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Opening View: Futures Flat as Wall Street Digests Pre-Payrolls Unemployment Reports
By: Schaeffer's Investment Research
Stocks are hovering close to breakeven this morning, as Wall Street awaits a three-session onslaught of unemployment data. Already this morning, the folks at Challenger, Gray & Christmas said the number of planned layoffs at U.S. firms rose to the highest level since April 2009 last month. Specifically, employers announced 115,730 planned pink slips in September -- more than twice the total of August, and roughly three times that of September 2010. Elsewhere, investors are still bracing for the latest data from Automatic Data Processing ( ADP ), which should provide further clues ahead of Uncle Sam's highly anticipated nonfarm payrolls report, slated for release on Friday. Against this cautious backdrop -- and despite a rally in Europe -- futures are mixed, with the Dow Jones Industrial Average (DJIA) lingering about 15 points south of breakeven, and the broader S&P 500 Index (SPX) trading fractionally higher ahead of the bell.
In earnings news, Acme Packet (APKT - 42.83) warned last night that it now expects an adjusted third-quarter profit of 20 cents to 22 cents per share, with revenue arriving near $70 million. The preliminary results fell way short of Wall Street's consensus estimates, which were calling for a profit of 30 cents per share on $82.8 million in revenue. "Our third-quarter results were adversely impacted by a very large opportunity at one of the two largest service providers in North America," explained President and CEO Andy Ory. "We now expect this opportunity to close in the first half of the fourth quarter." APKT is slated to report its third-quarter results in full after the market closes on Thursday, Oct. 20. In pre-market trading, APKT is pointed 14% lower.
Elsewhere, Yum Brands (YUM - 49.44) banked a third-quarter profit of $383 million, or 80 cents per share, up 7.3% from its year-ago earnings of $357 million, or 74 cents per share. On an adjusted basis, YUM earned 83 cents per share, while revenue improved 14% to $3.27 billion. Analysts, on average, were looking for a profit of 83 cents per share on $3.10 billion in revenue. A stronger foothold in China saved the quarter for the fast-food behemoth, with a 19% same-store sales surge in the key emerging market offsetting a 3% decline in the U.S. Looking ahead, YUM backed its forecast for full-year earnings growth of "at least" 12%, excluding items. At last check, YUM is headed for a 0.9% drop out of the gate.
Finally, Global Payments (GPN - 40.85) said its fiscal first-quarter earnings rose 30% to $64 million, or 79 cents per share, from $49.4 million, or 61 cents per share, a year earlier. On an adjusted basis, GPN earned 88 cents per share. Revenue, meanwhile, grew 23% to $542.8 million. Analysts, on average, were anticipating a slimmer per-share profit of 74 cents on $518.5 million in sales. Looking ahead, GPN lifted its fiscal 2012 adjusted earnings forecast to a range between $3.46 and $3.54 per share, up from its prior outlook of $3.35 to $3.43 per share. Ahead of the bell, GPN is poised to chip away at its year-to-date deficit of 11.6%.
Today's earnings docket will also feature reports from Acuity Brands ( AYI ), Costco Wholesale ( COST ), Marriott International ( MAR ), Monsanto ( MON ), and Ruby Tuesday (RT). Keep your browser at SchaeffersResearch.com for more news as it breaks.
Employment data starts to roll in on today, with the release of ADP's private payrolls report for September. Also due out is the ISM services index for September, as well as the usual report on weekly petroleum supplies. Weekly jobless claims are the lone economic report of note on Thursday. Finally, Friday's marquee event is the Labor Department's nonfarm payrolls report for September. Also on the day's docket are wholesale inventories and consumer credit for August.
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,301,264 call contracts traded on Tuesday, compared to 1,013,454 put contracts. The resultant single-session put/call ratio arrived at 0.78, while the 21-day moving average was 0.73.
Conversely, the major European benchmarks are pointed higher at midday. Italian Prime Minister Silvio Berlusconi's office expressed a general lack of surprise at the Moody's downgrade, and traders seem to share the government's nonchalance. Instead, stocks are on the upswing after the Financial Times reported that euro-zone finance ministers are working toward a plan to recapitalize financial institutions. "Capital positions of European banks must be reinforced to provide additional safety margins and thus reduce uncertainty," said Olli Rehn, commissioner of economic and monetary affairs, in a statement to the paper. At last check, the German DAX has jumped 3.4%, the French CAC 40 is up 2.8%, and London's FTSE 100 is 2.1% higher.
Currencies and Commodities
The greenback has given back some of its recent gains this morning, with the U.S. dollar index down about 0.8% at last check. After falling to a one-year low on Tuesday, crude oil futures are on the rebound, thanks to a favorable supplies report. Specifically, the American Petroleum Institute last night said domestic oil supplies fell by 3.1 million barrels last week, compared to economists' expectations for an uptick in inventories. Against this backdrop, crude oil futures are up $2.35, or 3.1%, to hover just north of $78 per barrel. Meanwhile, gold futures have extended yesterday's retreat, with the precious metal last seen $4.80, or 0.3%, lower at $1,611.20 an ounce.
Unusual Put and Call Activity:
Unusual Put and Call Activity:
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