Opening View: Bulls Hopeful as Manufacturing and M&A Dominate Monday's Headlines

The theme of last week was "volatility," as the Dow traded in a several-hundred-point range as a result of S&P's downgrade. This week, things seem to be looking up, as a slew of upbeat M&A activity could bolster the bulls' confidence. Moreover, a promising GDP report out of Japan has given investors hope about the global economy -- and in just a few minutes, the Empire State manufacturing survey for August could help bolster U.S. traders' spirits. Amid this backdrop, futures on the Dow Jones Industrial Average (DJIA ) are hovering 50 points north of fair value.

Dow, S&P and Nasdaq futures

Jumping right in... Lowe's Companies, Inc. (LOW - 19.51) kicked off this week's earnings, reporting that its second-quarter profit fell 0.2% to $830 million, or 64 cents per share, compared to $832 million, or 58 cents per share, a year ago. Meanwhile, sales increased 1.3% to $14.54 billion. These figures fell short of the consensus estimate for earnings of 66 cents per share on sales of $14.77 billion. "Despite some recovery in our seasonal business, our performance for the quarter fell short of our expectations," Lowe's CEO Robert Niblock said. Looking ahead, the firm forecast full-year earnings between $1.48 and $1.54 per share, including charges due to store closures. Analysts had been expecting fiscal-year earnings of $1.61 per share. Traders don't seem too bothered by this news, though, with the shares up 0.4% ahead of the open.

However, M&A activity is what's really making headlines this morning. Google Inc. (GOOG - 563.77) announced that it will be purchasing Motorola Mobility Holding Inc. (MMI - 24.47) for $12.5 billion, or $40 per share. This price values MMI at a premium of 63% to the stock's Friday close at $24.47. "Motorola Mobility's total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers," Google CEO Larry Page said in a press release. MMI is the child of former communications concern Motorola, which recently split into two separate companies. Shares of MMI are up 60% ahead of the open, to hover just below their $40-per-share price tag.

Transocean (RIG - 55.61) announced that it will acquire Norwegian drilling rig operator Aker Drilling ASA. In a deal valued at $2.23 billion, Transocean has offered roughly NOK26.50 ($4.83) per share for all outstanding shares in Aker Drilling -- a generous 62% premium to the stock's 30-day average price of NOK16.39 per share. RIG said that the deal will be "immediately accretive" to earnings.

Scripps Networks Interactive, Inc. (SNI - 42.68) announced that it will purchase Virgin Media's 50% stake in British cable-channel owner UKTV for around GBP239 million. Scripps will also pay about GBP100 million to acquire the outstanding preferred stock and debt owed by UKTV to Virgin Media, the two companies said in a statement. The move is part of Scripps' efforts to increase its global presence. "UKTV is a significant opportunity for Scripps Networks Interactive to participate in a thriving multi-channel, dual revenue stream media business in one of the world's largest television markets," explained CEO Kenneth W. Lowe. Completion of the deal is subject to regulatory approvals in the Republic of Ireland and Jersey, and could take up to 40 days.

Earnings Preview

Today's earnings docket will feature reports from Urban Outfitters ( URBN ), Zagg ( ZAGG ), Sysco ( SYY ), Agilent Technologies ( A ), Estee Lauder ( EL ), Harmony Gold Mining (HMY), and General Steel (GSI). Keep your browser at for more news as it breaks.

Economic Calendar

The economic calendar kicks off today with the Empire State manufacturing index for August. Tuesday's docket includes July's housing starts, import/export prices, industrial production, and capacity utilization. Inflation data starts to hit the Street on Wednesday, with the release of the producer price index (PPI) and core PPI for July. Also due out is the regularly scheduled report on weekly petroleum supplies. Initial and continuing jobless claims are on the calendar for Thursday, along with the consumer price index (CPI) and core CPI for July. Traders will also hear about existing home sales and the Conference Board's index of leading economic indicators for July, as well as the August Philadelphia Fed index. There are no major economic reports on Friday.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,000,680 call contracts traded on Friday, compared to 769,969 put contracts. The resultant single-session put/call ratio arrived at 0.77, while the 21-day moving average was 0.73.

NYSE and Nasdaq summaryVolatility indices

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Overseas Trading

Asian markets ended mostly higher today, with Tokyo setting the pace after a better-than-expected report on second-quarter gross domestic product (GDP). Japan's economy contracted 0.3% during the April-June quarter, or 1.3% on an annualized basis. Economists were expecting a steeper decline of 0.7%, or 2.6% on an annualized basis. On the heels of heavy losses during the past couple of weeks, traders were quick to interpret this news as a buying opportunity. By the close, Hong Kong's Hang Seng rose 3.3%, Japan's Nikkei added 1.4%, and China's Shanghai Composite climbed 1.3%. South Korean markets are closed for holiday.

Stocks in Europe are on the upswing at midday, led by energy and commodity issues. Leading the charge is Norway's Aker Drilling, with the stock nearly doubling in value on the heels of a $1.43-billion buyout bid from Transocean. However, volume in the region remains relatively light, with markets in Greece, Italy and Austria closed for public holidays. At last check, the German DAX is up 0.8%, London's FTSE 100 is 0.4% higher, and the French CAC 40 has added 0.7%.

Overseas markets

Currencies and Commodities

The dollar is looking weak this morning, as ongoing concerns over the state of the U.S. economy have weighed heavily on the greenback. Ahead of the open, the U.S. dollar index is down 0.2 point, or 0.2%. Similarly, oil futures are trading slightly lower this morning, down 0.6 point, or 0.6%. Meanwhile, gold has continued to edge higher, with the precious metal up 0.9 point, or 0.1%, in pre-market trading.

Currencies and commodities

Unusual Put and Call Activity:

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Every morning, our research staff analyzes the prior day and the overnight markets, and monitors the morning wires to give you an accurate preview of the day to come. If you enjoyed today's edition of Opening View, sign up here for free daily delivery, straight to your inbox, before the opening bell.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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