Stocks are pointed lower ahead of the bell this morning, with
the major market indexes set to snap their two-session winning
streak. Weighing on pre-market sentiment is the latest batch of
earnings reports, with retailers Aeropostale (
) and Gap Inc. (GPS) both missing the proverbial mark. However, as
we noted in this week's edition of
Monday Morning Outlook
, May options expiration week is notoriously unpredictable. That,
combined with a lack of economic fodder to provide a compass for
investors, could mean the session is still anybody's game. At last
check, the Dow Jones Industrial Average (DJIA ) is trading about 32
points south of fair value, while the broader S&P 500 Index
(SPX ) is headed for a 4.5-point drop out of the gate.
In equities news, BP plc (BP - 43.89) is headed about 2.5%
higher ahead of the bell, after one of the British oil giant's
partners agreed to contribute to the cost of the Deepwater Horizon
disaster. Specifically, MOEX USA Corp. -- a co-owner of the Macondo
oil well in the Gulf of Mexico -- said it will pay more than $1.07
billion to settle claims. The payment will be applied to the $20
billion trust established last year to pay spill-related claims,
Dow Jones reported.
On the earnings front, Aeropostale (ARO - 21.34) said
first-quarter profit fell a year-over-year 64% to $16.4 million, or
20 cents per share, in line with the consensus estimate on the
Street. However, sales increased 1% to $469.2 million, falling
short of analysts' expectations for net revenue of $478 million.
"Based on current business trends and uncertainty surrounding the
retail environment in the back-half of the year," ARO declined to
reiterate or update its full-year guidance, but said it expects
second-quarter earnings of 11 cents to 16 cents per share --
lagging analysts' forecast for earnings of 27 cents per share. At
last check, ARO is poised to sink about 10% at the open.
Meanwhile, fellow retailer Gap Inc. (GPS - 23.29) earned $233
million, or 40 cents per share, in its first quarter, marking a
year-over-year drop of 23%. Meanwhile, net sales for the quarter
docked at $3.3 billion, surpassing the Street's prediction for
revenue of $3.26 billion. However, thanks to escalating cotton
prices and production costs, the firm slashed its full-year profit
outlook to a range of $1.40 to $1.50 per share, from its previous
guidance for per-share earnings of $1.88 to $1.93. In pre-market
trading, GPS is down roughly 16%.
Elsewhere, Intuit Inc. (INTU - 55.90) said fiscal third-quarter
net income rose to $688 million, or $2.20 per share, from $576
million, or $1.89 per share, in the year-ago quarter. Excluding
items, INTU earned $2.33 per share, besting analysts' consensus
estimate for adjusted earnings of $2.27 per share. Revenue jumped
12% to $1.84 billion, roughly in line with expectations for sales
of $1.82 billion. For the current quarter, the firm expects its
bottom line to range from a 2-cent loss to a 2-cent profit on sales
of $567 million to $587 million, compared to the Street's forecast
for a loss of a penny per share on revenue of $587 million.
However, INTU upped its fiscal-year guidance to a range of $2.45 to
$2.50 per share on sales of $3.83 billion to $3.85 billion, from
its previous expectations for earnings of $2.41 to $2.48 per share
on revenue of $3.74 billion to $3.84 billion. At last check, INTU
is set to surrender about 2.5%.
Finally, Liberty Media Corp. offered $1.02 billion to purchase
struggling Barnes & Noble (BKS - 14.11). The offer, which
includes the assumption of $450 million in debt, translates to
about $17 per share -- a premium of 20% to BKS' closing price of
$14.11 on Thursday. Ahead of the bell, BKS has skyrocketed more
than 27% to hover just shy of the $18 level.
Today's earnings docket will feature reports from Ann Inc. (
), Camelot Information Systems (
), Donaldson (
), E Commerce China Dangdang (
), and Yingli Green Energy (YGE), just to name a few. Keep your
for more news as it breaks.
There are no notable economic reports scheduled for release
Equity option activity on the Chicago Board Options Exchange
(CBOE) saw 1,051,710 call contracts traded on Thursday, compared to
748,618 put contracts. The resultant single-session put/call ratio
docked at 0.71, while the 21-day moving average inched higher to
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Stocks in Asia ended mixed today, as weak U.S. economic data
kept many traders on the sidelines. Traders in Japan seemed
unsurprised by the central bank's decision to keep interest rates
unchanged, but uncertainty over a possible government breakup of
utilities weighed on stocks -- even though sector black sheep Tokyo
Electric Power gained ground ahead of its quarterly earnings
release. However, the well-received initial public offering of
LinkedIn (LNKD) provided a halo boost for Internet stocks in the
region, while equities in South Korea bounced back from the
previous day's drubbing. By the close, South Korea's Kospi added
0.8%, and the Hong Kong Hang Seng tacked on 0.2%. On the other
hand, China's Shanghai Composite dipped 0.04%, and Japan's Nikkei
gave up 0.1%.
European shares are also searching for direction at midday.
Energy stocks are rising in step with rebounding crude prices, and
BP is in focus after its Macondo well partner, MOEX, agreed to chip
in toward the cost of last year's catastrophic oil spill. Banking
stocks are also on the upswing, with Standard Chartered leading the
way after an upgrade to "buy" at UBS. Familiar financial worries
continue to lurk in the background, though, with
The Wall Street Journal
warning that this weekend's elections in Spain could lead to the
discovery of "piles of 'hidden debt.'" At last look, the German DAX
is down 0.5%, the French CAC 40 is off 0.2%, and London's FTSE 100
is up almost 0.2%.
Currencies and Commodities
The greenback is trading higher this morning, with the U.S.
dollar index up almost 0.3% at last check. Elsewhere, black gold
has bounced back, though the front-month contract is still trading
shy of the century mark. At last check, June-dated crude futures
are up $0.07, or about 0.1%, to flirt with $99 per barrel.
Meanwhile, gold futures have erased yesterday's slide, with the
front-month contract up $4, or roughly 0.3%, at $1,496.40 an
Unusual Put and Call Activity:
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