Opening View: Stocks Pointed Modestly Higher Ahead of U.S. Talks with China; TSN, DTG in Focus

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The major market indexes gained ground on Friday, thanks to a stronger-than-anticipated nonfarm payrolls report from Uncle Sam. Ahead of the bell today, stocks are poised to continue where they left off, with futures headed north ahead of high-level talks between the U.S. and China. The countries' annual meeting will feature discussions on currency rates, the trade deficit, human rights, and economic and foreign policy. However, limiting the bulls' momentum are fresh fiscal concerns out of the euro zone, after Greek's foreign minister confessed that the country could require additional bailout funds to meet its debt obligations. Ahead of the bell, the Dow Jones Industrial Average (DJIA ) is set to open with a 22-point lead, while the broader S&P 500 Index (SPX ) is poised to tack on about 2.9 points at the open.

Dow, S&P and Nasdaq futures

In equities news, Tyson Foods (TSN - 18.89) reported a net profit of $159 million, or 42 cents per share, for the fiscal second quarter -- marking little change from the year-ago quarter, and falling a penny shy of analysts' estimates. Revenue for the quarter docked at $8 billion, surpassing expectations for sales of $7.54 billion. The company also said it expects chicken sales to be profitable in both the fiscal third and fourth quarters, and predicted fiscal-year sales to top $32 billion, surpassing the Street's forecast for fiscal-year revenue of $31 billion. At last check, TSN is set to open with a gain of 0.3%.


Meanwhile, Silver Wheaton (SLW - 35.82) said today that its first-quarter profit surged 142% to $122.2 million, or 35 cents per share, while revenue jumped 84% to a record $158.2 million. The results were boosted by an 85% year-over-year increase in the average realized silver price. Analysts, on average, were looking for a profit of 38 cents per share on revenue of $193 million. In a statement, President and CEO Randy Smallwood noted that SLW's "corporate development team remains very busy pursuing further partnerships... With in excess of US$560 million in cash, an undrawn US$400 million revolving credit facility, and very robust operating cash flows, Silver Wheaton is extremely well-positioned to help mining companies achieve their growth goals." In pre-market action, SLW has tacked on 2.5%.

Also on the earnings front, Rosetta Resources (ROSE - 41.10) raked in a first-quarter profit of $11 million, or 21 cents per diluted share, up from its year-ago earnings of $7.3 million, or 14 cents per diluted share. Revenue for the quarter arrived at $97.1 million, compared to $70.1 million in the first quarter of 2010. The results were mixed, with analysts calling for a profit of 29 cents per share on revenue of $96 million. Looking ahead, ROSE raised its production guidance to between 155 and 165 millions of cubic feet equivalent per day, citing "continued strong performance from Eagle Ford properties." At last check, ROSE is up roughly 4.6%.

Elsewhere, Hertz Global Holdings (HTZ - 16.85) offered to buy Dollar Thrifty Automotive (DTG - 69.69) for about $2.08 billion, or $72 per share in cash and stock, marking a 3.3% premium to DTG's closing price of $69.69 on Friday. What's more, the bid represents a premium of 24% to a buyout offer from Avis Budget Group ( CAR ) in 2010, which DTG shareholders ultimately rejected. Ahead of the bell, HTZ is flirting with a 0.6% gain, while DTG is up nearly 8.3%.

Finally, Irish pharmaceutical firm Elan (ELN - 7.87) agreed to sell its drug delivery business to Alkermes Inc. (ALKS - 14.47) for $960 million in cash and stock. While ELN will lose 80 million euros in core earnings, Chief Executive Kelly Martin said the firm would recoup that within a year due to strong sales of Tysabri, its multiple sclerosis drug. "We think this is a very shareholder-friendly deal. We are going to have a lot of cash and we are going to have a lot of growth on the top line," Martin told Reuters. In pre-market trading, ELN is headed 3.4% higher, while ALKS is up about 2.6%.

Earnings Preview

Today's earnings docket will feature reports from Clean Energy Fuels Corp. ( CLNE ), Activision Blizzard ( ATVI ), Force Protection, Inc. ( FRPT ), Quicksilver Resources (KWK), Grand Canyon Education (LOPE), Mannkind Corp. (MNKD), PetMed Express (PETS), and Rackspace Hosting (RAX), just to name a few. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic agenda is pretty much bare today, but will heat up tomorrow with the latest import and export data, as well as the Commerce Department's wholesale inventories report for March. Wednesday will feature the regularly scheduled crude inventories data, as well as Uncle Sam's reports on the trade balance and Treasury budget. On Thursday, the Street will digest the Labor Department's weekly jobless figures and producer price data, as well as the government's business inventories report for March and retail sales data for April. Finally, Friday will feature April's consumer price index ( CPI ) and core CPI, along with the Reuters/University of Michigan consumer sentiment index.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,053,468 call contracts traded on Friday, compared to 666,705 put contracts. The resultant single-session put/call ratio docked at 0.63, while the 21-day moving average remained at 0.61.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Stocks in Asia ended mixed today. Hong Kong snapped an eight-day losing streak, with the Hang Seng rising 0.8% by the close. Electric automaker BYD led the charge higher after unveiling plans to list new shares on the mainland's Shenzhen stock exchange. The Shanghai Composite also gained ground, managing a modest 0.3% rise ahead of key inflation data due later this week. However, Japan's Nikkei shed 0.7% after Prime Minister Naoto Kan prevailed upon Chubu Electric Power to shut its nuclear power plant in order to shore up the facility's defenses against potential future tsunamis. Meanwhile, South Korea's Kospi dipped 0.4% as traders considered a possible Friday rate hike by the Bank of Korea.

Elsewhere, European stocks are in the red at midday, weighed down by concerns about the ongoing Greek debt crisis. Over the weekend, Finance Minister George Papaconstantinou confessed that the country may need additional bailout funds from its European brethren in order to meet its debt obligations. At last check, the German DAX was off 1%, the CAC 40 was 0.9% lower, and London's FTSE 100 dipped 0.5%.

Overseas markets

Currencies and Commodities

The greenback is trading lower this morning, with the U.S. dollar index down almost 0.4%. Elsewhere, after suffering their steepest weekly dollar drop on record last week, crude futures have bounced back above the century marker. At last check, the June-dated contract has added 3.2% to hover around $100.31 per barrel. Meanwhile, gold futures are trading nearly 1.1% higher to linger around the $1,508-an-ounce marker, while silver has rebounded 7.3% to trade near $37.85 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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This article appears in: Investing , Options

Referenced Stocks: ATVI , CAR , CLNE , CPI , FRPT

Schaeffer's Investment Research

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