Opening View: Futures Flat Ahead of Key Economic, Earnings Reports

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The Street is standing pat this morning, as investors prepare for a full day of earnings and economic reports. Dow bigwigs AT&T (T - 30.23) and Microsoft (MSFT - 27.06) are due to report earnings today, and the Street will also hear reports on weekly jobless claims, the Philly Fed index for July, and the Conference Board's index of leading economic indicators for June. Amid this backdrop, futures on the Dow Jones Industrial Average (DJIA ) and the S&P 500 Index (SPX ) are hovering right around breakeven, down 0.9 point and up 0.7 points, respectively.

Dow, S&P and Nasdaq futures

eBay (EBAY - 33.17) said its second-quarter net income fell to $283 million, or 22 cents per share, from $412 million, or 31 cents per share, in the year-ago quarter. Revenue, meanwhile, jumped 25% to $2.76 billion. Excluding items, the online auctioneer recorded a profit of 48 cents per share. Analysts, on average, were anticipating an adjusted second-quarter profit of 46 cents per share on $2.61 billion in sales. Looking ahead, EBAY said it expects adjusted third-quarter earnings of 46 cents to 47 cents per share on revenue between $2.85 billion and $2.95 billion, compared to Wall Street's consensus forecast for a current-quarter profit of 47 cents on $2.65 billion.


Intel Corp. (INTC - 22.99) reported a second-quarter profit of $2.95 billion, or 54 cents per share, up from its year-ago profit of $2.89 billion, or 51 cents per share. Excluding items, INTC raked in a per-share profit of 59 cents, exceeding analysts' projections for earnings of 51 cents per share. Sales for the quarter jumped to a record $13 billion from $10.8 billion, surpassing the Street's forecast for revenue of $12.8 billion. "Strong corporate demand for our most advanced technology, the surge of mobile devices and Internet traffic fueling data center growth, and the rapid rise of computing in emerging markets drove record results," said President and Chief Executive Paul Otellini. For the current quarter, the blue chip predicted adjusted revenue of $13.5 billion to $14.5 billion. Analysts, on average, were calling for third-quarter sales of $13.5 billion.

Banking bigwig Morgan Stanley (MS - 21.72) confessed to a second-quarter loss of 38 cents per share -- much better than the consensus forecast for a steeper loss of 64 cents per share. Revenue for the quarter rose to $9.3 billion, up 17% from $7.95 billion in the year-ago period. Analysts had projected MS to report a slimmer profit of just $8.03 billion. As a result of the upbeat news, MS has added over 6.5% in pre-market trading.

In M&A news, Express Scripts, Inc. (ESRX - 52.54) said Thursday it has agreed to acquire Medco Health Solutions Inc. (MHS - 55.78) for $71.36 per share in cash and stock, or a total of $29.1 billion. According to the deal, MHS shareholders will receive $28.80 in cash and 0.81 share for each Medco share they own. This represents a roughly 28% premium over Medco's closing price of $55.78 on July 20; however, in pre-market activity, the healthcare firm has added nearly 24% to trade at $69 per share.

Earnings Preview

Today's earnings docket will feature reports from AT&T ( T ), Microsoft ( MSFT ), Advanced Micro Devices ( AMD ), Eli Lilly ( LLY ), PepsiCo ( PEP ), Travelers Companies (TRV), and SanDisk (SNDK). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

As mentioned earlier, it's a busy day on the Street, with weekly jobless claims, the Philly Fed index for July, and the Conference Board's index of leading economic indicators for June. There are no major economic reports scheduled for Friday.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,175,066 call contracts traded on Wednesday, compared to 730,798 put contracts. The resultant single-session put/call ratio docked at 0.62, while the 21-day moving average was perched at 0.63.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Stocks in Asia ended mixed today, as traders looked ahead to a crucial meeting of euro-zone leaders that could determine the fate of a Greek bailout. The bears prevailed in China, with energy and resource issues among the hardest hit after data showed a contraction in factory activity during the month of July. Seoul-listed equities also slipped, thanks in part to lackluster earnings from Hyundai Heavy Industries and Hynix Semiconductor. Only Tokyo bucked the downtrend, with Japan's Nikkei eking out a 0.04% gain. By the close, China's Shanghai Composite lost 1%, South Korea's Kospi declined 0.5%, and Hong Kong's Hang Seng edged 0.07% lower.

The major European indexes are also sitting on the south side of breakeven at midday. A weak purchasing managers index (PMI) sparked anxiety in Germany, particularly on the heels of China's disappointing data. However, losses in the region are relatively minimal, after French President Nicolas Sarkozy and German Chancellor Angela Merkel found common ground regarding an aid package for Greece. At last check, the German DAX and French CAC 40 are each 0.3% lower, while London's FTSE 100 is off 0.4%.

Overseas markets

Currencies and Commodities

Crude futures have surrendered a portion of Wednesday's EIA-inspired gains, down 0.9 point, or 0.9%, to trade at $97.54 per barrel. According to the Energy Information Administration, U.S. crude stockpiles fell by 3.7 million barrels last week -- more than double the 1.3-million-barrel decline predicted by analysts. Conversely, the U.S. dollar index has edged higher this morning, up 0.3 point, or 0.3%, at last check. Meanwhile, gold is up 2.4 points, or 0.2%, to hover just below the key $1,600-per-ounce level.

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: AMD , LLY , MSFT , PEP , T

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