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Opening View: DJIA Fights for Gains; Bank of America Earnings Fail to Impress

By: Schaeffer's Investment Research
Posted: 7/16/2010 7:45:00 AM
Referenced Stocks: BAC;C;CBOE;CPI;GCI;GE;JPM;MAT

The Dow Jones Industrial Average's (DJIA) seven-day winning streak came to an end at seven days in a row on Thursday, despite an impressive late-session rally back from a triple-digit loss that nearly pushed the Dow positive for the session. The DJIA managed to hold support in the 10,300 area, with longer-term support at the 10,250 region kicking in as well. However, the Dow is still locked below 10,400, which continues to be a thorn in the bulls' side. Still, the blue-chip barometer is on pace for a weekly gain of 1.5%, which complements the prior week's gain of 5% rather nicely. Elsewhere, the S&P 500 Index (SPX) has been unable to overcome its own technical demon in the 1,100 region, though support at 1,080 is holding firm. Heading into the open, futures on the DJIA and the SPX are pointing toward a flat start to the regular session of trading, as Wall Street digests the latest round of earnings reports from the likes of Bank of America Corp. ( BAC ) and General Electric Co. ( GE ).

Speaking of earnings, Bank of America Corp. ( BAC ) said that its second-quarter profit fell to $3.1 billion, or 27 cents per share. Net income applicable to common shareholders was $2.8 billion, while total revenue net of interest expense was $29.2 billion. Analysts had expected earnings of 22 cents per share on revenue of $29.6 billion. BAC shares were last seen lower by 0.84% in pre-market trading.

Meanwhile, General Electric Co.'s ( GE ) second-quarter profit rose 16% to $3.11 billion, or 28 cents per share, even as revenue fell 4% to $37.44 billion. GE Capital saw segment profit jump 93%, with NBC Universal profits growing 13%. On a continuing operations basis, GE earned 30 cents per share, topping analyst expectations for a profit of 27 cents per share. GE shares have edged 0.26% higher in pre-market trading.

Finally, Keefe, Bruyette & Woods upgraded its 2010 earnings outlook for JPMorgan & Chase Co. ( JPM ), a day after the banking giant released its quarterly earnings report. The brokerage firm now expects JPM to earn $3.69 per share in fiscal 2010, up from its previous forecast for $2.97 per share. The firm reiterated its "outperform" rating on JPM, with a target price of $57 per share. Separately, analysts at FBR Capital Markets reiterated its "outperform" rating and $45 target per-share price target for JPM.

Earnings Preview

On the earnings front, Citigroup Inc. ( C ), Gannett Co. Inc. ( GCI ), and Mattel Inc. ( MAT ) are scheduled to release their quarterly earnings report today. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

We finish 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.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,266,977 call contracts traded on Thursday, compared to 766,551 put contracts. The resultant single-session put/call ratio arrived at 0.61, while the 21-day moving average held at 0.64.

Volatility indices

NYSE and Nasdaq summary

**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.**

Dow, S&P and Nasdaq futures

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.

Overseas Trading

Overseas trading is mixed this morning, as only six of the 10 foreign indexes that we track are in positive territory. The cumulative average return on the collective stands at a gain of 0.03%. In Asia, stocks closed mostly lower. European stocks rallied as investors positioned themselves ahead of U.S. banking giants Bank of America and Citigroup. Overseas market information comes to you courtesy of Schaeffer's Daily Bulletin .

Overseas markets

Currencies and Commodities

Persistent concerns about economic growth in the U.S. are keeping pressure on the dollar, even as the euro rebounds from near annual lows and the Japanese yen benefits from safe-haven buying. As a result, the U.S. Dollar Index has dropped 0.34% to trade at 82.28, setting the index on course for a week-over-week loss of nearly 2%. Commodities, meanwhile, are struggling to maintain a positive bias this morning, despite the weaker greenback. For instance, gold futures are off $2.50 at $1,205.80 in London. Finally, crude oil has added a mere nine cents to trade at $77.10 per barrel in electronic trading.

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

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