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Opening View: DJIA Headed South Ahead of Key Economic Data

Posted
1/5/2012 8:11:00 AM
By: Schaeffer's Investment Research
Referenced Stocks:APOL;FDO;GPN;MON;STZ

U.S. stock futures are pointed lower this morning, as economic uncertainty takes the spotlight in all corners of the globe. On the domestic front, investors are awaiting a slew of data set to be released today thanks to the holiday-shortened week. First up are the ADP private-sector payrolls and weekly jobless claims, followed by weekly crude inventories and the ISM services index.

Across the pond, focus is once again turned to euro-zone debt, as France saw its borrowing costs rise during an auction of 10-year notes. Against this backdrop, the Dow Jones Industrial Average (DJIA) is looking at a 68-point drop, while the S&P 500 Index is trading 8 points lower.

Dow, S&P and Nasdaq futures

In earnings news, Mosaic Company (MOS - 52.30) unveiled a fiscal second-quarter profit of $623.6 million, or $1.40 per share, down 39% from $1.03 billion, or $2.29 per share, in the year-ago quarter. Net revenue, on the other hand, increased 13% to $3.01 billion. MOS' results were mixed, as Wall Street was calling for a profit of $1.28 per share on $3.2 billion in revenue. Looking ahead, the fertilizer company is predicting record global shipments in 2012, but CEO Jim Prokopanko warned that Mosaic's third-quarter performance could be negatively impacted by "near-term macroeconomic uncertainty and cautious distributor purchasing behavior." MOS is up fractionally ahead of the bell.

Sonic (SONC - 6.85) reported a fiscal first-quarter profit of $5.5 million, or 9 cents per share, down from $7.2 million, or 12 cents per share, in the year-ago period. Meanwhile, revenue fell 0.7% to $128.3 million, but same-store sales edged up by 0.1%. Analysts, on average, were expecting a profit of 9 cents per share on revenue of $129.9 million. Furthermore, SONC's drive-in restaurant margin decreased to 11.4% from 12.7% amid rising commodity costs. SONC is down 2.2% in pre-market trading.

Additionally, Texas Industries, Inc. (TXI - 31.02) reported a fiscal second-quarter loss of $21 million, or 75 cents per share, compared to last year's loss of $11.2 million, or 40 cents per share. The current loss includes charges of 11 cents per share and 30 cents per share related to cost-cutting and tax-related measures, respectively. Gross margin was also on the decline, dropping to 1.8% from 8.1%. Revenue, meanwhile, rose 5.4% to $156.1 million. The bottom-line results came in weaker than expected, as analysts were calling for a slimmer loss of 61 cents per share on $155 million in sales.

Earnings Preview

Today's earnings docket will also feature reports from Apollo Group ( APOL ), Constellation Brands ( STZ ), Family Dollar ( FDO ), Global Payments ( GPN ), Monsanto ( MON ), Ruby Tuesday (RT), Worthington Industries (WOR), and Xyratex (XRTX). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Thanks to Monday's holiday, the ADP private-sector payrolls report and weekly crude inventories will hit the Street today -- one day later than usual. Also on tap are the ISM services index and weekly jobless claims. Finally, we wrap up the week on Friday with the Labor Department's monthly report on nonfarm payrolls and the unemployment rate for December.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 891,488 call contracts traded on Wednesday, compared to 674,004 put contracts. The resultant single-session put/call ratio arrived at 0.76, while the 21-day moving average was 0.71.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Asian stocks ended mostly lower today, thanks to revived concerns about the fiscal fate of the euro zone. Amid rumors of a possible Spanish bailout and signs of strain in the Italian banking sector, exporters were among the notable laggards of the session. Closer to home, a stagnant reading on Chinese manufacturing activity cemented the day's bearish bias. However, oil refiners were buoyed by Europe's decision to block imports from Tehran. By the close, China's Shanghai Composite lost 1%, Japan's Nikkei fell 0.8%, South Korea's Kospi gave up 0.1%, and Hong Kong's Hang Seng bucked the trend by rising 0.5%.

European equities are mired in red ink at midday, after an auction of French debt saw 10-year yields creep higher. With debt anxieties back in the spotlight, banking issues are pacing the decline. Italy's UniCredit is extending its slide after Wednesday's cut-rate stock sale, while Banco Santander is slumping in Spain after a government official warned of substantial losses on soured property investments. At last check, the French CAC 40 is down 0.9%, the German DAX is off 0.7%, and London's FTSE 100 is 0.4% lower.

Overseas markets

Currencies and Commodities

The U.S. dollar is up this morning, with the greenback last seen 0.6% higher to trade at $80.65. Succumbing to an uncertain international backdrop , and ahead of today's inventories report, crude oil futures are trading 0.7% lower this morning at $102.54 per barrel. Finally, after closing yesterday at a two-week high, gold futures are down 0.2% at $1,609.70 an 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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