Opening View: Futures Lower as Buyers Exercise Caution Ahead of Payrolls Report


Shutterstock photo

Despite several attempts to break into the black on Thursday, the Dow Jones Industrial Average (DJIA ) couldn't overcome a disappointing weekly unemployment report and a batch of lackluster retail sales data. Ahead of the bell this morning, buyers are once again sitting on the sidelines, as the bulls exercise caution ahead of today's highly anticipated nonfarm payrolls report from Uncle Sam. Economists have been scaling back their expectations throughout the week, after the aforementioned jobless report and Wednesday's unimpressive private-sector data from ADP struck an ominous tone on the Street. At last check, the Dow is trading about 28.5 points below fair value, while the S&P 500 Index (SPX ) is set to open with a 3.2-point drop.

Dow, S&P and Nasdaq futures

In equities news, Newell Rubbermaid (NWL - 16.97) slashed its full-year forecast thanks to weak consumer spending trends and unfavorable economic conditions. The firm now expects 2011 earnings of $1.60 to $1.67 per share on a 3% to 4% increase in core revenue, compared to its previous guidance for a per-share profit of $1.67 to $1.70 on core sales growth of 4% to 5%. Analysts, on average, were calling for full-year earnings of $1.69 per share. The lowered expectations of the company's large retail customers "are impacting customer ordering patterns and, as a result, we think it prudent to reflect those assumptions for lower growth in our own sales projections for the year," said President and CEO Mark Ketchum. At last check, NWL is set to start the session about 6% lower.

Meanwhile, Verifone Systems (PAY - 47.14) banked a fiscal second-quarter profit of $25.2 million, or 27 cents per share, up 25% on a year-over-year basis. Excluding items, earnings arrived at 46 cents per share, while revenue rose 22% to $292.4 million. The results crushed Wall Street's expectations, which called for earnings of 43 cents per share on $284.7 million in revenue. Plus, PAY also hiked its full-year earnings forecast. The company now expects a 2011 profit of $1.80 to $1.83 per share on revenue of $1.17 billion to $1.18 billion. Analysts, by comparison, are looking for a full-year profit of $1.81 per share on $1.17 billion in revenue. In pre-market action, PAY is down roughly 0.2%.

Elsewhere, Quiksilver Inc. (ZQK - 6.09) swung to a fiscal second-quarter loss of $83.3 million, or 51 cents per share, from a year-ago profit of $9.42 million, or 6 cents per share. Excluding items, the sports outfitter earned 9 cents per share, while revenue jumped 2.1% to $478.1 million -- its first annual sales jump in three years. Analysts, on average, were expecting an adjusted quarterly profit of 7 cents per share on sales of $472.6 million. Ahead of the bell, ZQK has shot close to 11.9% higher.

Finally, Diamond Foods (DMND - 71.35) swung to a fiscal third-quarter profit of $7.7 million, or 34 cents per share, from a year-earlier loss of $4.3 million, or 22 cents per share. On an adjusted basis, DMND raked in a profit of 52 cents per share, while revenue skyrocketed 61% to $223 million. The results beat the Street's estimates for earnings of 48 cents per share on sales of $216.6 million. For the current quarter, the company projected earnings of 40 cents to 44 cents per share on sales of $210 million to $220 million, falling short of analysts' expectations for a per-share profit of 48 cents on revenue of $211 million. However, DMND upwardly revised its fiscal-year earnings forecast above the Street's predictions, and offered stronger-than-expected fiscal 2012 guidance. At last look, DMND is poised to open with a 1.6% drop.

Earnings Preview

Today's earnings docket will feature reports from American Woodmark ( AMWD ) and Blyth Inc. ( BTH ), to name a few. Keep your browser at for more news as it breaks.

Economic Calendar

The economic calendar goes out with a bang today, with the highly anticipated release of Uncle Sam's nonfarm payrolls report.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 832,916 call contracts traded on Thursday, compared to 602,660 put contracts. The resultant single-session put/call ratio docked at 0.72, while the 21-day moving average inched higher to 0.66 -- the highest since July 8, 2010.

NYSE and Nasdaq summary

Volatility indices

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

Overseas Trading

Asian markets closed mostly lower today, thanks in part to anxiety over today's U.S. employment data. In Japan, Sony slipped on reports of another potential security breach, while Tokyo Electric Power took a dive as political upheaval created fresh uncertainty about a post-nuclear crisis compensation plan. In Hong Kong and China, traders are bracing for a potential policy-tightening announcement over the long holiday weekend, as the central bank has made a habit of timing such moves to coincide with market holidays. However, bargain-hunting helped stocks in Shanghai climb out of the red. By the close, Hong Kong's Hang Seng dropped 1.3%, Japan's Nikkei shed 0.7%, South Korea's Kospi declined 0.03%, and China's Shanghai Composite added 0.8%.

Anxiety over U.S. jobs data is also pressuring stocks in Europe, offsetting news of a potential aid agreement for Greece. According to reports, European finance ministers have agreed in principle to the terms of an additional bailout plan for the debt-strapped country. Traders are also weighing data showing slower growth in the U.K. services sector, as well as a drop in business confidence during the month of May. At last check, the French CAC 40 is off 0.1%, London's FTSE 100 is fractionally higher, and the German DAX is up 0.3%.

Overseas markets

Currencies and Commodities

The greenback has continued its retreat this morning, with the U.S. dollar index fractionally lower. Elsewhere, black gold has given up yesterday's modest gains, breaching the century mark in pre-market trading. At last check, the front-month contract has shed 89 cents, or almost 0.9%, to linger near $99.51 per barrel. Meanwhile, gold futures have extended their pullback, with the front-month contract surrendering $5.40, or nearly 0.4%, to trade around $1,527.30 an ounce.

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 Nasdaq, Inc.

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

This article appears in: Investing , Options
More Headlines for: AMWD , BTH , CBOE , NWL

More from Schaeffer's Investment Research


Schaeffer's Investment Research

Schaeffer's Investment Research

Market News
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by