Opening View: Stocks Set to Bounce - If Traders Can Shake Off Debt Jitters

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Futures on all three indexes are pointing slightly higher this morning -- but after Wednesday's bloodbath, that isn't saying much. Ongoing anxieties over the possibility of a U.S. debt default have taken their toll on stocks, with 28 of the 30 components on the Dow Jones Industrial Average (DJIA ) suffering losses on Wednesday. In fact, these bigger-picture economic issues have cast a shadow on earnings season, with traders virtually ignoring a slew of upbeat reports from large-cap names. That being said, with today's agenda featuring quarterly results from several corporate heavyweights, as well as reports on weekly jobless claims and pending home sales for May, there is definitely plenty of potential fuel to help the bulls back on their feet -- if traders can shake off debt jitters.

Dow, S&P and Nasdaq futures

In earnings news, Potash Corp. of Saskatchewan (POT - 59.18) said its second-quarter profit increased 75% to $840 million, while earnings jumped from 53 cents to 96 cents per share. Meanwhile, revenue grew 62% to $2.33 billion. The fertilizer firm attributed the results to higher prices and strong demand. Analysts had been expecting POT to post a slimmer profit of 86 cents per share on revenue of $2.01 billion. What's more, the firm lifted its fiscal 2011 forecast to a range of $3.40 to $3.80 per share, well above the consensus estimate for full-year earnings of $2.46 per share. Investors seem pleased by this news, with the shares up some 4% ahead of the open.

Visa Inc. (V - 87.75) posted a fiscal third-quarter profit of $1.01 billion, or $1.43 per share - up 40% from the $716 million, or 97 cents per share, earned a year earlier. Revenue increased 14% to $2.32 billion. Analysts, on average, expected earnings of $1.23 per share on revenue of $2.3 billion. The credit-card concern attributed the healthy quarter to global payments volume and robust transactions growth, which increased 13% and 11%, respectively. In addition, Visa authorized a new $1 billion share buyback program, and said it's "prepared to deliver on our financial goals" in the face of a "new regulatory landscape."

Crocs, Inc. (CROX - 26.76) said second-quarter profit rose to $55.5 million, or 61 cents per share, from a year-ago profit of $32.3 million, or 37 cents per share. Revenue for the quarter increased to $295.6 million from $228 million a year ago. The results handily topped expectations, with analysts calling for a per-share profit of 44 cents on $282.2 million in sales. Looking ahead, the shoe maker said it anticipates current-quarter earnings of about 40 cents per share on revenue of $280 million, exceeding the Street's forecast for a third-quarter profit of 32 cents per share on sales of $264.8 million.

Akamai Technologies (AKAM - 29.48) reported a second-quarter profit of $47.9 million, or 25 cents per share, down 5.3% from the year-ago quarter. Excluding items, the company said it earned $65.8 million, or 35 cents per share, on revenue of $245.3 million. The figures fell short of the consensus forecast, as analysts anticipated an adjusted per-share profit of 36 cents on sales of $277.8 million. For the current quarter, AKAM said it expects to record a profit of around 31 cents to 34 cents per share on revenue of $273 million to $283 million. Wall Street, on the other hand, was calling for third-quarter earnings of 38 cents per share on revenue of $288.5 million.

Earnings Preview

Today's earnings docket will feature reports from: Exxon Mobil ( XOM ), Chesapeake Energy ( CHK ), Starbucks ( SBUX ), Sprint Nextel ( S ), Automatic Data Processing ( ADP ), Monster Worldwide (MWW), Bristol Myers Squibb (BMY), Boston Scientific (BSX), MetLife (MET), DR Horton (DHI), and M/I Homes (MHO). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Today's docket includes the usual update on weekly jobless claims, as well as pending home sales for May.The week's marquee economic report -- the advance estimate of second-quarter gross domestic product (GDP) -- hits the Street on Friday. Also on the day's docket are the Chicago PMI and the final Reuters/University of Michigan consumer sentiment index for July.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,156,597 call contracts traded on Wednesday, compared to 771,200 put contracts. The resultant single-session put/call ratio docked at 0.67, while the 21-day moving average remained at 0.63.

NYSE and Nasdaq summary

Volatility indices

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

Overseas Trading

Bears grabbed the reins in Asia today, as traders took their cues from a red ink-soaked session on Wall Street. Rising anxiety about a potential U.S. debt default inspired selling across the region, while higher risk aversion propped up the yen -- creating an additional headwind for Japanese exporters. However, Hong Kong's benchmark index managed a minor gain, thanks to strength in real estate and utility issues. By the close, the Hang Seng added 0.1%, China's Shanghai Composite fell 0.5%, South Korea's Kospi shed 0.9%, and Japan's Nikkei tumbled 1.5%.

Stocks in Europe have also started the day on a negative note, with anxiety running high ahead of the looming U.S. debt-ceiling deadline. Against this backdrop, a round of lackluster earnings from the likes of Credit Suisse, BASF, and Alcatel-Lucent have only served to embolden the bears. At last check, the German DAX is down 1.5%, the French CAC 40 is off 1.2%, and London's FTSE 100 is 0.6% lower.

Overseas markets

Currencies and Commodities

Crude futures have continued to backpedal this morning, as the ongoing U.S. debt situation has ebbed demand for oil. Meanwhile, Wednesday's report on weekly petroleum inventories revealed a 2.3 million-barrel increase in supplies, defying expectations for a drop. Against this backdrop, crude futures are hovering 0.1 point, or 0.1%, lower, at $97.26 per barrel. Meanwhile, after a rough session on Wednesday, gold is hovering just above breakeven this morning, tacking on 0.5 point, or 0.03%. Finally, despite an uncertain economic backdrop, the dollar has tacked on fractional gains this morning, adding 0.2 point, or 0.3%.

Currencies and commodities

Unusual Put and Call Activity:

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Unusual options activity - puts

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This article appears in: Investing , Options

Referenced Stocks: ADP , CHK , S , SBUX , XOM

Schaeffer's Investment Research

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