Opening View: Stocks Set to Extend Fed-Induced Retreat; Euro Breaches Key Support

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U.S. stocks are set to follow their European peers -- and the euro -- into the red, extending yesterday's Fed-induced, eleventh-hour retreat . Weighing on pre-market sentiment appears to be a disappointing bond auction out of Italy, which saw five-year yields surge to euro-era highs of 6.47%. The ascending borrowing costs have exacerbated concerns about the nation's ability to pay debt, overshadowing a relatively encouraging auction of two-year notes in Germany. Against this light-volume backdrop, and with little on the domestic economic agenda, the Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) are trading just south of breakeven ahead of the bell.

Dow, S&P and Nasdaq futures

On the earnings front, FormFactor (FORM - 5.40) slashed its fourth-quarter revenue forecast to a range between $28 million and $31 million, down from its previous guidance of $30 million to $34 million. The semiconductor issue chalked up the downwardly revised forecast to "the challenging DRAM pricing environment and softening demand for probe cards." Additionally, the company warned that the rest of the financial guidance provided during its third-quarter conference call could also be "negatively impacted" by the difficult operating environment. Analysts, on average, were expecting FORM to report fourth-quarter revenue of $31.9 million. At last check, FORM is headed 2.8% lower.

Meanwhile, ABM Industries, Inc. (ABM - 20.47) reported a fiscal fourth-quarter profit of $18.0 million, or 33 cents per share, a 17.4% drop from last year's profit of $21.8 million, or 41 cents per share. Excluding items, earnings arrived at 37 cents per share. Revenue, meanwhile, rose 20% to $1.08 billion. ABM's bottom-line results came in better than expected, as analysts were calling for an adjusted profit of 36 cents per share on net sales of $1.08 billion. Looking ahead, ABM is predicting adjusted earnings of $1.40 to $1.50 per share in fiscal 2012, while analysts are looking for earnings to fall on the high end of that range, at $1.49 per share. Furthermore, ABM upped its quarterly cash dividend by 3.6% to 14.5 cents per share. In pre-market trading, ABM is bracing for a 1.7% drop.

In equities news, Avon Products (AVP - 16.14) late yesterday announced an executive change-up. Specifically, the firm said it will search for a new CEO, as Andrea Jung switches to serving solely as chairman. Jung, 53, has been both chairman and CEO since 1999, and will continue to juggle both roles as the board looks for a successor. Ahead of the bell, AVP is pointed nearly 9% higher.

Earnings Preview

Today's earnings docket will feature reports from Apogee Enterprises ( APOG ), Joy Global (JOYG), MedCath ( MDTH ), Nordson ( NDSN ), Rick's Cabaret ( RICK ), and VeriFone Systems ( PAY ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Today's docket features data on import and export prices, as well as the usual update on domestic petroleum supplies. A slew of economic reports are due out on Thursday, including the producer price index (PPI), the Empire State manufacturing index, the Philadelphia Fed index, industrial production and capacity utilization, and weekly jobless claims. Finally, the week's slate of economic events wraps up on Friday with the release of the consumer price index (CPI).

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 813,087 call contracts traded on Tuesday, compared to 643,910 put contracts. The resultant single-session put/call ratio arrived at 0.79, while the 21-day moving average was 0.71.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended moderately lower today, echoing the late-session decline on Wall Street after the Federal Open Market Committee (FOMC) failed to inspire new confidence in investors. With no hints at additional stimulus efforts in the U.S., and debt-related uncertainty still hovering over Europe, exporters helped to pull markets into the red. Meanwhile, traders in China were disappointed by the outcome of the Central Economic Work conference, where the country's leadership opted to stay the course with current fiscal policies -- dashing some investors' hopes for a more accommodative approach in 2012. By the close, China's Shanghai Composite fell 0.9%, Hong Kong's Hang Seng lost 0.5%, Japan's Nikkei declined 0.4%, and South Korea's Kospi shed 0.3%.

The major European indexes are broadly lower at midday, thanks in part to a discouraging Italian debt auction. The yield on the country's five-year notes surged as high as 6.47%, representing a new record high for the euro era. Amid concerns about the state of the global economy, energy stocks are among the day's notable laggards, keeping pace with early weakness in crude futures. At last check, the French CAC 40 has dipped 1.5%, the German DAX has given up 0.7%, and London's FTSE 100 is down 0.8%.

Overseas markets

Currencies and Commodities

The greenback has continued its ascent this morning, with the U.S. dollar index up another 0.3%. In fact, as alluded to earlier, the euro was last seen south of the psychologically significant $1.30 marker for the first time in 11 months. Crude oil, meanwhile, has pared yesterday's Iranian rumor-related gains , with the front-month contract last seen 1.4% lower at $98.76 per barrel. Finally, gold futures have extended their quest for multi-month lows , surrendering 2.2% to flirt with $1,626 an ounce.

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: APOG , MDTH , NDSN , PAY , RICK

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