition of ING Direct. Ahead of the open, COF has tacked on 0.5%.

Healthcare Services Group (HCSG - 17.57) announced that its second-quarter profit climbed 13% to $9.8 million, or 15 cents per share, from its year-ago earnings of $8.7 million, or 13 cents per share. Revenue for the quarter rose 9.6% to $211.5 million. The results were mixed, with Wall Street looking for a profit of 15 cents per share on $215 million in revenue. However, HCSG added that its board approved a dividend increase of 4% to $0.15875 per common share, which is payable Aug. 19 to shareholders of record at the close on July 29.

ASML Holding N.V. (ASML - 34.88) is down 1.7% this morning, as traders react to a particularly disappointing earnings report. While the tech firm posted a consensus-beating second-quarter net profit of 432 million euros, ASML's lackluster sales forecast overshadowed this data. Specifically, ASML said that orders will decline in the third quarter as a result of the lagging economy, with the company projecting sales of just 500 million euros -- well below last year's numbers, as well as the firm's original forecast for sales between 900 million and 1 billion euros.

Finally, in M&A news, Kinetic Concepts, Inc. (KCI - 64.49) announced that it will be bought by a consortium of bidders in a deal worth $6.3 billion. The buyers, which include Apax Partners and members of Canada pension firms, will be paying $68.50 per share for the medical equipment issue -- a notable premium to KCI's Tuesday close at $64.49. Ahead of the open, the shares have added 5.2%.

Earnings Preview

Today's earnings docket will feature reports from Adtran ( ADTN ), ASML Holding (ASML), Bank of the Ozarks ( OZRK ), Emmis Communications ( EMMS ), Marriott International ( MAR ), and Yum Brands ( YUM ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Today, we'll hear reports on import/export prices for June, the Treasury budget, and weekly crude inventories. The afternoon features the minutes from the latest meeting of the Federal Open Market Committee (FOMC). A round of inflation data kicks off on Thursday, with the producer price index (PPI) and core PPI for June. The weekly update on jobless claims will also be released, along with retail sales for June and May's business inventories. The economic calendar wraps up on Friday with the consumer price index (CPI) and core CPI for June, the preliminary Reuters/University of Michigan consumer sentiment index for July, the Empire State manufacturing index, and reports on industrial production and capacity utilization.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 928,232 call contracts traded on Tuesday, compared to 647,039 put contracts. The resultant single-session put/call ratio docked at 0.70, while the 21-day moving average was perched at 0.69.

NYSE and Nasdaq summary

Volatility indices

The spring 2011 issue of SENTIMENT magazine is now available here.

Overseas Trading

Asian markets ended higher today, thanks to a well-received gross domestic product (GDP) report out of China. The economy expanded 9.5% during the second quarter -- marking the tamest growth since the third quarter of 2009, but narrowly exceeded the consensus estimate of 9.4%. The upside surprise helped to offset news that Moody's cut its rating on Ireland to junk territory, which had sparked jitters earlier in the session. Elsewhere, Agricultural Bank of China paced a financials rally in Hong Kong after offering a solid first-half forecast, but a strong yen continued to limit gains in Japan. By the close, China's Shanghai Composite added 1.5%, Hong Kong's Hang Seng rose 1.2%, South Korea's Kospi climbed 0.9%, and Japan's Nikkei tacked on 0.4%.

Stocks in Europe are cautiously higher at midday, as China's upbeat economic data has boosted beaten-down investor sentiment. Irish banks are taking a drubbing after that Moody's downgrade, even as Italian financial firms rebound from heavy losses. Meanwhile, cosmetics giant L'Oreal and chip issue ASML both declined amid concerns about softening demand, with L'Oreal confessing to weak second-quarter sales and ASML predicting a slowdown in orders. At last check, the German DAX was up 0.6%, London's FTSE 100 was up 0.2%, and the French CAC 40 added 0.2%.

Overseas markets

Currencies and Commodities

Ongoing economic concerns have had an adverse effect on the dollar, with the greenback down 0.3 point, or 0.3%, in pre-market activity. However, the global debt dilemma has bolstered gold's "safe haven" status, with the precious metal ascending to record levels this morning. Specifically, gold futures have added 11.9 points, or 0.8%, to hover around $1,574.20 an ounce. Elsewhere, crude futures are sitting on fractional losses this morning, down 0.05 point, or 0.1%.

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.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options

Referenced Stocks: ADTN , EMMS , MAR , OZRK , YUM

Schaeffer's Investment Research

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