After retreating amid exacerbated fears about debt-strapped Greece on Friday, stocks around the world are once again headed for the red. Across the pond, traders are digesting a scandal surrounding International Monetary Fund (IMF) chief Dominique Strauss-Kahn, while inflationary concerns and lower commodities prices dragged down stocks down in Asia. On the home front, a lackluster earnings forecast from Lowe's Cos. (LOW) has weighed on sentiment, though blue chip Merck (MRK) is poised to buck the trend after a key regulatory victory. Ahead of the bell, the Dow Jones Industrial Average (DJIA ) is trading almost 43 points below fair value, while the broader S&P 500 Index (SPX ) is set to slump more than 5 points out of the gate.
On the earnings front, Lowe's Companies (LOW - 25.76) reported a first-quarter profit of $461 million, or 34 cents per share -- down 5.7% from the year-ago quarter, and below analysts' expectations for earnings of 36 cents per share. Revenue, meanwhile, dipped 1.6% to $12.19 billion, falling short of the Street's forecast for sales of $12.52 billion. Looking ahead, the home-improvement issue expects second-quarter earnings of 65 cents to 69 cents per share, and fiscal-year earnings-per-share in the $1.56 to $1.64 ballpark. Earlier, LOW projected current-year earnings of $1.60 to $1.72 per share. In pre-market trading, LOW has surrendered more than 5%.
In equities news, Merck & Co. (MRK - 37.08) scored a regulatory victory over the weekend, after the Food and Drug Administration (FDA) approved the launch of its new hepatitis C treatment -- the first of its kind in almost a decade. The blue chip pharmaceutical bigwig plans to sell boceprevir under the brand name Victrelis, and will begin shipping the pills to pharmacies within a week, a MRK spokeswoman said. At last check, MRK is headed about 0.5% higher.
In merger-and-acquisition news, Joy Global (JOYG - 87.48) will enter the drilling market with a $1.1 billion purchase of LeTourneau Technologies Inc. from Rowan Cos. (RDC - 38.04). The purchase is expected to add to JOYG's earnings in fiscal 2011. Ahead of the bell, JOYG is up roughly 1%, while RDC is trading fractionally lower.
Finally, after a disappointing discussion with the U.S. Justice Department, Nasdaq OMX Group (NDAQ - 26.91) and IntercontinentalExchange (ICE - 118.32) withdrew their $11 billion bid for NYSE Euronext (NYX - 40.89). "We took the decision to withdraw our offer when it became clear that we would not be successful in securing regulatory approval for our proposal despite offering a variety of substantial remedies, including the sale of the NYSE SRO and related businesses," Nasdaq CEO Bob Greifeld said in a statement. Ahead of the bell, NDAQ has fallen about 2%, ICE has added roughly 2%, and NYX has shed almost 10%.
Today's earnings docket will feature reports from J.C. Penney (JCP), Valspar (VAL), Urban Outfitters (URBN), and Ctrip.com ( CTRP ), just to name a few. Keep your browser at SchaeffersResearch.com for more news as it breaks.
Today kicks off with the Empire State manufacturing index for May. The action heats up on Tuesday, with the release of new home starts, industrial production, and capacity utilization for April. Wednesday features the regularly scheduled update on domestic petroleum supplies, as well as the minutes from the latest meeting of the Federal Open Market Committee (FOMC). Finally, the economic calendar wraps up early on Thursday, with a flurry of data on the docket. Traders will hear the weekly report on jobless claims, the Philly Fed index for May, April's existing home sales, and the Conference Board's index of leading economic indicators.
Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 995,598 call contracts traded on Friday, compared to 742,281 put contracts. The resultant single-session put/call ratio jumped to 0.75, while the 21-day moving average inched higher to 0.63.
Concerns about debt restructuring in the euro zone spilled over into Asian trading today, with markets ending lower across the region. Lower commodities prices weighed on energy and mining issues, while banks and utilities continued to struggle in Japan as traders considered a pending aid package for nuclear crisis-stricken Tokyo Electric Power. Meanwhile, anxiety about high inflation and the potential for additional monetary tightening maneuvers kept investors in Hong Kong and China on the sidelines. By the close, Hong Kong's Hang Seng was off 1.4%, Japan's Nikkei backpedaled 0.9%, and China's Shanghai Composite and South Korea's Kospi each gave up 0.8%.
The headline news in Europe today is the arrest of International Monetary Fund (IMF) chief Dominique Strauss-Kahn, who had been scheduled to meet with euro-zone finance ministers today to discuss financial aid for struggling Greece. Strauss-Kahn, a French presidential hopeful, was arrested Saturday and charged with attempted rape, sexual assault, and unlawful imprisonment of a maid at the Sofitel hotel, and is expected to be arraigned Monday in New York. With this unexpected development adding fresh uncertainty to the already-dicey European fiscal situation, markets are wallowing in red ink at midday. The French CAC 40 is off 1.4%, the German DAX has dropped 1.2%, and London's FTSE 100 is 0.9% lower.
Currencies and Commodities
The greenback has continued its trek higher this morning, with the U.S. dollar index up almost 0.1%. Elsewhere, black gold has given up Friday's last-minute gains. At last check, June-dated crude futures have fallen $1.64, or 1.6%, to trade near $98.48 per barrel. Meanwhile, gold and silver futures are also in the red, with the front-month contracts down about 0.2% and 2.7%, respectively.
Unusual Put and Call Activity:
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