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Opening View: DJIA Ready to Erase Weekly Deficit; Europe, DIS in Focus
By: Schaeffer's Investment Research
U.S. stocks are poised to extend Thursday's rebound today, as Wall Street once again follows Europe's lead. Across the pond, traders are celebrating the approval of austerity measures in Italy's senate, which will allow the country's parliament to vote on the bill this weekend -- and for Italian Prime Minister Silvio Berlusconi to make good on his resignation pledge . On the home front, meanwhile, solid earnings from blue-chip bigwig Walt Disney ( DIS ) have also bolstered the collective mood ahead of both the opening bell and a round of consumer sentiment data. Against this backdrop, the Dow Jones Industrial Average (DJIA) is ready to make a run at a weekly gain, while the broader S&P 500 Index (SPX) is headed for a double-digit jump out of the gate.
In earnings news, Walt Disney (DIS - 34.64) saw its fiscal fourth-quarter profit improve 30% to $1.09 billion, or 58 cents per share, while revenue rose 7% to $10.43 billion. On an adjusted basis, DIS earned 59 cents per share. The results surpassed analysts' expectations, which called for a profit of 54 cents per share on $10.36 billion in revenue. At last check, DIS is set to open with a 3.9% lead.
Meanwhile, Molycorp (MCP - 38.70) last night reported a third-quarter profit of $48.4 million, or 52 cents per share, compared to last year's loss of $10.1 million, or 15 cents per share. Excluding items, earnings arrived at 67 cents per share. Citing a 92% increase in volume at its California-based Mountain Pass facility, MCP said revenue skyrocketed to $138.1 million from $8.5 million. The results came in weaker than expected, as analysts, on average, were predicting adjusted earnings of 70 cents per share on revenue of $162 million. Ahead of the bell, MCP is bracing for a 6% drop.
Finally, fashion retailer Nordstrom (JWN - 49.62) reported third-quarter earnings of $127 million, or 59 cents per share, up 6.7% from $119 million, or 53 cents per share, in the year-ago quarter. Thanks to a healthy 7.9% growth in same-store sales, revenue increased 14% to $2.38 billion. JWN's results fell right in line with analysts' expectations for a per-share profit of 59 cents on $2.38 billion in sales. For fiscal 2011, the Seattle-based company narrowed its earnings-per-share view to $3.05 to $3.10, from its earlier range of $2.95 to $3.10 per share. However, Wall Street is looking for a more robust $3.14 per share in earnings. In pre-market trading, JWN is headed 1.4% lower.
Today's earnings docket will also feature reports from Brookfield Asset Management ( BAM ), D.R. Horton ( DHI ), and Tree.com ( TREE ). Keep your browser at SchaeffersResearch.com for more news as it breaks.
The week wraps up with the Thomson Reuters/University of Michigan consumer sentiment survey for early November.
Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 845,063 call contracts traded on Thursday, compared to 633,449 put contracts. The resultant single-session put/call ratio arrived at 0.75, while the 21-day moving average was 0.69.
Asian markets ended moderately higher today, whittling a portion of the previous session's heavy losses. Traders seemed relieved after Italy generated respectable demand at a bond auction, with yields backpedaling beneath the anxiety-inducing 7% benchmark. The news was a boon for exporters, such as Hyundai and Sony. However, investors were relatively unmoved by the Bank of Korea's decision to stand pat on interest rates, which was widely expected. By the close, South Korea's Kospi rallied 2.8%, Hong Kong's Hang Seng gained 0.9%, Japan's Nikkei added 0.2%, and China's Shanghai Composite rose 0.06%.
The bullish mood has spread to Europe, after Italian lawmakers on Thursday voted in favor of much-needed austerity measures. Cooling bond yields also helped traders rediscover their appetite for risk, with battered banking stocks helping to lead the advance. At midday, the German DAX is up 1.6%, the French CAC 40 is 0.9% higher, and London's FTSE 100 has tacked on 0.8%.
Currencies and Commodities
The greenback has continued its pullback this morning, with the U.S. dollar down 0.3%. On the other hand, crude futures have extended yesterday's rebound , with the front-month contract up 0.3% to hover just shy of $98 per barrel. Likewise, gold futures are set to snap their three-session losing streak today, with the malleable metal last seen 0.4% higher at $1,765.70 an ounce.
Unusual Put and Call Activity:
Unusual Put and Call Activity:
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