Opening View: DJIA Bulls Look to Consolidate Gains Near a Three-Month High
The Dow Jones Industrial Average (DJIA) kicked off August with a bang on Monday, soaring some 200 points, or 2%, to close just shy of former support in the 10,700 area. However, in the face ofa mixed bag of earnings from Dow components Procter & Gamble Co. and Pfizer Inc., the blue-chip barometer is taking a breather this morning, with futures pointing toward an opening drop of about 35 points. Look for support to hold near 10,600 for the Dow should selling pressure gain momentum. The S&P 500 Index (SPX) also put on quite a show on Monday, closing firmly above its 200-day moving average. The index also closed above the 1,125 level for the first time since May 17. Like the Dow, however, the SPX is digesting yesterday's gains, slipping about 3 points heading into the open. Still, the broad-market index should find support near 1,120-1,115 if the bears manage to gain any momentum today. Finally, the CBOE Market Volatility Index (VIX) plunged 6% to close at a three-month low yesterday. The "fear" index has now plummeted approximately 33% since the beginning of July.
In equity news, Procter & Gamble Company ( PG ) reported a 12% decline in fourth-quarter net income to $2.19 billion, or 71 cents per share. Analysts had been expecting earnings of 73 cents per share. Sales for the quarter rose 5% to $18.9 billion. "We are executing on all three dimensions of our growth strategy," said CEO Bob McDonald. Looking ahead of fiscal 2011, P&G said it expects net sales to rise 2% to 4%, with net earnings from continuing operations seen in a range of $3.91 to $4.0 per share.
Elsewhere, Pfizer Inc. ( PFE ) said that its adjusted second-quarter profit came in at $4.96 billion, or 62 cents per share, as revenue jumped 58% to $17.3 billion. Wall Street was expecting earnings of 52 cents per share on revenue of $16.63 billion. "Pfizer's more balanced global portfolio...and diversified products generated strong performance in a period of notable worldwide economic uncertainty," said Chief Executive Jeff Kindler in a statement. Looking ahead, the company expects to earn $2.10 to $2.20 per share on an adjusted basis for the full year.
Finally, Coach Inc. ( COH ) posted a fourth-quarter profit of $195.5 million, or 64 cents per share, with sales rising 22% to $950.5 million. Excluding one-time gains, Coach earned 56 cents per share, falling in line with the consensus estimate. The company said it expects to increase sales and per-share profit this year at a double-digit pace.
On the earnings front, Archer Daniels Midland Co. ( ADM ), ArvinMeritor Inc. ( ARM ), D.R. Horton Inc. ( DHI ), Duke Energy Corp. ( DUK ), The Dow Chemical Co. ( DOW ), Marathon Oil Corp. ( MRO ), MasterCard Inc. ( MA ), MGM Resorts International ( MGM ), Molson Coors Brewing Co. ( TAP ), OfficeMax Inc. ( OMX ), Rowan Companies Inc. ( RDC ), Solarfun Power Holdings Co. Ltd. ( SOLF ), Tenet Healthcare Corp. ( THC ), Anadarko Petroleum Corp. ( APC ), AvalonBay Communities Inc. ( AVB ), CBS Corp. ( CBS ), Force Protection Inc. ( FRPT ), Leap Wireless International Inc. ( LEAP ), Novatel Wireless Inc. ( NVTL ), priceline.com Inc. ( PCLN ), STEC Inc. ( STEC ), True Religion Apparel Inc. ( TRLG ), and Whole Foods Market Inc. ( WFMI ) are scheduled to release their quarterly earnings report today. Keep your browser at SchaeffersResearch.com for more news as it breaks.
The Commerce Department will weigh in this morning with reports on personal income, personal spending and factory orders for June. We'll learn about July auto sales in the afternoon. The market will be graced with the weekly report on U.S. petroleum supplies on Wednesday, along with the Institute of Supply Management ( ISM ) services index, but the Street will likely pay the most attention to the ADP report on private sector employment, the first of three days worth of employment data. The weekly report on initial jobless claims will be released on Thursday. On Friday, the Labor Department will release the month's highly anticipated nonfarm payrolls and unemployment reports.
Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,167,750 call contracts traded on Monday, compared to 664,131 put contracts. The resultant single-session put/call ratio arrived at 0.57, while the 21-day moving average slipped to 0.60.
**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 divided this morning, with only five of the 10 foreign indexes that we track in positive territory. The cumulative average return on the collective stands at a loss of 0.06%. Asian trading ended mixed, with Japanese stocks following Wall Street's lead despite the strengthening yen, while Chinese markets slipped on concerns over economic growth. Traders also digested news from the Reserve Bank of Australia, which kept its benchmark interest rate unchanged at 4.5%. Across the pond in Europe, profit taking dominated the landscape, as stocks pulled back from a three-month high.
Currencies and Commodities
The U.S. Dollar Index has continued to plunge this morning, with the index down 0.53% at 80.51. The dollar has not traded this low against its major foreign rivals since mid-April. The next level of support for the index should appear near the 80 level. Meanwhile, crude futures broke out above the $80 per barrel mark yesterday, and black gold has continued its advance in Asian trading. Heading in to the open, crude future are up 44 cents at $81.78 per barrel. Finally, the front-month gold contract is moving higher this morning, rallying $4.80 to trade at $1,190.20 an ounce. The malleable metal is still staring up at its falling 20-day moving average, as well as potential psychological resistance near the $1,200 an ounce region.
Unusual Put and Call Activity:
Unusual Put and Call Activity: