Opening View: U.S. Stocks Catch a 'Case of the Mondays' from Downbeat Europe

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It seems that U.S. stocks have caught a "case of the Mondays" from Europe, with futures on all three major indexes pointing lower. Specifically, futures on the Dow Jones Industrial Average (DJIA ) are hovering nearly 55 points below fair value, while the S&P 500 Index (SPX ) is trading over seven points below fair value. Ongoing concerns over the fiscal health of the euro zone (and the U.S. "debt ceiling") seem to have fanned the bearish flames -- and with no notable economic reports on today's agenda, the bulls could have little reason to put up much of a fight. The star of the show this week will likely be tech stocks, as sector bigwig IBM is slated to report earnings after today's close, i-giant Apple, Inc. will hit the earnings stage after tomorrow's closing bell, and PC titan Microsoft Corp. will release earnings on Thursday. You'll definitely want to check back regularly at SchaeffersResearch.com for the latest earnings-related updates this week.

Dow, S&P and Nasdaq futures

Hasbro, Inc. (HAS - 41.37) said that its second-quarter profit increased 33% to $58.1 million, or 42 cents per share, from $43.6 million, or 29 cents per share, in the year-ago period. The toymaker also revealed that revenue for the quarter jumped 23% to $908.5 million. Analysts had expected HAS to post a much slimmer profit of 33 cents per share on $848.8 million in revenue. The company attributed the strong results to the success of its "Transformers" franchise, and offered an optimistic outlook for fiscal 2011. "We expect to deliver meaningful growth in both revenues and earnings per share versus our 2010 reported full-year results," explained Chief Financial Officer Deborah Thomas. HAS has added nearly 1.8% ahead of the open.

Halliburton Company (HAL - 53.08) reported that second-quarter net income rose 54% to $739 million, or 80 cents per share, from $480 million, or 53 cents per share, a year ago. Revenue, meanwhile, increased to $5.94 billion from $4.39 billion. Analysts had predicted HAL to report a smaller profit of 73 cents per share on $5.63 billion of revenue. "North America continues to deliver very strong growth in revenue and profitability while international profit recovered modestly," wrote HAL's Chief Executive Officer Dave Lesar.

Thanks to increased customer subscriptions and upgrades, Check Point Software Technologies Ltd. (CHKP - 56.58) reported a first-quarter profit of 68 cents as revenue increased 15% to $300.6 million. These figures easily surpassed analysts' estimate for earnings of 66 cents on $296 million in revenue, as well as the company's previous projections for revenue in the $290-297 million neighborhood. "We continued to outperform our projections in the second quarter. These good results are driven by increased sales of enterprise gateways with more software blades attached," said CHKP's Chief Executive Officer Gil Shwed. The company also revealed that it has named Amnon Bar-Lev as its new president, effective immediately.

Earnings Preview

Today's earnings docket will feature reports from IBM ( IBM ), Charles Schwab ( SCHW ), Gannett Co. ( GCI ), Steel Dynamics ( STLD ), and Zions Bancorporation ( ZION ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The economic calendar kicks off today with NAHB's housing market index for July. Housing data continues on Tuesday, with the release of home starts and building permits for June. Existing home sales for June will hit the Street on Wednesday, along with the usual update on U.S. petroleum supplies. A flurry of data will be released Thursday, including weekly jobless claims, the Philly Fed index for July, and the Conference Board's index of leading economic indicators for June. There are no major economic reports scheduled for Friday.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,304,771 call contracts traded on Friday, compared to 838,574 put contracts. The resultant single-session put/call ratio docked at 0.64, while the 21-day moving average was perched at 0.67.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Stocks in Asia ended lower today, as traders kept a wary eye on the continuing debt drama in Europe and the U.S. These macroeconomic concerns weighed on exporters across the region, while the prospect of a broader resource tax in China dragged on energy issues and property stocks. Meanwhile, in Taiwan, HTC turned lower after the International Trade Commission (ITC) ruled that the handset maker infringed on two patents owned by Apple (AAPL). By the close, South Korea's Kospi shed 0.7%, Hong Kong's Hang Seng lost 0.3%, and China's Shanghai Composite dipped 0.1%. Japanese markets are closed for holiday.

Banking stocks are leading the decline in Europe, as traders seem unimpressed by the results of last week's stress tests. Sector heavyweights such as Deutsche Bank seemed to pass the test by only the slimmest of margins, inciting fresh fears about the fate of financial firms in the event of a worst-case sovereign debt default. At last check, the French CAC 40 is down 1.3%, the German DAX is 1% lower, and London's FTSE 100 is off 1.1%.

Overseas markets

Currencies and Commodities

The big story this morning is gold, which has rallied to new highs above $1,600 an ounce in pre-market trading. Ongoing concerns over the fiscal health of the euro zone have sent traders flocking to the "safe-haven" investment, sending gold to record levels during the past few weeks. Ahead of the open, gold futures have added 12 points, or 0.8%, to trade at $1,602 an ounce. On the other hand, oil has backtracked this morning, with the August-dated contract currently down 0.3 point, or 0.3%, to hover around $97.28 per barrel. Meanwhile, the U.S. dollar index -- a measure of the dollar's performance against six other currencies -- has tacked on 0.5 point, or 0.7%, ahead of the open.

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: GCI , IBM , SCHW , STLD , ZION

Schaeffer's Investment Research

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