Opening View: Alcoa Gives DJIA Bulls a Shot in the Arm
The Dow Jones Industrial Average (DJIA) may have gained only about 18 points on Monday, but the rally pushed the venerable average past resistance at the 10,200 level and marked the fifth straight gain for the Dow. The DJIA is also trading above its 10-week moving average, and given the historical upside bias of expiration weeks, it has a good chance of closing the week above this trendline for the first time since late April. The S&P 500 Index (SPX) wasn't as lucky as the Dow, closing below resistance in the 1,080-1,085 region and its 10-week moving average. Today's session looks promising, however, as futures on the DJIA and SPX are trading 64 points and 9 points above fair value, respectively, as traders react to a strong quarterly performance from Alcoa Inc. ( AA ). Alcoa shares are up more than 4% in pre-market trading, which bodes well for Wall Street, as the stock's post-earnings reaction has been a good indicator for overall market direction.
Speaking of Alcoa, the aluminum giant said that it swung to a second-quarter profit of $136 million, or 13 cents per share, due to lower costs and stronger aluminum demand. The results were in line with analyst expectations. Revenue rose 22% to $5.2 billion from the year-earlier quarter, topping the consensus analyst target of $4.97 billion. The company also raised its 2010 forecast for global aluminum consumption.
Elsewhere, CSX Corp. ( CSX ) said its second-quarter profit from continuing operations came in at $414 million, or $1.07 per share. Revenue climbed 22% to nearly $2.7 billion. CSX was expected to earn 96 cents per share on revenue of $2.62 billion.
Finally, Novellus Systems Inc. ( NVLS ) reported a second-quarter profit of $63.3 million, or 66 cents per share. Revenue was $321.4 million, up from $119.2 million. Analysts had expected the company to report earnings of 60 cents per share, on revenue of $312 million.
The Fastenal Co. ( FAST ), Infosys Technologies Limited ( INFY ), Intel Corp. ( INTC ), and Yum! Brands Inc. ( YUM ) are scheduled to release their quarterly earnings report today. Keep your browser at SchaeffersResearch.com for more news as it breaks.
May's trade balance and June's Treasury budget arrive today. Tomorrow, the market will be graced with the weekly report on U.S. petroleum supplies, as well as June's retail sales, June's import/export prices, May's business inventories, and the minutes from the most recent Federal Open Market Committee meeting.
Inflationary data is on tap for Thursday, with the release of June's producer price index (PPI) and the core PPI reading. Furthermore, weekly initial jobless claims, July's Empire State manufacturing index, June's industrial production/capacity utilization report, and the July Philadelphia Fed's manufacturing index are all slated for release. Finally, Friday finishes off a week packed full of data with June's consumer price index ( CPI ), the core CPI, and the University of Michigan's consumer sentiment index for July.
Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,016,963 call contracts traded on Monday, compared to 644,961 put contracts. The resultant single-session put/call ratio arrived at 0.63, while the 21-day moving average held at 0.65.
**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.**
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Overseas trading is mostly positive this morning, as seven of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.67%. In Asian trading, regional indexes erased early gains after Chinese leadership in Beijing denied that it would relax its tightening policies on the property market. Meanwhile, European markets are broadly higher, as traders cheer strong earnings outlooks from Alcoa Inc. and BMW. Furthermore, data out of the U.K. pointed toward slowing inflationary pressures, though less than expected. Specifically, consumer prices rose 0.1% in June and were 3.2% higher on a year-over-year basis, the Office for National Statistics said. Economists had forecast a flat monthly reading and a 3.1% annual rise. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .
Currencies and Commodities
The U.S. dollar is trading fractionally lower this morning due to a mix of data, including news that Moody's downgraded Portugal's government debt rating by two notches. The euro is trading lower as a result, but the dollar is being eschewed in favor of equities this morning following last night's quarterly report from Alcoa Inc. As a result, the U.S. Dollar Index is off 0.05% at 84.17 heading into the open. Commodities, meanwhile, are taking advantage of the lower greenback. Specifically, gold futures have risen $8.20 to $1,206.90 an ounce in London, while crude oil has added 44 cents to $75.39 per barrel in electronic trading.
Unusual Put and Call Activity:
Unusual Put and Call Activity: