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Opening View: Wall Street Bulls Rejuvenated by Ford's Surprise Profit

U.S. stock futures shake off last week's losses to head higher

by Joseph Hargett (jhargett@sir-inc.com) 11/2/2009 8:15 AM

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Bolstered by a better-than-expected quarterly report by Ford Motor Co. (F), U.S. stock futures on the Dow Jones Industrial Average (DJIA) are up 36 points at 9,700, or roughly 37 points above fair value. Traders appear to have shrugged off last week's sell-off, which saw the Dow plunge 2.6% on a week-over-week basis. Still, the blue-chip barometer managed to squeak by with a gain of 0.01% for October. This week could certainly test the bulls' wherewithal, as the Street will be faced with a decision on monetary policy by the Federal Open Market Committee (FOMC) and October's nonfarm payrolls and unemployment rate.

In currencies and commodities, the U.S. Dollar Index is down 0.19% at 76.15 in pre-market activity. Meanwhile, the December gold futures contract has rallied $12.70 to trade at $1,053 an ounce. Finally, crude oil for December delivery is up 78 cents at $77.78 per barrel in electronic trading.

Ford Motor Co. (F) said Monday it swung to third-quarter net income of $997 million, or 29 cents per share, from a loss of $161 million, or 7 cents per share, in the year-ago period. On an after-tax basis, excluding special items, Ford posted an operating profit of $873 million, or 26 cents per share, compared to a loss of $3 billion, or $1.32 per share, a year ago. The period marks Ford's first pre-tax operating profit since the first quarter of 2008. Revenue fell to $30.9 million from $31.7 million. Wall Street analysts expected Ford to lose 13 cents per share on revenue of $29.1 billion. Based on its recent performance and present planning assumptions, Ford is changing its full-year 2011 guidance for total company and North American Automotive operations from being "breakeven or better" to "solidly profitable" on a pre-tax basis excluding special items, with positive automotive operating-related cash flow. For 2010, the carmaker said it may face a substantial decrease in European industry volume.

Dean Foods Co. (DF) reported Monday that its third-quarter profit rose to $49.7 million, or 27 cents per share, from $37.8 million, or 24 cents, a year earlier. Sales declined to $2.77 billion from $3.19 billion. Excluding items, the company said it would have earned 34 cents per share. Dean Foods sees fourth-quarter profit excluding items of at least 36 cents per share and profit of at least $1.63 per share for the year. Analysts, on average, estimated Dean Foods to earn 34 cents per share in the third quarter, 39 cents in the fourth quarter and $1.65 for the year.

Earnings Preview

The earnings calendar is still packed, and includes Cooper Tire & Rubber (CTB), Humana Inc. (HUM), and Chesapeake Energy Corp. (CHK). Keep your browser at SchaeffersResearch.com throughout the day for more.

Economic Calendar

The economic calendar offers up September's construction spending, the Institute for Supply Management's (ISM) manufacturing index, and pending September home sales. On Tuesday, the Street will be graced with September factory orders and October auto sales.

The Challenger, Christmas & Grey job cuts report for October, the October ADP employment report, the ISM services index for October, weekly U.S. petroleum supplies, and the Federal Open Market Committee's (FOMC) decision on monetary policy are on tap for Wednesday. On Thursday, preliminary third-quarter productivity will be joined by weekly initial jobless claims. We end the week with a bang on Friday, as September's wholesale inventories, September's consumer credit report, and the coup de gr�ce, October's nonfarm payrolls, unemployment rate, average work week, and hourly earnings.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,483,626 call contracts traded on Friday, compared to 1,181,339 put contracts. The resultant single-session put/call ratio arrived at 0.80, while the 21-day moving average held at 0.59.

**The volume data shown above is from the Nasdaq and NYSE exchanges only. It does not include regional volume activity, which means that other daily volume quotes you see may be higher.**

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.

Overseas Trading

Overseas trading is weak this morning as only two of the ten markets that we follow are in positive territory. The cumulative average return on the group stands at a loss of 0.36%. Most Asian markets ended lower Monday, with Japanese exporters such as Sony hurt by concerns over the U.S. economy and the yen's recent strength. However, Chinese stocks in Shanghai jumped sharply after data showed the country's manufacturing activity accelerated at the fastest pace in 18 months, helping narrow losses in Hong Kong. Chinese stocks retraced early losses after initially falling in a knee-jerk reaction to regional market declines. Shares may have gotten an extra fillip from HSBC China PMI for October climbing to an 18-month high of 55.4 from September's 55.0, marking the seventh-straight month the figure has remained above 50.0, which indicates the manufacturing sector is expanding. Leading gains in Shanghai, shares of Ping An Insurance climbed 6.7%, Poly Real Estate Group advanced 3.8%, while SAIC Motor jumped 6.3%.The performance helped some China-related stocks rebound or pare losses in Hong Kong, with Ping An rising 0.3% and Industrial & Commercial Bank of China gaining 0.2%. But property and resource stocks were mostly lower, with Sino Land sliding 2.4% and Sun Hung Kai Properties dropping 1.6%, while Cnooc shed 1.2%.

European shares struggled for direction at the onset of a new month, although Royal Bank of Scotland and Ryanair Holdings were under notable pressure. The Royal Bank of Scotland fell more than 5% as the lender said it's going to have sell off assets "not initially contemplated" due to negotiations with the European Commission. ING, which said last week it will break itself apart in order to repay the Dutch state, fell 2%, while KBC shares were down 1.5%. Meanwhile, the Bank of England may take steps to buy up to 50 billion pounds of assets to help the U.K. escape recession. Earnings are due from UBS, BNP Paribas, Societe Generale, Total, Adidas and Deutsche Telekom among many others. Of movers in Europe, Ryanair Holdings, down 4.9%, said its profit climbed 35% to 250.5 million euros ($369.8 million) during the fiscal second quarter, as declining fuel prices more than offset the impact of declining average fares. But the airline, traditionally a cautious one, repeated its concern that fares may drop by up to 20% this winter, which could cause "material" losses over the next two quarters. Shares of Dutch international express mail service TNT advanced 2.2%. Its third-quarter net profit fell 12.4% to 99 million euros ($146 million) from the same period a year ago, but beat analyst expectations for a profit of 85.5 million euros.

The U.S. Dollar Index (DX/Y) rose to 76.32 on Friday, up from 75.87 in late-Thursday trading. The greenback gained ground against its major foreign counterparts for the sixth time in the past seven trading session after a government report revealed that U.S. consumer spending fell in September. As a result, traders abandoned the equities market in droves, with the dollar benefiting from safe-haven demand. Against this backdrop, the euro fell to $1.4729, while the dollar fell 1.3% to 90.00 yen.

The futures contract on the 30-year bond (US/1 � 120'05) jumped 1-15/32 on Friday. Treasurys rose sharply on the session, logging a weekly gain on the heels of a decline in U.S. personal spending, which raised concerns that the economy can't sustain the recent pace of recovery. However, a report showing the Chicago purchasing managers' index rose more than expected to 54.2 in October limited upside in the bond market.

Commodity Corner

Crude futures kept pace with steep losses in the equities market on Friday, with black gold getting hammered by a surge in the U.S. dollar. While the greenback reaped the benefits of a flight to safety among edgy investors, crude was pressured by September's disappointing consumer spending data. By the close, December-dated crude shed $2.87, or 3.59%, to settle at $77 per barrel. Nevertheless, crude oil still managed to gain 9% in October.

Gold futures also sank on Friday, as a solid U.S. dollar diminished demand for the popular inflationary hedge. The malleable metal was also dented by a down day for oil and stocks, prompted by fresh woes about the financial sector and the U.S. consumer. However, gold still eked out a positive October, thanks to its gains earlier in the month. Gold for December delivery settled on a drop of $6.70, or 0.64%, at $1,040.40 per ounce. For the month, gold futures added 3.8%, bringing their year-to-date gain up to 18%.

Unusual Put and Call Activity:

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Opening View: Disappointing Dell Earnings Revive Wall Street Bears

(11/20/2009 7:50:30 AM)

The technology sector is in trouble this morning, as traders have reacted negatively to Dell Inc.'s (DELL) third-quarter earnings report. The company said that profit plunged 57%, and it missed Wall Street's expectations by 5 cents per share. What's more, Dell's miss arrives on the heels of Bank of America's downgrade of several semiconductor stocks on Thursday. As a result, U.S. stock futures on the Dow Jones Industrial Average (DJIA) have plummeted 80 points to 10,247, or about 63 points below fair value.

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Opening View: Wall Street Bulls Take Profits on Economic Concerns

(11/19/2009 8:02:22 AM)

The bull rally is apparently beginning to wane on Wall Street, and traders appear ready to take some profits off the table. Heading into the open, U.S. stock futures on the Dow Jones Industrial Average (DJIA) are down 67 points at 10,337, or about 65 points below fair value. Among equities, the technology sector could come under fire, as Bank of America Merrill Lynch downgraded eight microchip companies, including Intel Corp. (INTC) and Texas Instruments Inc. (TXN), citing concerns that inventories are too high unless there's a sharp upturn from the global economy. Meanwhile, initial jobless claims and October's leading economic indicators are on tap in the economic calendar.

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Opening View: Wall Street on Hold Ahead of Consumer Price and Housing Data

(11/18/2009 8:00:15 AM)

Wall Street appears to be headed for a relatively flat open this morning, as U.S. stock futures on the Dow Jones Industrial Average (DJIA) are up 19 points at 10,417, or about eight points above fair value. After pushing the Dow and the S&P 500 Index (SPX) to their best closes since October of last year, traders are once again taking it easy. All of that could change later this morning, however, as key reports on housing starts, consumer inflation, and weekly U.S. petroleum supplies are scheduled for release. Investors should also keep an eye on salesforce.com inc. (CRM), BJ's Wholesale Club Inc. (BJ), and Autodesk Inc. (ADSK), as all three have released their quarterly earnings statements.

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Opening View: Wall Street Takes a Break Ahead of Housing and Inflation Data

(11/17/2009 8:05:30 AM)

After posting gains in nine of the past 11 sessions, Wall Street appears ready for a bit of a rest today. In fact, U.S. stock futures are pointed lower, with futures on the Dow Jones Industrial Average (DJIA) down 25 points at 10,343, or about 35 points below fair value. On the economic front, housing data and inflation will come to the forefront, as traders will need to digest October's producer price index (PPI) and the National Association of Home Builders' housing market index for November. Speaking of housing, Home Depot (HD) noted that it has seen "positive signs of stabilization" in the sector. HD's comments follow on the heels of similar housing-sector sentiment from competitor Lowe's Companies (LOW) yesterday.

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Opening View: Wall Street Headed for a Bullish Start to Expiration Week

(11/16/2009 7:35:43 AM)

Wall Street bulls are off to the races as we kick off this expiration week. Bolstered by stronger-than-expected growth out of Japan's economy and merger-and-acquisition activity, traders have pressured U.S. stock futures on the Dow Jones Industrial Average (DJIA) higher by 62 points at 10,304, placing the contract about 66 points above fair value. Several key U.S. economic reports are on tap, with October's retail sales and the November Empire State manufacturing index arriving. Elsewhere, Cisco Systems Inc. (CSCO) lifted its offer for Tandberg to $3.4 billion, while reports are suggesting that JPMorgan Chase & Co. (JPM) is nearing a deal to buy Britain's Cazenove.

