Opening View: Wall Street Holding Its Breath Ahead of the Fed

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Across the pond, European officials are scrambling to clean up the mess created by Greek Prime Minister George Papandreou's, unexpected decision to leave austerity measures to the will of his constituents. Papandreou is headed to Cannes to attend an emergency meeting with German Chancellor Angela Merkel and French President Nicolas Sarkozy ahead of the previously scheduled G20 summit, in hopes of hashing out details for yet another stabilization plan. Against this backdrop, the Dow Jones Industrial Average (DJIA) finds itself trading 107 points north of fair value, while the broader S&P 500 Index (SPX) is set to open about 15 points higher.

Dow, S&P and Nasdaq futures

In earnings news, Peet's Coffee & Tea (PEET - 61.43) last night reported a third-quarter profit of $1.5 million, or 11 cents per share, a significant drop from last year's profit of $3.8 million, or 28 cents per share. PEET attributed the year-over-year decline to a one-time, anticipated class action lawsuit settlement of $2.2 million. Excluding items, net income was unchanged at 28 cents per share. Net revenue, on the other hand, increased 14% to $91.2 million. The results came in better than expected, as analysts, on average, were expecting adjusted earnings of 27 cents per share on revenue of $89.7 million. Looking ahead, PEET is projecting fiscal 2011 earnings to fall between $1.27 and $1.34 per share, with adjusted earnings ranging between $1.43 and $1.50 per share. Analysts are looking for a full-year profit of $1.50 per share. Shares of PEET are down over 3% in pre-market trading.

Meanwhile, Primerica (PRI - 21.74) reported a third-quarter profit of $40.6 million, or 53 cents per share, up 3% from $39.6 million, or 52 cents per share, in the year-ago period. Revenue increased by 14% to $275.8 million. Meanwhile, net operating income rose by 5% to $42.8 million, or 56 cents per share, compared to $40.9 million, or 54 cents per share, in the third quarter of 2010. Operating revenue also increased by 15% to $276.0 million. Analysts, on average, were expecting a profit of 57 cents per share on revenue of $271.1 million. PRI also announced a plan in which it will buy back $200 million of its shares from Citigroup ( C ). PRI is trading nearly 4% lower ahead of the bell.

Finally, Jazz Pharmaceuticals (JAZZ - 37.80) unveiled a third-quarter profit of $32.5 million, or 69 cents per share. Excluding items, JAZZ said it earned a profit of 94 cents per share. Meanwhile, revenue increased 18% to $73.3 million. The results were mixed, as analysts had predicted a profit of 94 cents per share on $72 million in sales. The specialty drug company also boosted its guidance for fiscal 2011. JAZZ is now targeting adjusted full-year earnings of $3.45 to $3.50 per share on total product sales of $261 million to $268 million.

Earnings Preview

Today's earnings docket will also feature reports from Kraft Foods ( KFT ), Mastercard ( MA ), News Corp. ( NWS ), Qualcomm ( QCOM ), AOL (AOL), Time Warner (TWX), Comcast (CMCSA), Clean Harbors (CLH), Transocean (RIG), Dendreon (DNDN), Whole Foods Market (WFM), Tesla Motors (TSLA), and Zipcar (ZIP). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The monthly onslaught of jobs data begins today, with ADP's private-sector employment report and the Challenger, Gray & Christmas update on monthly job cuts both due for release. Around midday, the Federal Open Market Committee (FOMC) will announce its latest monetary policy decision, and a 2:15 p.m. press conference will follow. As usual, Thursday's calendar features weekly jobless claims. Also on the day's docket are the ISM services index, third-quarter productivity and labor costs, and factory orders. Bright and early Friday morning, all eyes will be on the Labor Department's nonfarm payrolls report for October.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,068,073 call contracts traded on Tuesday, compared to 959,797 put contracts. The resultant single-session put/call ratio arrived at 0.90, while the 21-day moving average was 0.68.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Asian markets ended mixed today, with traders on edge amid ongoing Greek debt uncertainty and ahead of today's policy decision from the U.S. Federal Reserve. Brokerage firms backpedaled in Japan, pressured by a weak earnings showing from Nomura Holdings. On the other hand, Korean automakers ticked higher, thanks to well-received sales reports from Hyundai and Kia. By the close, Hong Kong's Hang Seng added 1.9%, China's Shanghai Composite climbed 1.4%, South Korea's Kospi declined 0.6%, and Japan's Nikkei gave back 2.2%.

The major European benchmarks are wobbling around the breakeven line at midday, after swallowing steep declines on Tuesday. Investors seem to be waiting for the other shoe to drop on the Greek front, as major euro-zone leaders are scheduled to meet today in Cannes to discuss the implications of the surprise referendum. At last check, the German DAX is up 0.9%, the French CAC 40 is 0.9% higher, and London's FTSE 100 has shed 0.3%.

Overseas markets

Currencies and Commodities

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.



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This article appears in: Investing , Options

Referenced Stocks: C , KFT , MA , NWS , QCOM

Schaeffer's Investment Research

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