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Opening View: DJIA Futures Higher Ahead of U.S. Payrolls

By: Schaeffer's Investment Research
Posted: 12/2/2011 8:09:00 AM
Referenced Stocks: BIG;CBOE;EU

The Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) are shaking off yesterday's losses , with stock futures on the broad-market indexes headed higher. Wall Street is hoping that November's nonfarm payrolls report, slated for release at 8:30 a.m., follows in the direction of other promising economic reports that were dispatched earlier in the week. Although they are expecting roughly 125,000 new jobs, economists are predicting that unemployment will remain firm at 9.0%.

Heading across the pond, German Chancellor Angela Merkel and French President Nicolas Sarkozy are once again preparing to take budget proposals to the table -- including a possible treaty -- at a European Union ( EU ) financial summit, scheduled for Dec. 9. Against this optimistic backdrop, futures on the DJIA are trading 150 points above fair value, while the S&P 500 Index (SPX) is up over 17 points.

Dow, S&P and Nasdaq futures

In equities news, Research In Motion (RIMM - 18.58) warned today that it will take a $485-million charge during the third quarter, or $360 million after taxes, as the company implements additional promotional efforts in an attempt to pare down its bloated PlayBook inventory. RIMM added that adjusted revenue for the third quarter is now expected to arrive below the firm's prior guidance of $5.3 billion to $5.6 billion. Adjusted earnings for the quarter are expected to fall near the mid-to-low end of RIMM's previously forecast range of $1.20 to $1.40 per share, and the BlackBerry maker no longer expects to meet its full-year target of $5.25 to $6.00 per share. Despite the lackluster sales so far, co-CEO Mike Lazaridis asserted, "RIM is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy." RIMM is down over 3% ahead of the bell.

In earnings news, Ulta (ULTA - 68.49) reported a third-quarter profit of $26.8 million, or 42 cents per share, up 88.5% from $14.2 million, or 23 cents per share, in the year-ago period. Meanwhile, revenue rose by 21.8% to $413.1 million, as same-store sales climbed 9.6%. Analysts, on average, were looking for a profit of 38 cents per share on revenue of $406.5 million. Looking ahead, ULTA is expecting a fourth-quarter profit of 62 cents to 64 cents per share, with revenue ranging between $552 million and $562 million. Analysts are predicting a more modest profit of 61 cents per share -- but the top-line forecast came in a little softer than expected, with Wall Street targeting fourth-quarter revenue of $559 million.

Earnings Preview

Today's earnings docket will also feature a report from Big Lots ( BIG ). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The week wraps up as the Labor Department unveils its monthly nonfarm payrolls report today.

Market Statistics

Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 841,295 call contracts traded on Thursday, compared to 546,475 put contracts. The resultant single-session put/call ratio arrived at 0.65, while the 21-day moving average was 0.71.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Stocks in Asia ended mixed today, as the bulls let up on the throttle after Thursday's big gains. Traders seemed reluctant to push equities too much higher ahead of the weekend -- particularly with a key U.S. employment report on the day's docket. Meanwhile, automakers took diverging paths in the wake of November sales data. Toyota and Nissan both gained ground after their respective reports, while Honda declined after confessing to another month of weakening sales. By the close, China's Shanghai Composite fell 1.1%, South Korea's Kospi ended fractionally lower, Hong Kong's Hang Seng added 0.2%, and Japan's Nikkei jumped 0.5%.

On the other hand, European benchmarks are broadly higher at mid-session. Investor sentiment caught a boost after Merkel and Sarkozy announced a Monday meeting to discuss possible treaty reforms that could facilitate the euro zone's fiscal rehabilitation. At last check, the French CAC 40 has added about 1.8%, the German DAX is up 1.7%, and London's FTSE 100 is 1.7% higher.

Overseas markets

Currencies and Commodities

The U.S. dollar index is headed lower this morning, with the greenback 0.1% lower at $78.23. Crude oil, on the other hand, is hoping to extend its stay above the century mark, with the front-month contract 0.8% higher to trade at $100.97 per barrel. Gold futures are looking to end the week on a positive note. At last check, the malleable metal has added $14.50 to rest at $1,754.30 per ounce.

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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