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Opening View: Dow Futures Rise on Strong Walt Disney Co. Outlook

(11/13/2009 7:59:11 AM)

While Wall Street received a brief respite from the recent data deluge earlier in the week, traders will have to deal with a flood of reports heading into the weekend. Import/export prices, the trade balance, and the University of Michigan's consumer sentiment index join the continued march of corporate earnings today. Speaking of earnings, a strong outlook from The Walt Disney Co. (DIS) has helped push futures on the Dow Jones Industrial Average (DJIA) higher by 11 points at 10,200, placing futures about 35 points above fair value.

Elsewhere, the U.S. Dollar Index is headed lower heading into the open, shedding 0.30% to trade at 75.37 in pre-market activity. According to analysts, currency traders will be keeping a close eye on the trade balance, which is seen widening to $32 billion. Meanwhile, the December gold futures contract has added $2.40 to $1,109 an ounce. Finally, crude oil for January delivery is up 40 cents at $78.05 per barrel in electronic trading.

After the close last night, the Mouse's House reported that that fiscal-quarter profit rose 18% to $895 million, or 47 cents per share, from earnings of $760 million, or 40 cents per share, last year. Excluding an item, The Walt Disney Co. (DIS) said it would've earned 46 cents per share. Revenue rose 4% to $9.87 billion from $9.44 billion. Analysts were expecting earnings of 41 cents per share on sales of $9.31 billion. Disney cited improved results at cable network ESPN and syndication sales of "Grey's Anatomy" and "Desperate Housewives" for the better-than-expected results.

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Opening View: Traders Set to Consolidate Gains

(11/10/2009 8:05:19 AM)

Wall Street could be in for a bit of consolidation in today's trading, as U.S. stock futures on the Dow Jones Industrial Average (DJIA) are down 29 points at 10,190, or about 26 points below fair value. The potential for a negative start to the day should come as no surprise, as traders take time out to digest yesterday's 2% rally that pushed the DJIA to its highest level since Oct. 6, 2008. Meanwhile, there are a handful of companies already bucking the potential doldrums of today's session, as Beazer Homes USA Inc. (BZH) has jumped more than 9% in pre-market trading after the company said it swung to a fourth-quarter profit from last year's loss. Other companies joining the earnings parade heading into the open include Tyco International Ltd. (TYC) and Electronic Arts Inc. (ERTS).

In currencies and commodities, the U.S. Dollar Index is trading flat again this morning, adding about 0.09% at 75.08 in pre-market activity. Meanwhile, the December gold futures contract is down $2.50 at $1,098.70 an ounce. Finally, crude oil for December delivery is off 10 cents at $79.33 per barrel in electronic trading.

Beazer Homes USA Inc. (BZH) reported that it swung to a fourth-quarter profit of $33.8 million, or 84 cents per share, from a loss of $473.9 million, or $12.29 per share, last year. Revenue dropped to $376.3 million from $649.8 million. Inventory impairments and option contract abandonments losses narrowed to $29.9 million, from $50.9 million last year, and the firm also recorded an $89.3 million gain on early extinguishment of debt. "During the quarter, we experienced some moderation in negative market trends," the firm said.

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Opening View: Wall Street Bulls Have Room to Run

(11/9/2009 7:57:46 AM)

Even though the Federal Reserve concluded last week that the weak U.S. economy still requires the currently massive amount of stimulus, Wall Street appears to have once again come to terms with the policies that have helped push the market more than 60% off its March lows. Heading into the open, U.S. stock futures on the Dow Jones Industrial Average (DJIA) have soared some 85 points to trade at 10,063, or about 80 points above fair value. Traders may be left to their own devices for much of the week, as the economic calendar is devoid of reports until about Thursday. Meanwhile, corporate earnings continue to flow, with Freddie Mac (FRE), Dish Network Corp. (DISH), and Berkshire Hathaway (BRK) releasing their quarterly reports.

In currencies and commodities, the U.S. Dollar Index is trading sharply lower, shedding 0.96% to trade at 75.08 in pre-market activity. Meanwhile, the December gold futures contract is up $12.70 at $1,108.40 an ounce. Finally, crude oil for December delivery is up $1.05 at $78.49 per barrel in electronic trading.

