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.
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), NetEase.com (NTES), and Pan American Silver
(PAAS), just to name a few. Keep your browser at
SchaeffersResearch.com
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.
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.
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.
Unusual Put and Call Activity:
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