Opening View: DJIA, SPX Poised to Drop as Street Digests Earnings; PFE, CHK, and ADM in Focus
After touching new multi-year highs, the major market indexes finished Monday's session just south of breakeven, as lackluster economic data rained on the bulls' bin Laden-related parade. Ahead of the bell today, stocks are set to continue their downward trajectory, with traders digesting the latest round of earnings reports, led by blue chip Pfizer (PFE). Later in the session, investors will take their cues from a report on factory orders, which is set to hit the Street at 10 a.m. Eastern. At last check, the Dow Jones Industrial Average (DJIA ) is trading 43 points below fair value, while the broader S&P 500 Index (SPX ) is flirting with a 6-point drop.
In equities news, Pfizer (PFE - 21.02) earned a first-quarter profit of $2.22 billion, or 28 cents per share, up from its year-ago earnings of $2.03 billion, or 25 cents per share. On an adjusted basis, PFE's profit arrived at 60 cents per share. Revenue for the quarter backpedaled to $16.5 billion. Analysts, on average, were looking for a profit of 58 cents per share on $16.6 billion in revenue. Looking ahead, PFE predicted full-year earnings of $2.25 to $2.35 per share, on an adjusted basis, topping Wall Street's consensus forecast of $2.24 per share. In pre-market trading, however, the shares of PFE have given up 1.4%.
Elsewhere, Chesapeake Energy Corp. (CHK - 33.23) said it swung to a first-quarter loss of $162 million, or 32 cents per share, compared to its year-ago profit of $738 million, or $1.14 per share. Excluding items, the natural gas concern earned 75 cents per share, topping analysts' estimate for a per-share profit of 70 cents. Revenue, however, fell short of the Street's forecast of $2.68 billion, with CHK confessing to just $1.61 billion in quarterly sales. Ahead of the bell, CHK is poised to drop roughly 4.9%.
Meanwhile, Hartford Financial Services (HIG - 28.82) saw its core first-quarter earnings rise 8.1% to $588 million, or $1.16 per share -- easily surpassing Wall Street's consensus estimate of 95 cents per share. Assets under management improved 4.3% to $314.7 billion. "We are delivering more stable and consistent financial and operating performance," said Chairman, CEO, and President Liam E. McGee in a statement. "In Japan, our hedging programs performed well, limiting the impact of the equity market and currency volatility that followed the tragic events in March." At last look, HIG is headed about 2.9% higher.
Finally, Archer Daniels Midland (ADM - 37.00) reported a first-quarter profit of $578 million, or 86 cents per share -- up 37% from the year-ago quarter, and in line with analysts' expectations. Revenue for the quarter increased to $20.8 billion from $15.15 billion, surpassing the Street's estimates for sales of $16.89 billion. Nevertheless, ADM is down 2% in pre-market action.
Today's earnings docket will feature reports from MasterCard (MA), Beazer Homes USA ( BZH ), First Solar ( FSLR ), Green Mountain Coffee Roasters (GMCR), Level 3 Communications (LVLT), Las Vegas Sands (LVS), Massey Energy (MEE), and Sirius XM Radio (SIRI), just to name a few. Keep your browser at SchaeffersResearch.com for more news as it breaks.
Data on factory orders will be the lone highlight of today's economic agenda, while tomorrow will heat up with ADP's employment figures for April, the ISM services index, and the regularly scheduled crude inventories report. Meanwhile, reports on first-quarter productivity and weekly jobless figures are due out Thursday, and Federal Reserve Chairman Ben Bernanke is slated to speak at the Chicago Fed conference. Finally, the Labor Department's highly anticipated unemployment data will take center stage before the opening bell on Friday, with the Federal Reserve's monthly consumer credit report slated for release in the afternoon.
Equity option activity on the Chicago Board Options Exchange ( CBOE ) saw 1,174,763 call contracts traded on Monday, compared to 594,101 put contracts. The resultant single-session put/call ratio docked at 0.51, while the 21-day moving average remained at 0.59.
Chinese stocks ended a volatile session slightly higher today, with banks leading the path into the black amid rumors of looming policy-tightening measures from the central bank. Indian stocks, meanwhile, ended notably lower after the country's reserve bank raised its key interest rate by half a percentage point, and cautioned that economic growth would slow amid elevated inflation in the first half of the fiscal year. By the close, the Shanghai Composite tacked on 0.7%, while India's Sensex fell 2.4%. Japanese markets were closed for holiday.
European markets were trading lower at midday, with buyers exercising caution ahead of interest rate decisions from the Bank of England and the European Central Bank. Along with automakers, Metro AG and Hannover Re AG were leading the laggards in Germany, after both companies offered disappointing earnings reports. At last check, London's FTSE has given up 0.2%, France's CAC 40 is down 0.7%, and Germany's DAX has surrendered nearly 0.8%.
Due to technical issues, the overseas chart is unavailable today. We apologize for any inconvenience.
Currencies and Commodities
The greenback has gained ground this morning, with the U.S. dollar index up almost 0.4%. Elsewhere, crude futures have extended Monday's slide; at last check, the June-dated contract has surrendered 1% to hover around $112.45 per barrel. Meanwhile, gold futures have retreated from record-high territory. In pre-market action, the front-month contract is trading 0.1% lower at $1,542.30 an ounce.
Due to technical issues, the commodities chart is unavailable today. We apologize for any inconvenience.
Unusual Put and Call Activity:
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