Opening View: U.S. Stock Futures Falter as Chinese Economy Heats Up

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The Dow Jones Industrial Average (DJIA) is set to extend Wednesday's losses this morning, as traders fret ahead of this morning's economic data and news that China's economy expanded faster than expected in the fourth quarter. Heading into the open, futures on the DJIA and the S&P 500 Index (SPX) are trading roughly 14 points and 0.7 point below fair value, respectively. Wall Street will be greeted with leading economic indicators, weekly jobless claims, and Philadelphia manufacturing data later today, as well as a continued flood of corporate earnings reports.

Technically, the DJIA held support at the 11,800 level yesterday, but the victory could be fleeting if premarket selling pressure gains momentum. Look for support to emerge near the 11,750 level, home to the Dow's 10-day moving average, while the 11,700 level should create a more solid floor if the situation worsens. As for the SPX, the broad-market index suffered its biggest percentage decline since November on Wednesday, but support held firm at the 1,280 level and the SPX's 10-day moving average. This region will be tested today, with the 1,270 area likely being called upon to provide a backstop for the SPX.

In equity news, PNC Financial Services Group Inc. ( PNC ) reported that its fourth-quarter net profit attributable to shareholders fell 21% to $798 million, or $1.50 per share, as revenue dropped 20% to $3.9 billion. Excluding items, PNC said adjusted earnings were $1.60 per share. Wall Street was looking for a profit of $1.38 per share on revenue of $3.54 billion.

After the close last night, eBay Inc. ( EBAY ) reported fourth-quarter net income of $559 million, or 42 cents per share, down from $1.36 billion, or $1.02 per share, in the same quarter last year. On an adjusted basis, earnings rose 17% to $684 million, or 52 cents per share. Revenue climbed 5% to $2.5 billion from a year ago.

Elsewhere, MannKind Corp. ( MNKD ) has plunged more than 44% in electronic trading, after the Food & Drug Administration (FDA) deferred approving Afrezza, an inhaled insulin treatment for hyperglycemia. The FDA has requested two additional clinical trials with the inhaler.

Finally, Wendy's/Arby's Group Inc. ( WEN ) announced that it may sell Arby's Restaurant Group Inc. to refocus on its core business. "A pure-play Wendy's will enable us to focus all of our energies on growing the Wendy's brand via new store growth both in North America and international markets, and with accelerated same-store sales through the introduction of new dayparts and core menu innovation," said Chief Executive Roland Smith.

Earnings Preview

On the earnings front, Freeport McMoRan Copper & Gold Inc. ( FCX ), Morgan Stanley (MS), Southwest Airlines Co. (LUV), UnitedHealth Group Inc. (UNH), Advanced Micro Devices Inc. (AMD), and Google Inc. (GOOG) are slated to release their quarterly earnings reports today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

On the economic front, Wall Street will be greeted with weekly initial jobless claims, the National Association of Realtors' existing home sales figures for December, the Conference Board's leading indicators index for December, and the Philadelphia Fed's January manufacturing index. Finally, we'll also get the usual weekly report on crude inventories, a day later than usual because of Monday's holiday. There are no major economic reports scheduled for tomorrow.

Market Statistics

Equity option activity on the CBOE saw 2,099,520 call contracts traded on Wednesday, compared to 1,013,980 put contracts. The resultant single-session put/call ratio arrived at 0.48, while the 21-day moving average held at 0.51.

Volatility indices

NYSE and Nasdaq summary

**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 higher.**

Dow, S&P and Nasdaq futures

Trading the News: A Contrarian View. Check out this special report from Bernie Schaeffer here.

Overseas Trading

Overseas trading is in poor shape, with only two of the 10 foreign indexes that we track in positive territory. The cumulative average return on the collective stands at a loss of 0.89%. The cascade started in Asian trading, after China reported that its gross domestic product rose 9.8% in the fourth quarter, exceeding forecasts for 9.2% growth. The better-than-expected economic growth stoked fears that Beijing would have to tighten monetary policy in order to rein in inflationary pressures. European markets are following suit; sectors with heavy Chinese exposure are leading the retreat.

Overseas markets

Currencies and Commodities

The U.S. dollar attempted to gain some ground in overnight trading, with investors seeking a haven from falling equities. However, the greenback's strength was short-lived, as the U.S. Dollar Index has since slipped 0.08% to 78.58 heading into the open on Wall Street. Commodities are also trading lower this morning, with crude futures down 47 cents at $91.34 per barrel, and gold futures off $7.10 to $1,363.10 an ounce in London.

Currencies and commodities

Unusual Put and Call Activity:

For an explanation of how to use this information, check out our Education Center topics on Option Volume and Open Interest Configurations .

Unusual options activity - puts

Unusual options activity - calls

Every morning, our research staff analyzes the prior day and the overnight markets, and monitors the morning wires to give you an accurate preview of the day to come. If you enjoyed today's edition of Opening View, sign up here for free daily delivery, straight to your inbox, before the opening bell.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: EBAY , FCX , MNKD , PNC , WEN

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