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Opening View: DJIA, SPX Modestly Higher as Wall Street Eyes ECB

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U.S. stocks are once again pointed modestly higher today, as Wall Street continues to digest the latest headlines out of Europe. Most notably, the European Central Bank (ECB) -- as expected -- cut its key lending rate by a quarter of a percentage point to 1%, marking the second such rate cut in as many months. Now, all eyes will be on ECB President Mario Draghi, whose morning press conference will carry even more weight than usual ahead of tomorrow's highly anticipated summit of European Union ( EU ) leaders . Against this backdrop, buyers are playing it somewhat safe ahead of the bell, with the Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) last seen moderately north of breakeven.

In earnings news, Costco Wholesale (COST - 87.47) reported fiscal first-quarter earnings of $320 million, or 73 cents per share -- up 2.6% from $312 million, or 71 cents per share, a year prior. Revenue, meanwhile, jumped 12% to $21.63 billion. However, the wholesale retailer said its earnings were impacted by costs related to an income-tax audit of its joint venture in Mexico, as well as contributions to support a bailout initiative in Washington. Nevertheless, the results fell short of analysts' expectations for earnings of 80 cents per share on sales of $21.46 billion. In pre-market action, COST is bracing for a 0.5% drop.

Pacific Sunwear of California (PSUN - 1.35) reported a third-quarter loss of $17.6 million, or 26 cents per share, compared to its year-ago loss of $7 million, or 11 cents per share. Excluding items, PSUN's loss arrived at 10 cents per share. Net sales also weakened, dropping 6.2% to $242 million. PSUN's results came in better than expected, as analysts were projecting an adjusted loss of 14 cents per share on net sales of $232.8 million. As a means of getting its fiscal house back in order, PSUN also announced the closure of around 175 to 200 stores over the course of the next 14 months, in addition to new financing deals with Golden Gate Capital and Wells Fargo. Looking ahead, PSUN is predicting a fourth-quarter adjusted loss on a per-share basis of 18 cents to 27 cents. By comparison, analysts are calling for a loss of 26 cents per share. Ahead of the bell, PSUN is poised to skyrocket 34.8%.

Finally, G-III Apparel (GIII - 20.36) banked a third-quarter profit of $43.6 million, up 2% from $42.7 million in the year-ago period. Net income per share, however, remained flat at $2.16. Meanwhile, net sales improved 13.3% to $510 million. Analysts, on average, were expecting earnings of $2.14 per share on revenue of $497.5 million. Looking ahead, GIII trimmed its full-year guidance to a range between $2.50 and $2.60 per share on sales of $1.25 billion. By contrast, analysts are predicting a profit of $2.80 per share on revenue of $1.24 billion. "Our lower gross margin percentage in the third quarter reflected our higher costs and the promotional environment," explained Chairman and CEO Morris Goldfarb, warning that he expects these pressures to continue during the fourth quarter. At last check, GIII is pointed 21.5% higher.

Earnings Preview

Today's earnings docket will also feature reports from Smithfield Foods ( SFD ), Conn's Inc. ( CONN ), Analogic Corp. ( ALOG ), Smith & Wesson Holding Corp. ( SWHC ), Pall Corp. (PLL), and Ciena (CIEN). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

The regularly scheduled report on first-time jobless claims will hit the Street today, as well as the government's wholesale inventories data. Finally, Friday rounds out the week with Uncle Sam's monthly trade balance report and the Thomson Reuters/University of Michigan consumer sentiment index.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 795,525 call contracts traded on Wednesday, compared to 585,353 put contracts. The resultant single-session put/call ratio arrived at 0.74, while the 21-day moving average was 0.71.

Overseas Trading

The major Asian indexes settled lower today, as investors exercised caution ahead of the ECB rate decision and tomorrow's EU summit. Furthermore, a slew of notable economic data out of China is also slated for release tomorrow, which further exacerbated the collective jitters in Shanghai and Hong Kong. Meanwhile, a larger-than-expected drop in core machinery orders pressured Japanese stocks lower, while a strengthening yen weighed on exporters like Honda Motor and Mitsubishi Motors. By the close, Hong Kong's Hang Seng and Japan's Nikkei both fell 0.7%, while China's Shanghai Composite surrendered 0.1%.

On the other hand, stocks in Europe are higher at midday, as investors digest an anticipated rate cut from the ECB. However, some buyers are still waiting on the sidelines ahead of a speech from ECB President Mario Draghi, which is expected to offer clues to the policymakers' stance on bond buying ahead of tomorrow's EU meeting in Brussels. Earlier this morning, the Bank of England (BOE) left its key lending rate at a record-low 0.5%. At last look, London's FTSE and Germany's DAX are each up 0.5%, while the French CAC 40 has tacked on 0.2%.

Currencies and Commodities

The greenback is trading fractionally lower this morning, with the U.S. dollar index down 0.04%. Crude oil, meanwhile, is on the rebound, with the front-month contract last seen 0.5% higher to wink at $101 per barrel. Finally, gold futures have pared a portion of yesterday's gains, giving up 0.1% to trade near $1,743.30 an ounce.

Unusual Put and Call Activity:

For an explanation of how to use this information, check out our Education Center topics on Option Volume and Open Interest Configurations .

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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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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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