Opening View: Futures Down Following Sobering (But Not Surprising) Economic News

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Federal Reserve Chairman Ben Bernanke's highly anticipated speech on Wednesday provided little comfort for investors, as he simply highlighted the fact that the recovery is proceeding at a snails' pace. Meanwhile, the Fed trimmed its 2011 and 2012 growth estimates for the U.S. economy, and also pushed its core inflation forecasts higher. Against this backdrop, all three major market indexes suffered substantial losses -- and the forecast doesn't look much better today. Futures on the Dow Jones Industrial Average (DJIA ) are trading over 67 points lower, while S&P 500 Index (SPX ) futures are down 9.4 points. On the calendar for today are weekly jobless claims data, followed by figures on sales of new homes.

Dow, S&P and Nasdaq futures

Bed Bath & Beyond (BBBY - 54.06) reported a first-quarter profit of $180.6 million, or 72 cents per share, up 31% from its year-ago earnings of $137.6 million, or 52 cents per share. Revenue for the period improved 9.7% to $2.11 billion, boosted by a 7% rise in same-store sales. The results exceeded analysts' expectations, which called for a profit of 62 cents per share on $2.08 billion in revenue. BBBY also upped its full-year forecast, with the retailer now predicting a 15% to 20% rise in earnings per share for fiscal 2011. Previously, the company expected full-year earnings growth of 10% to 15%. BBBY is up 2.6% in pre-market trading.

Red Hat (RHT - 43.72) announced that its first-quarter profit climbed 35% to $32.5 million, or 17 cents per share, while revenue surged 27% to $264.7 million. On an adjusted basis, RHT raked in 24 cents per share, compared to 18 cents in the year-ago period. Wall Street, by contrast, was expecting a profit of 22 cents per share on $254 million in revenue.

Lennar Corporation (LEN - 18.10) said this morning that its fiscal second-quarter net profit dropped 65% to $13.8 million, or 7 cents per share, from $39.7 million, or 21 cents a share, in the year-ago period. Meanwhile, revenue fell 6% to $764.5 million. Analysts, on average, had expected LEN to report a slimmer profit of 4 cents per share on $646.3 million in revenue. The homebuilding firm said the results were driven by a 9% drop in new home deliveries, along with a 2.3% decrease in operating margin. CEO Stuart Miller said Lennar's year-on-year comparisons should only improve, since the housing tax credit ended in May 2010. Ahead of the open, LEN is down 0.6%.

Pfizer Inc. (PFE - 20.28) scored a key victory on Wednesday. After the close, the drug diva, along with sector peer Bristol-Myers Squibb Co. (BMY - 27.74) announced results of the late-stage trial of the blood thinner Eliquis. In a study of patients with an abnormal heart rhythm and at least one additional risk factor for stroke, Eliquis met efficacy goals compared to the drug warfarin, reported PFE. Analysts believe that this new drug could become a major competitor to similar medications from Johnson & Johnson and Bayer AG. Ahead of the open, PFE has added nearly 4%.

Earnings Preview

Today's earnings docket will feature reports from Accenture ( ACN ), ConAgra ( CAG ), Discover Financial Services ( DFS ), H&R Block ( HRB ), Oracle ( ORCL ), Rite Aid (RAD), and Tibco Software (TIBX). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Today's calendar includes initial and continuing jobless claims, as well as new home sales for May. The week wraps up with a bang, as Friday promises the latest revision to first-quarter gross domestic product (GDP) and durable goods orders for May.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 896,303 call contracts traded on Wednesday, compared to 471,989 put contracts. The resultant single-session put/call ratio docked at 0.53, while the 21-day moving average was perched at 0.75.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Markets in Asia ended mostly lower today, as traders took their cues from Wall Street's red ink-soaked finish. However, Shanghai-listed stocks powered higher after data from HSBC showed a slowdown in manufacturing activity during the month of June, suggesting that the central bank may take a break from its relentless policy-tightening mission. In the wake of this data, banks and property developers helped pace the advance on the mainland. By the close, China's Shanghai Composite was up 1.5%, Hong Kong's Hang Seng lost 0.5%, South Korea's Kospi shed 0.4%, and Japan's Nikkei declined 0.3%.

European stocks are trading south of breakeven at midday, pressured by the Fed's downwardly revised U.S. growth outlook and a weaker-than-forecast purchasing managers index (PMI) for the euro-zone region. In particular, banking issues continue to struggle amid the atmosphere of rising risk aversion, with BNP Paribas, Credit Agricole, and Societe Generale each losing about 2% in Paris. At last check, the French CAC 40 is down 1.3%, the German DAX is off 1.1%, and London's FTSE 100 is 1.1% lower.

Overseas markets

Currencies and Commodities

The dollar has continued to climb this morning, fueled by worries over the health of the economy. Bernanke's speech on Tuesday simply highlighted what most already know: the global recovery is proceeding very, very slowly, and there continues to be economic trouble in Europe. As a result, the dollar has gained against its rivals, adding 0.6 point, or 0.8%, ahead of the open. Meanwhile, crude oil has continued to sink, surrendering 2.1 points, or 2.2%, to trade just above $93 per barrel. Gold, too, has swallowed losses this morning, shedding 13.6 points, or 0.9%.

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: ACN , CAG , DFS , HRB , ORCL

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