Credit: Shutterstock photoVolatility has been the name of the game this week, with the Dow trading in a range of several hundred points since last Friday's devastating blow from Standard & Poor's. Speaking to this, futures are mixed this morning, as traders regroup from the previous session's massive sell-off. On one hand, some investors have their rose-colored glasses on, and are cheering what could only be described as a mixed earnings showing from Dow underperformer Cisco Systems (CSCO - 13.73). On the other hand, lingering concerns about a potential debt downgrade for France have limited any pre-market optimism.
Jumping right in... CSCO reported a fiscal fourth-quarter profit of $1.23 billion, or 22 cents per share, down 36% from its year-ago earnings of $1.94 billion, or 33 cents per share. On an adjusted basis, earnings arrived at 40 cents per share, while revenue edged up 3.3% to $11.2 billion. The results narrowly surpassed analysts' expectations, which called for a profit of 38 cents per share on $10.97 billion in revenue. Looking ahead, Cisco predicted first-quarter earnings of 38 cents to 41 cents per share on sales growth of 1% to 4%, well short of Wall Street's forecast for earnings of 44 cents per share on 7% higher sales. However, it seems the Street has taken a glass-half-full approach to CSCO's mixed report, with the shares up over 10% ahead of the open.
News of the World
Retail bigwig Kohl's Corporation (KSS - 44.29) reported that its second-quarter earnings rose 16.5% to $303 million, or $1.09 per share, from $260 million, or 84 cents per share, a year ago. Meanwhile, revenue increased to $4.25 billion from $4.1 billion. Wall Street analysts had expected Kohl's to earn $1.08 per share on revenue of $4.25 billion. The department store diva lifted its 2011 earnings forecast to between $4.45 and $4.60 per share, from its previous forecast for earnings between $4.25 and $4.40 per share. Kohl's also said it expects same-store sales to be up between 2% and 4% in the next quarter.
Finally, AOL, Inc. (AOL - 10.22) announced this morning that its board of directors has approved a $250 million stock repurchase program, effective Aug. 10. "We are continuing the disciplined execution of our strategy and have confidence in our future growth prospects," wrote Chairman and CEO Tim Armstrong in a statement. This announcement comes just after a particularly disappointing earnings report earlier this week, when the company lowered its outlook on slowing sales.
Earnings Preview
Today's earnings docket will feature reports from Brinker International ( EAT ), Red Robin Gourmet Burgers ( RRGB ), Wendy's Co. ( WEN ), Sara Lee ( SLE ), SodaStream International ( SODA ), DeVry (DV), eDiets.com (DIET), Nvidia (NVDA), Renren (RENN), Emulex (ELX), Bally Technologies (BYI), Hoku Corp. (HOKU), Nordstrom (JWN), Molycorp (MCP), Teekay Corp. (TK), and Teekay Tankers (TNK). Keep your browser at SchaeffersResearch.com for more news as it breaks.
Economic Calendar
Initial and continuing jobless claims are due out today, along with June's trade balance. The economic calendar concludes on Friday with the release of retail sales for July, June's business inventories, and the preliminary Reuters/University of Michigan consumer sentiment index for August.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,316,596 call contracts traded on Wednesday, compared to 1,072,809 put contracts. The resultant single-session put/call ratio arrived at 0.81, while the 21-day moving average was 0.74.
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Overseas Trading
Asian markets ended mixed today, as economic anxiety was partially offset by bargain-hunting. In Tokyo, a stronger yen kept exporters under pressure, while weakness in banking giant HSBC dragged on stocks in Hong Kong. Seoul-listed securities gained ground for the second day in a row, as a wave of institutional buying helped to erase early losses. Meanwhile, in China, a round of equity purchases by the National Social Security Fund contributed to a positive session. By the close, Hong Kong's Hang Seng lost about 1%, Japan's Nikkei fell 0.6%, South Korea's Kospi rose 0.6%, and China's Shanghai Composite added 1.3%.
French banks are weighing on investor sentiment in Europe, where stocks are trading south of breakeven at midday. Concerns about a potential debt downgrade, as well as rumors about potential trouble at Societe Generale, have triggered a fresh wave of selling, with financials leading the laggards. At last check, the French CAC 40 is down 3.3%, the German DAX is off 1.7%, and London's FTSE 100 is 1% lower.
Currencies and Commodities
After Wednesday's massive sell-off, the U.S. dollar index has edged slightly higher this morning, adding 0.05 point, or 0.1%. Meanwhile, oil is fractionally lower in pre-market trading, backpedaling 0.03 point, or 0.04%. Gold has also taken a break this morning, after the precious metal's exponential ascent during the past few sessions. Ahead of the open, gold futures have dropped 1.7 points, or 0.1%.
Unusual Put and Call Activity:
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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.
