Opening View: Futures Flat Ahead of FOMC Minutes; DELL, DE, SPLS Step Up to the Earnings Podium


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A dismal forecast from Hewlett-Packard (HPQ) and disappointing economic data sent U.S. equities reeling on Tuesday, with the Dow Jones Industrial Average (DJIA ) ending south of 12,500 for the first time since April 25. In pre-market action today, stocks are having a harder time picking a direction, with investors absorbing a mixed bag of earnings reports from Dell Inc. ( DELL ), Deere & Co. ( DE ), and Staples (SPLS), among others. What's more, many traders will likely remain on the sidelines until this afternoon, when the Federal Open Market Committee (FOMC) will release its latest meeting minutes. Against this backdrop, the Dow is trading about 4.5 points below fair value, while the broader S&P 500 Index (SPX ) is sticking closer to breakeven, up about half a point.

Dow, S&P and Nasdaq futures

On the earnings front, Dell Inc. (DELL - 15.90) pulled down a first-quarter profit of $945 million, or 49 cents per share, nearly tripling its year-ago earnings of $341 million, or 17 cents per share. Excluding items, DELL earned 55 cents per share, while revenue improved 1% to $15.02 billion. The results were mixed, with Wall Street looking for a profit of just 44 cents per share on higher revenue of $15.4 billion. For the full fiscal year ahead, DELL now expects operating income to grow 12% to 18%, substantially higher than its earlier growth forecast of 6% to 12%. At last check, DELL is set to open about 5.5% higher.

Meanwhile, Deere & Co. (DE - 86.96) reported a fiscal second-quarter profit of $904.3 million, or $2.12 per share, up 65% from the year-ago quarter. Sales soared 25% to $8.12 billion. Analysts, on average, were expecting a quarterly profit of $2.06 per share on revenue of $8.14 billion. For the current quarter, DE forecast year-over-year sales growth of 20%, and said it now expects equipment sales to rise 21% to 23% during the fiscal year, up from its previous guidance for an 18% to 20% improvement. Furthermore, the farming equipment manufacturer lifted its fiscal-year earnings estimates by $150 million to $2.65 billion. In pre-market trading, DE is hovering just a hair's breadth south of breakeven

Elsewhere, Staples Inc. (SPLS - 19.65) said first-quarter profit rose to $198.2 million, or 28 cents per share, from $188.8 million, or 26 cents per share, a year earlier. Meanwhile, revenue edged 2% higher to $6.17 billion. The results fell short of the Street's expectations for a quarterly profit of 32 cents per share on sales of $6.2 billion. What's more, the office supplier cut its 2011 earnings guidance to a range of $1.35 to $1.45 per share, from its previous forecast for earnings of $1.50 to $1.60 per share. Analysts, on average, projected full-year earnings of $1.53 per share. Ahead of the bell, SPLS is poised to surrender about 11% out of the gate.

Finally, Target Corp. (TGT - 50.78) said it earned $689 million, or 99 cents per share, in the first quarter -- up from $671 million, or 90 cents per share, in the year-ago quarter, and above analysts' expectations for per-share earnings of 94 cents. Sales rose 2.8% to $15.58 billion, while total revenue -- which includes credit card sales -- advanced 2.2% to $15.94 billion. Analysts, on average, were anticipating sales of $16 billion. At last check, TGT has tacked on 1%.

Earnings Preview

Today's earnings docket will feature reports from Abercrombie & Fitch ( ANF ), Advance Auto Parts ( AAP ), Hot Topic (HOTT), (NTES), and Pan American Silver (PAAS), just to name a few. Keep your browser at for more news as it breaks.

Economic Calendar

The economic agenda features the regularly scheduled update on domestic petroleum supplies, as well as the minutes from the latest meeting of the Federal Open Market Committee (FOMC). Finally, the economic calendar wraps up early on Thursday, 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 1,122,550 call contracts traded on Tuesday, compared to 848,732 put contracts. The resultant single-session put/call ratio jumped to 0.76, while the 21-day moving average remained at 0.63.

NYSE and Nasdaq summary

Volatility indices

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

Overseas Trading

Markets in Asia settled north of breakeven today, as bargain-hunters scooped up stocks in beaten-down sectors. In Japan, banks and utilities led the charge higher, while chip issue Renesas Electronics surged on news that it will restart production at its quake-damaged Naka facility. Automakers Hyundai Motor and Kia Motors were a pocket of strength in Korea, while a solid day for commodity stocks helped propel Shanghai-listed stocks to a positive finish. Optimism over the prospects for gambling revenue growth in Macau provided a boost in Hong Kong, with shares of SJM Holdings and Wynn Macau closing comfortably higher. By the close, South Korea's Kospi added 1.6%, Japan's Nikkei collected a 1% gain, China's Shanghai Composite rose 0.7%, and the Hong Kong Hang Seng tacked on 0.5%.

European shares are flirting with modest gains at midday, as financial leaders in the region move forward on a plan to aid cash-strapped Greece. Jean-Claude Juncker, the prime minister of Luxembourg and chair for the group of euro-zone finance ministers, said a "soft restructuring of Greek debt" may be possible, though he's "strictly opposed" to a major overhaul. Meanwhile, well-received quarterly results from Land Securities Group provided a boost for real estate stocks, while rebounding commodity prices prompted gains in mining issues. At last check, London's FTSE 100 and the French CAC 40 have each added 0.8%, while the German DAX is 0.5% higher.

Overseas markets

Currencies and Commodities

The greenback has given back some of Tuesday's gains, with the U.S. dollar index down almost 0.1% at last check. Elsewhere, black gold has recovered a portion of yesterday's losses, with June-dated crude futures up $1.23, or 1.3%, to trade near $98.66 per barrel. Meanwhile, gold and silver futures are also bouncing back from multi-week lows, with the front-month contracts up about 0.9% and 3.2%, respectively.

Currencies and commodities

Unusual Put and Call Activity:

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This article appears in: Investing , Options
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