Futures on the Dow Jones Industrial Average (DJIA) are trending
cautiously higher in premarket trading, as Wall Street turns its
attention toward blue chip earnings and January options expiration.
The potential for additional tightening in Chinese monetary policy
sent stocks lower on Thursday, but quarterly reports from General
Electric Co. (
) and Bank of America Corp. (
) are helping to boost investor sentiment heading into the open. In
fact, futures on the DJIA and the S&P 500 Index (SPX) are
trading roughly 25 points and 4 points above fair value,
respectively. With options expiring after the close today, we could
see a high-volume day as traders reposition themselves.
Technically, the DJIA continues to hold firm above support at the
11,800 level, though the blue chip barometer received a fair amount
of help from its 10-day moving average yesterday. Look for
continued support in the 11,750-11,800 area, while the Dow should
meet with resistance in the 11,850-11,900 region. As for the SPX,
the broad-market barometer enters today below its 10-day moving
average -- the first such occurrence since Nov. 30, 2010. The index
has support in the 1,270 region, though, with its 20-day trendline
rising into the region. Resistance remains at 1,290, with the 1,300
creating a longer-term hurdle overhead.
In equity news, General Electric (
) posted fourth-quarter net income of $4.54 billion, or 42 cents
per share. Earnings from continuing operations rose 33% to $3.9
billion, or 36 cents per share, topping the consensus estimate for
a profit of 32 cents per share. Revenue grew 1% to $41.4 billion,
marking the first increase in nine quarters. Chief Executive Jeff
Immelt said the company expects continued earnings growth in 2011
Also, Bank of America Corp. (
) released its fourth-quarter results this morning, immediately
giving analysts headaches. The company reported numerous charges,
including $4.1 billion to handle mortgage repurchases and a $2
billion write-down on home loans and insurance business. The
banking giant also increased its legal reserves and boosted gains
from asset sales, which were required as a condition of exiting
TARP. Excluding items, BAC reported earnings of just 4 cents per
share, though the plethora of write-downs and charges may make for
difficult comparisons to the consensus expectations for a profit of
18 cents per share. Investors are clearly a bit taken aback, with
BAC shares down nearly 1% in premarket activity.
After the close last night, Google Inc. (
) posted fourth-quarter earnings of $2.54 billion, or $7.81 per
share, with net revenue coming in at $6.37 billion. Excluding
one-time items, Google earned $8.75 per share. Wall Street was
expecting a profit of $8.06 per share and $6.05 billion in net
revenue. Additionally, Google announced that Eric Schmidt will be
stepping down as CEO, with co-founder Larry Page taking over the
reins in April.
Finally, Advanced Micro Devices Inc. (
) said that it banked a fourth-quarter profit of $375 million, or
50 cents per share. On a non-GAAP basis, AMD said earnings would
have been $106 million, or 14 cents per share. Revenue was flat at
$1.65 billion. Analysts were expecting earnings of 11 cents per
share on revenue of $1.63 billion.
On the earnings front, BB&T Corp. (
), Schlumberger Limited (SLB), and SunTrust Banks Inc. (STI) are
slated to release their quarterly earnings reports today. Keep your
for more news as it breaks.
There are no major economic reports scheduled for release
Equity option activity on the CBOE saw 1,943,446 call contracts
traded on Thursday, compared to 1,337,018 put contracts. The
resultant single-session put/call ratio arrived at 0.69, while the
21-day moving average edged higher to 0.52.
**The volume data shown above is from the Nasdaq and NYSE
exchanges only. It does not include regional volume activity,
which means that other daily volume quotes you see may be
Trading the News: A Contrarian View.
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Overseas trading is mixed this morning, as six of the 10 foreign
indexes that we track are in positive territory. The cumulative
average return on the collective stands at a gain of 0.33%.
Inflationary fears continue to dog Asian trading, sending most of
the region broadly lower. However, Chinese shares closed higher as
bargain hunting took hold. European markets are attempting to
rebound from yesterday's losses, with the banking sector leading
the way higher following news that Royal Bank of Scotland Group
could submit a plan to emerge from the government's
asset-protection scheme earlier than expected.
Currencies and Commodities
The U.S. dollar is headed lower once again this morning, with
the greenback off 0.36% at 78.54 heading into the open. Crude
futures have rallied in the wake of the dollar's decline, with
black gold gaining 52 cents to $90.11 per barrel in electronic
trading. Gold, however, hasn't been as lucky. After falling to a
near two-month low on Thursday, the front-month gold contract has
dropped another $2.40 to $1,344.10 an ounce in London.
Unusual Put and Call Activity:
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