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Opening View: DJIA Futures Flat on Conflicting Global Reports

By: Schaeffer's Investment Research
Posted: 12/1/2011 8:10:00 AM
Referenced Stocks: BKS;HRB;ISM;KR;LULU

U.S. stock futures are flat this morning, taking an apparent breather after the Dow Jones Industrial Average (DJIA) clocked its heftiest percentage gain since early 2009. On the home front, economic reports continue to roll in today, including weekly jobless claims, slated for release at 8:30 a.m., as well as both the Institute for Supply Management's ( ISM ) manufacturing index and construction spending for October, due out shortly after the bell.

In the meantime, Wall Street is keeping one cautious eye across the pond, where conflicting news from all corners has traders a bit on edge. Specifically, France and Spain enjoyed bond rallies, in spite of European Central Bank (ECB) President Mario Draghi's words of caution on the economy. China also remains on the scene, as on the heels of a positive central bank move, the country experienced a contraction in its manufacturing sector. Amid these skittish conditions, futures on the DJIA are trading 6 points above fair value, while the S&P 500 Index (SPX) is looking at a slight 1-point drop.

Dow, S&P and Nasdaq futures

In earnings news, Aeropostale (ARO - 15.51) reported a third-quarter profit of $24.1 million, or 30 cents per share, down 59% from $58.5 million, or 63 cents per share, in the year-ago period. Meanwhile, net sales fell by 1% to $596.5 million, as same-store sales dropped by 9%. Analysts, on average, were expecting a profit of 28 cents per share on revenue of $581.5 million. Looking ahead, ARO is predicting a fourth-quarter profit between 35 cents and 38 cents per share, well below the consensus analyst estimate of 44 cents per share. ARO is down 1.4% in pre-market trading.

After the close last night, Finisar (FNSR - 18.44) said its fiscal second-quarter profit fell 82% to $5.9 million, or 6 cents per share, from last year's profit of $33.8 million, or 39 cents per share. On an adjusted basis, FNSR's earnings decreased to 23 cents from 44 cents per share. Revenue, on the other hand, edged 0.2% higher to $241.5 million. Results for the optical subsystems and components provider were mixed, as Wall Street was calling for earnings of 22 cents per share on $242.2 million in revenue. For the current quarter, FNSR forecast an adjusted profit of 20 cents to 24 cents per share on sales of $235 million to $250 million. Analysts are looking for a profit of 26 cents per share on sales of $250 million. FNSR is looking at a 3.7% drop ahead of the bell.

Finally, La-Z-Boy Inc. (LZB - 9.90) reported a fiscal second-quarter profit of $7.9 million, or 15 cents per share, compared to last year's profit of $3.9 million, or 7 cents per share. Net sales were also on the rise, jumping 5% to $307.7 million. LZB's bottom-line results exceeded the Street's forecast, as analysts, on average, were expecting earnings of 14 cents per share on revenue of $310 million.

Earnings Preview

Today's earnings docket will also feature reports from Barnes & Noble ( BKS ), H&R Block ( HRB ), Kroger ( KR ), Lululemon Athletica ( LULU ), Shanda Interactive Entertainment (SNDA), Talbots (TLB), Ulta (ULTA), and Zumiez (ZUMZ). Keep your browser at for more news as it breaks.

Economic Calendar

Today features the ISM manufacturing index, as well as construction spending data and the usual report on weekly jobless claims. The week wraps up with a bang on Friday, when the Labor Department unveils its monthly nonfarm payrolls report.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,190,540 call contracts traded on Wednesday, compared to 657,432 put contracts. The resultant single-session put/call ratio arrived at 0.55, while the 21-day moving average was 0.73.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended substantially higher, following suit with Wall Street's Wednesday surge. Traders today had a chance to respond to an unexpected policy accommodation by the People's Bank of China, as well as a joint effort to bolster dollar liquidity by central banks in some of the world's largest economies. Against this backdrop, not even data showing a contraction in Chinese manufacturing activity could curb the market's momentum. By the close, Japan's Nikkei gained 1.9%, China's Shanghai Composite added 2.3%, South Korea's Kospi climbed 3.7%, and Hong Kong's Hang Seng jumped 5.6%.

Meanwhile, the major European indexes are looking relatively lifeless at midday. A report from Markit today pointed to a sharp slowdown in euro-zone factory activity, with the PMI arriving at a 28-month low of 46.4. Additionally, in a speech before the European Union's (EU) parliament, ECB President Mario Draghi warned that "downside risks to the economic outlook have increased." However, stocks have moved off their session lows, with traders relieved to see French bond yields easing back during a debt auction. At last check, London's FTSE 100 has added 0.6%, the French CAC 40 is up 0.1%, and the German DAX has shed 0.2%.

Overseas markets

Currencies and Commodities

The greenback is pointed south ahead of the bell, with the dollar index trading 0.2% lower at $78.21. Crude oil, meanwhile, is struggling to extend its stay above the century mark, as the front-month contract was last seen 0.1% lower. Gold futures have continued yesterday's jump. The malleable metal is trading just north breakeven, around $1,750.70 per ounce.

Currencies and commodities

Unusual Put and Call Activity:

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Unusual options activity - puts

Unusual options activity - calls

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