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Opening View: Stocks, Commodities Head Lower as Euro-Zone Bond Yields Climb
11/17/2011 8:20:00 AM
By: Schaeffer's Investment Research
U.S. stocks are poised to extend Wednesday's late-session sell-off today, thanks to persisting concerns about European debt. Reflecting the collective skepticism, Spain's 10-year bond yields soared to euro-era highs, and even AAA-rated France has seen its credit default swaps skyrocket in the wake of a lackluster bond auction. Against this backdrop, and with Fitch's contagion warning still fresh in Wall Street's mind, the Dow Jones Industrial Average (DJIA) is set to steepen its slide south of 12,000.
In earnings news, Dollar Tree (DLTR - 76.05) said third-quarter profit soared to $104.5 million, or 87 cents per share, from $93.2 million, or 73 cents per share, a year earlier. Revenue, meanwhile, jumped to $1.6 billion from $1.43 billion. Analysts, on average, were expecting the discount retailer to earn just 83 cents per share on sales of $1.58 billion. Looking ahead, DLTR expects fourth-quarter earnings of $1.50 to $1.57 per share, encompassing Wall Street's forecast for a per-share profit of $1.54. In addition, the firm projected full-year earnings of $3.94 to $4.01 per share on sales of $6.57 billion to $6.62 billion. In comparison, analysts were calling for a 2011 profit of $3.95 per share on sales of $6.58 billion. At last check, DLTR is set to open 1.3% higher.
Elsewhere, tech company Applied Materials (AMAT - 12.47) saw its fiscal fourth-quarter profit drop 2.6% to $456 million, or 34 cents per share, from $468 million, or 35 cents per share, in the year-ago period. Excluding items, earnings fell to 21 cents from 36 cents per share. Revenue slipped 24% to $2.18 billion. The results topped Wall Street's forecast for earnings of 19 cents per share on revenue of $2.15 billion. For the first quarter of fiscal 2012, AMAT predicts its adjusted earnings in the range of 8 cents to 16 cents per share, on revenue of $1.85 billion to $2.07 billion. Analysts are looking for a current-quarter profit of 17 cents per share on $2.06 billion in revenue. Ahead of the bell, AMAT is bracing for a 3.4% drop.
Meanwhile, Limited Brands (LTD - 42.97) reported a third-quarter profit of $94.3 million, or 31 cents per share, a 54% rise from last year's profit of $61.3 million, or 18 cents per share. Excluding items, earnings rose 39% to arrive at 25 cents per share. On a year-over-year basis, net sales increased 9.6% to $2.17 billion. The results came in stronger than forecast, as analysts were expecting adjusted earnings of 24 cents per share on sales of $2.16 billion. Looking forward, LTD is projecting adjusted fourth-quarter earnings to range between $1.28 and $1.43 per share, and upped its full-year forecast to $2.38 to $2.53 per share. By comparison, analysts are predicting a fourth-quarter profit of $1.42 per share, and full-year earnings of $2.04 per share. In pre-market trading, LTD is headed 2.3% lower.
Finally, Hot Topic (HOTT - 6.52) reported a third-quarter profit of $3.1 million, or 7 cents per share, compared to $390,000, or 1 cent per share, in the year-ago period. Last year's quarterly results were impacted by a non-cash impairment charge of 4 cents per share relating to HOTT's ShockHound assets. Meanwhile, revenue fell 4% to $175.8 million, while same-store sales declined by 1.6%. Analysts, on average, were expecting a profit of 7 cents per share on revenue of $178.6 million. At last look, HOTT is pointed 6.4% higher.
Today's earnings docket will also feature reports from Aruba Networks ( ARUN ), Blue Coat Systems ( BCSI ), Buckle ( BKE ), Children's Place ( PLCE ), China Sunergy ( CSUN ), Focus Media Holding (FMCN), Foot Locker (FL), GameStop (GME), The Gap (GPS), J.M. Smucker (SJM), Marvell Technology Group (MRVL), Salesforce.com (CRM), Sears Holdings (SHLD), and Williams-Sonoma (WSM). Keep your browser at SchaeffersResearch.com for more news as it breaks.
Today brings us the regularly scheduled weekly report on jobless claims, the Philadelphia Fed manufacturing index, and housing starts. The economic calendar concludes on Friday with the Conference Board's index of leading indicators.
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 866,344 call contracts traded on Wednesday, compared to 646,359 put contracts. The resultant single-session put/call ratio arrived at 0.75, while the 21-day moving average was 0.70.
Asian markets ended mixed today, as growing concerns over a possible European debt contagion kept most buyers on the sidelines. However, there were a few bright spots. In Seoul, Hynix Semiconductor rallied on the heels of a courtroom victory against Rambus, while TDK paced a tech-sector advance in Tokyo after one of its subsidiaries inked a supply deal with Western Digital. By the close, South Korea's Kospi added 1.1%, Japan's Nikkei tacked on 0.2%, China's Shanghai Composite shed 0.2%, and Hong Kong's Hang Seng gave up 0.8%.
The major European benchmarks are firmly planted in the red at midday, with traders casting a wary eye on skyrocketing bond yields. A Spanish auction of 10-year notes saw yields vaulting to new euro-era highs north of 7%, while French credit default swaps jumped to a record peak after a less-than-stellar bond offering. At last check, London's FTSE 100 is 1.8% lower, the French CAC 40 is down 1.3%, and the German DAX is off 1.2%.
Currencies and Commodities
The greenback is on the rise this morning, with the U.S. dollar up 0.4%. On the other hand, crude futures have pulled back from multi-month highs, with the front-month contract down 2% to test its footing atop the key century mark. Finally, gold futures have extended their recent retreat, with the malleable metal last seen 1.7% lower at $1,744.70 an ounce.
Unusual Put and Call Activity:
Unusual Put and Call Activity:
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