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A Bearish Blanket of Fog Hangs Over Wall Street
By: Schaeffer's Investment Research
Stocks are poised to continue their recent stay in the red, with futures on all three major indexes pointed modestly lower this morning. On the domestic front, all eyes will be on this morning's unemployment claims, as well as the final report on fourth-quarter gross domestic product ( GDP ). After this week's mixed bag of economic data, a bearish mood has set in ahead of the reports. Traders have also turned a wary eye back overseas, where concerns over Spain's unpopular austerity measures, as well as China's faltering growth, have resurfaced. Heading into today's session, futures on the Dow Jones Industrial Average (DJIA) are 32 points lower, with the broader S&P 500 Index (SPX) down 4 points.
After Wednesday's close, Zynga Inc. (ZNGA - 12.24) set the price of its secondary stock offering at $12 per share. The San Francisco-based online gamer has put up roughly 43 million shares for sale from existing shareholders, with a 30-day option available to underwriters to purchase an additional 6.4 million shares. The company initially went public in December. ZNGA is up 0.6% ahead of the bell.
In earnings news, The Mosaic Company (MOS - 58.22) said its fiscal third-quarter profit slid 50% to $273.3 million, or 64 cents per share, from last year's profit of $542.1 million, or $1.21 per share. MOS' bottom line was negatively impacted by the rising cost of raw materials. A 27% drop in potash sales caused revenue to backpedal 1.1% to $2.19 billion. The results were mixed, with analysts calling for a per-share profit of 74 cents on $2.13 million in sales. MOS is set to drop 2.9% right out of the gate.
Red Hat (RHT - 51.39) reported a fourth-quarter profit of $36 million, or 18 cents per share, up from $33.5 million, or 17 cents per share, in the year-ago period. Excluding items, earnings arrived at 29 cents per share. Meanwhile, revenue rose by 21.3% to $297 million, boosted by a 22% increase in subscription sales. The results surpassed analysts' expectations for a profit of 27 cents per share on revenue of $291.2 million. RHT is up 8.2% in pre-market trading.
Paychex (PAYX - 31.98) netted a fiscal third-quarter profit of $135.4 million, or 37 cents per share, up 3.7% from last year's earnings of $130.6 million, or 36 cents per share. Revenue improved 7.2% to $569.5 million. The results fell roughly in line with Wall Street's forecast, as consensus estimates were calling for a profit of 37 cents per share on $568.9 million in revenue. For the full fiscal year, PAYX backed its previously issued earnings guidance, but noted that "growth in checks per payroll will continue to moderate." PAYX has edged fractionally higher ahead of the bell.
Earnings and Econ
Today's earnings docket will also feature reports from Best Buy ( BBY ) , Cache ( CACH ), Finish Line ( FINL ) , Nortek ( NTK ), SeaChange (SEAC), Shaw Group (SHAW), Research In Motion (RIMM) , Saba Software (SABA), TIBCO Software (TIBX), and Xyratex (XRTX), while Thursday's economic round-up will include weekly jobless claims and the final report on fourth-quarter GDP . Keep your browser at SchaeffersResearch.com for more news as it breaks.
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,116,175 call contracts traded on Wednesday, compared to 806,723 put contracts. The resultant single-session put/call ratio arrived at 0.72, while the 21-day moving average was 0.62.
Stocks in Asia ended lower today, following suit with Wall Street's Wednesday swoon. A stronger yen applied pressure to Japanese exporters, while mining stocks were hit by softer prices for copper and gold. Elsewhere in the commodities space, Cnooc shares took a dive in Hong Kong, with traders unimpressed by the oil-and-gas producer's modest production forecast for 2012. By the close, China's Shanghai Composite lost 1.4%, Hong Kong's Hang Seng gave up 1.3%, South Korea's Kospi fell 0.9%, and Japan's Nikkei declined 0.7%.
The selling mood has spread to Europe, where major equity benchmarks are planted south of breakeven at midday. Traders are keeping a wary eye on debt-strapped Spain, with workers striking to protest unpopular austerity measures as the government prepares to unveil its revamped budget. In Paris, Total has extended its technical tumble, as the oil major continues to battle a gas leak at a North Sea platform. Meanwhile, a disappointing earnings report from retail giant H&M has also sparked jitters. At last check, the German DAX is down 1.1%, France's CAC 40 has shed roughly 1%, and London's FTSE 100 is 0.7% lower.
Currencies and Commodities
The U.S. dollar index is trading 0.1% higher this morning at $79.21. Crude oil, on the other hand, is 0.5% lower at $104.89 per barrel, with Wednesday's tempering of supply concerns still fresh in traders' minds. Elsewhere, gold futures are down 0.1% at $1,658.80 an ounce.
Unusual Put and Call Activity:
Unusual Put and Call Activity:
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