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Opening View: DJIA Set to Rebound as Italian Bonds Ease; Greece Names New Prime Minister
By: Schaeffer's Investment Research
After suffering one of the worst sessions in months on Wednesday, U.S. stocks are set to reclaim some ground this morning. Fueling optimism is news that the European Central Bank (ECB) ramped up its bond buying, which has eased Italian bond yields from uncomfortably high levels, though the 10-year rates still remain above the key 7% marker. Furthermore, Greece named ECB veteran Lucas Papademos its new prime minister, which should help Wall Street get a clearer picture of the cash-strapped country's political and financial trajectory. Against this backdrop, traders have put a downwardly revised growth forecast from the European Union ( EU ) on the proverbial backburner, with the Dow Jones Industrial Average (DJIA) headed for a triple-digit rebound out of the gate.
In earnings news, Cisco Systems (CSCO - 17.61) banked a fiscal first-quarter profit of $1.78 billion, or 33 cents per share, down 7.9% from its year-ago earnings of $1.93 billion, or 34 cents per share. On an adjusted basis, CSCO earned 43 cents per share, while revenue improved 4.7% to $11.26 billion. The results were stronger than expected, as analysts were looking for a quarterly profit of 39 cents per share on $11.03 billion in revenue. In pre-market trading, CSCO is up 6.7%.
Green Mountain Coffee Roasters (GMCR - 67.02) is poised to plunge after confessing to a major revenue miss -- its first since 2009. The Keurig parent raked in a fiscal fourth-quarter profit of $75.4 million, or 47 cents per share, more than doubling its year-ago earnings of $27 million, or 20 cents per share. Meanwhile, revenue jumped 91% to $711.9 million. By contrast, Wall Street was looking for a profit of 48 cents per share on $760.5 million in revenue. In a statement, President and CEO Lawrence J. Blanford explained that fourth-quarter sales growth "was off of our estimates as a result of a number of factors, including changes in wholesale customer ordering patterns in our grocery and club channels, despite steady consumer point-of-sale demand in those channels." At last check, GMCR is set to open with a 30% drop.
Finally, Kohl's (KSS - 54.29) said third-quarter earnings rose to $211 million, or 80 cents per share, from its year-ago profit of $176 million, or 57 cents per share. Sales, meanwhile, increased 4% to $4.4 billion. The results surpassed expectations, with Wall Street calling for a third-quarter profit of 79 cents per share on revenue of $4.38 billion. Going forward, the retailer projected current-quarter earnings of $1.93 to $2.04 per share, and 2011 earnings of $4.41 to $4.52 per share. Analysts, on average, were anticipating fourth-quarter and full-year per-share earnings of $1.96 and $4.46, respectively. Ahead of the bell, KSS is pointed 2.7% higher.
Today's earnings docket will also feature reports from AMC Networks ( AMCX ), CyberDefender ( CYDE ), Flowers Foods ( FLO ), Hoku Corp. ( HOKU ), Molycorp (MCP), Nordstrom (JWN), Nvidia (NVDA), Renren (RENN), Viacom (VIA), and Walt Disney (DIS). Keep your browser at SchaeffersResearch.com for more news as it breaks.
Today brings a relative onslaught of economic news, including import/export prices, the U.S. trade balance, the Treasury budget, and the weekly report on jobless claims. The week wraps up on Friday with the Thomson Reuters/University of Michigan consumer sentiment survey for early November.
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 950,967 call contracts traded on Wednesday, compared to 873,328 put contracts. The resultant single-session put/call ratio arrived at 0.92, while the 21-day moving average was 0.68.
Stocks in Asia were hit hard today, following suit with Wednesday's steep sell-off on Wall Street. Ballooning Italian bond yields stoked fears that the No. 3 economy in the euro zone may be teetering on the edge of collapse, applying heavy pressure to banking issues and exporters. Hong Kong-listed equities took the brunt of the bears' wrath, with a 9% post-earnings slide for HSBC spearheading the decline. Meanwhile, traders were also spooked by data showing slower-than-anticipated growth in Chinese exports during the month of October. By the close, Hong Kong's Hang Seng fell 5.3%, South Korea's Kospi dropped 4.9%, Japan's Nikkei lost 2.9%, and China's Shanghai Composite gave up 1.8%.
On the other hand, European stocks have crept higher at midday, despite the EU downwardly revising its growth forecast for the region. The EU now anticipates gross domestic product (GDP) for the 27-nation bloc to rise just 0.5% in 2012, down from its previous outlook of 1.8% growth. This gloomy forecast aside, traders seem optimistic over the appointment of former ECB official Lucas Papademos as the new prime minister of Greece -- as well as speculation suggesting that erstwhile European Commissioner Mario Monti may step up to replace outgoing Italian Prime Minister Silvio Berlusconi. At last check, the German DAX has added 1.2%, the French CAC 40 is up 0.9%, and London's FTSE 100 has gained 0.3%.
Currencies and Commodities
After soaring against the euro on Wednesday , the greenback has come back down to Earth a bit, with the U.S. dollar down 0.5%. Meanwhile, crude futures have bounced back from yesterday's retreat, with the front-month contract last seen 1.7% higher at $97.25 per barrel. On the other hand, gold futures have extended their recent pullback, with the malleable metal down $20.60, or 1.2%, to linger near $1,771 an ounce.
Unusual Put and Call Activity:
Unusual Put and Call Activity:
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