In earnings news, Freddie Mac (FRE) reported that its third-quarter net loss narrowed to $5.01 billion from a loss of $25.3 billion in the same quarter a year earlier. After payment of a $1.3 billion dividend on its senior preferred stock to the Treasury Department, the company's net loss attributable to common stockholders was $6.3 billion, or $1.94 per share. Revenue totaled $3.38 billion. "We believe that factors like high unemployment, excess inventory and rising foreclosures will continue to impede a full recovery for some time and put further downward pressure on house prices. We expect to request additional funds from Treasury as this prolonged deterioration of market conditions continues to negatively impact our financial results," Chief Executive Charles Haldeman said in a statement.

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Opening View: Futures Flat Ahead of October Jobs Data

(11/6/2009 8:03:30 AM)

The bulls are holding their breath this morning, as Wall Street awaits the release of October's nonfarm payrolls report and the unemployment rate. U.S. stock futures on the Dow Jones Industrial Average are up 7 points at 9,970, or about 2 points above fair value. Analysts are forecasting a loss of 150,000 jobs in October, the 22nd such decline in employment, but better than September's drop of 263,000. Furthermore, October's unemployment rate is seen rising to 9.9% from 9.8% in September, with some economists predicting a jump to 10% or even 10.1%.

In currencies and commodities, the U.S. Dollar Index is trading basically flat, having fallen a mere 0.03% to hover near 75.72 in pre-market activity. Meanwhile, the December gold futures contract has posted a slight gain, adding $4.00 to trade at $1,093.30 an ounce. Finally, crude oil for December delivery is off 5 cents at $79.60 per barrel in electronic trading.

In earnings news, American International Group Inc. (AIG) said that it swung to a third-quarter profit of $455 million, or 68 cents per share, from a loss of $24.5 billion, $181.02 per share, in the year-ago period. On an adjusted basis, net income was $1.9 billion, compared with an adjusted net loss of $9.2 billion in the third quarter of 2008. Total revenue rose to $26.05 billion from $898 million. However, analysts were looking for a profit of $1.20 per share. The stock was down some 6%, at last check, in pre-market trading following the report.

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Opening View: Wall Street Still Digesting Fed Monetary Policy

(11/5/2009 8:06:35 AM)

Wall Street is still digesting the Federal Open Market Committee's policy statement this morning, as traders come to the sobering conclusion as to why the Fed decided to leave interest rates at record lows for an extended period. While the Fed believes that the economy is improving, the rates are staying low out of concern for the strength of the recovery. U.S. stock futures are trading lower against this backdrop, but while futures on the Dow Jones Industrial Average (DJIA) are down 2 points at 9,783, they are still trading some 26 points above fair value. Meanwhile, the Street must still prepare for tomorrow's nonfarm payrolls report and the continued flood of corporate earnings, including reports from Cisco Systems Inc. (CSCO), Cardinal Health Inc. (CAH), and Sirius XM Radio (SIRI).

In currencies and commodities, the U.S. Dollar Index is trading basically flat, having risen a mere 0.06% to hover near 75.80 in pre-market activity. Meanwhile, the December gold futures contract has posted a slight gain, adding $1.80 to trade at $1,089.30 an ounce. Finally, crude oil for December delivery is down 45 cents at $79.95 per barrel in electronic trading.

On the earnings front, Cisco Systems Inc. (CSCO) reported a first-quarter profit of $1.8 billion, or 30 cents per share, compared with a profit of $2.2 billion, or 37 cents per share, last year. Revenue came in at $9 billion, down from $10.3 billion a year ago. Adjusted income was 36 cents per share. Wall Street was expecting earnings of 31 cents per share on revenue of $8.75 billion.

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Opening View: Wall Street Bulls Rejuvenated by Ford's Surprise Profit

U.S. stock futures shake off last week's losses to head higher

by Joseph Hargett (jhargett@sir-inc.com) 11/2/2009 8:15 AM

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