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Opening View: DJIA, SPX Cling to Breakeven Ahead of Pre-Payrolls Jobless Data

Posted
6/2/2011 8:08:00 AM
By: Schaeffer's Investment Research
Referenced Stocks:CYBX;PAY;TFM;XIDE;ZQK

Wall Street kicked off the month on a bearish note on Wednesday, after dismal data -- notably, a foreboding employment report from ADP -- sent stocks reeling right out of the gate. In pre-market action this morning, the major market indexes are clinging to breakeven, as traders await another round of pre-payrolls jobless figures. In addition, data on factory orders and a slew of retail sales reports will set the tone on the Street today, though many investors will likely keep one eye on the sovereign debt drama across the pond. Ahead of the bell, the Dow Jones Industrial Average (DJIA ) is trading less than 2 points above fair value, while the S&P 500 Index (SPX ) is fractionally lower at last check.

Dow, S&P and Nasdaq futures

In equities news, Hot Topic Inc. (HOTT - 7.52) was among the first retailers to confess its monthly sales data. Last night, the firm said same-store sales rose just 0.4% in May, falling short of expectations for a 1.4% increase. In addition, the company reiterated its forecast for a second-quarter loss of 9 cents to 11 cents per share, steeper than analysts' predictions for a per-share loss of 9 cents. In pre-market trading, HOTT is up around 0.5%.

Elsewhere, an Illinois court ordered AMR Corp.'s (AMR - 6.09) American Airlines to resume the publication of its flight schedules and fares on Orbitz Worldwide's (OWW - 2.21) travel sites. In December, American Airlines omitted its content from the sites after Orbitz refused to adopt its new technology. "This reinstatement ... is a win for transparency, consumer choice and for all of our mutual customers," Orbitz said in a statement. At last check, OWW is set to open more than 55% higher, while AMR is flirting with a 0.3% loss.

On the earnings front, Coldwater Creek (CWTR - 1.83) swung to a fiscal first-quarter loss of $30 million, or 32 cents per share, from a year-ago profit of $2.3 million, or 3 cents per share. Meanwhile, revenue plunged 26% to $179.8 million. Analysts, on average, were expecting a slimmer per-share loss of 29 cents on revenue of $180 million. "We remain intently focused on reinventing our brand," said Chairman and CEO Dennis Pence. Ahead of the bell, CWTR is up about 0.6%.

Finally, Joy Global Inc. (JOYG - 85.88) reported a fiscal second-quarter profit of $162 million, or $1.52 per share -- up 34% from the year-ago quarter, and above analysts' expectations for a profit of $1.35 per share. Revenue rose 19% to $1.06 billion, topping the Street's forecast for sales of $1.03 billion. For the fiscal year, the company upped its earnings outlook to a range of $5.30 to $5.60 per share, from its previous guidance for $5.10 to $5.40 per share. Analysts, on average, were calling for fiscal-year earnings of $5.39 per share. At last look, JOYG has added roughly 3.8%.

Earnings Preview

Today's earnings docket will also feature reports from Cyberonics ( CYBX ), Exide Technologies ( XIDE ), Quiksilver ( ZQK ), Verifone Systems ( PAY ), and The Fresh Market ( TFM ), to name a few. Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Today, the government's weekly jobless figures will take center stage, along with reports on April factory orders and first-quarter productivity. Finally, the economic calendar goes out with a bang on Friday, with the highly anticipated release of Uncle Sam's nonfarm payrolls report.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 989,292 call contracts traded on Wednesday, compared to 761,026 put contracts. The resultant single-session put/call ratio docked at 0.77, while the 21-day moving average inched higher to 0.65.

NYSE and Nasdaq summary

Volatility indices

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Overseas Trading

Stocks in Asia slumped today, with traders taking their cues from the drastic sell-off on Wall Street. Weak U.S. sales pressured automakers in the region, while lower commodity prices weighed on energy stocks. Meanwhile, political unrest in Japan is adding to the atmosphere of uncertainty, with Prime Minister Naoto Kan dodging a no-confidence vote by offering to resign after he's handled the worst of the nuclear crisis. By the close, Japan's Nikkei declined 1.7%, Hong Kong's Hang Seng gave up 1.6%, China's Shanghai Composite shed 1.4%, and South Korea's Kospi lost 1.3%.

Economic woes have sent European shares into the red at midday. In addition to poorly received U.S. data, traders are responding to a three-notch downgrade of Greek debt by Moody's. The ratings agency slapped a junk-grade Caa1 rating on the troubled country, citing "an even chance of default over the rating horizon" as the catalyst behind the downgrade. At last check, the French CAC 40 is down 1.1%, the German DAX has dipped 1.3%, and London's FTSE 100 is off 0.8%.

Overseas markets

Currencies and Commodities

The greenback has continued its retreat this morning, with the U.S. dollar index down about 0.4%. Elsewhere, after pulling back amid concerns of ebbing demand, black gold has pared a portion of yesterday's losses. At last check, the front-month contract has added $0.17, or almost 0.2%, to linger near $100.46 per barrel. Meanwhile, gold futures have extended their uptrend as traders continue to seek safety, with the front-month contract advancing $1.10, or nearly 0.1%, to trade around $1,544.30 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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