Morning Market Update: Monday, March 21, 2011
Opening View: Stocks Set to Extend Rebound on AT&T’s Bid for T-Mobile
Japan’s Nikkei added 2.7% on optimism about the nuclear clean-up
by Andrea Kramer (akramer@sir-inc.com) 3/21/2011 8:05 AM
The Dow Jones Industrial Average (DJIA) continued its late-week rebound on Friday, as the Street cheered efforts to cool the Japanese yen and a dividend-induced rally among financials. Ahead of the bell, stocks are poised to extend their climb today, following overseas markets higher thanks to optimism over Japan’s earthquake-damaged nuclear complex. In addition, AT&T (T) is blazing the trail into the black on the heels of a bid for rival T-Mobile, while oil is headed higher after Western forces launched air strikes on Libya.
At last check, the Dow was trading nearly 120 points above fair value, and the S&P 500 Index (SPX) was last seen nearly 15 points higher. Meanwhile, the Nasdaq Composite (COMP) is poised to open with a gain of roughly 28 points, and looks set to claw its way back into the black for the year.
In equities news, AT&T (T) signed an agreement with Germany’s Deutsche Telekom AG to buy T-Mobile USA. The cash-and-stock deal is worth about $39 billion, the duo announced last night, and will create a combined entity about a third larger than market leader Verizon Communications (VZ). The deal is still subject to regulatory approvals, but is expected to close in about a year, the companies stated.
On the earnings front, Tiffany & Co. (TIF) reported fourth-quarter net income of $181.2 million, or $1.41 per share, on revenue of $1.1 billion. The results fell roughly in line with analysts’ expectations, but TIF trimmed its first-quarter earnings forecast to 57 cents per share due to expected sales disruptions from the Japan catastrophe. Nevertheless, the upscale jeweler’s full-year forecast calls for earnings of $3.35 to $3.45 per share, outpacing Wall Street’s consensus estimate of $3.25 per share. TIF shares were last seen about 5% higher ahead of the bell.
Earnings Preview
There are no notable earnings reports on tap today. Keep your browser atSchaeffersResearch.com for more news as it breaks.
Economic Calendar
The economic calendar will be dominated by housing stats during the first half of the week, with data on existing home sales slated for release today. Tomorrow, will be more of the same, with the FHFA housing price index on tap. On Wednesday, the Commerce Department will release its new-home sales figures, with the weekly crude inventories report also on deck. Thursday will feature the latest jobless claims, as well as February’s durable orders data. Finally, Friday ends with the government’s latest gross domestic product (GDP) estimates for the fourth quarter, as well as the Reuters/University of Michigan’s consumer sentiment index.
Market Statistics
Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,517,417 call contracts traded on Friday, compared to 1,100,528 put contracts. The resultant single-session put/call ratio dipped to 0.70, while the 21-day moving average remained at 0.63.
Overseas Trading
Tokyo stocks led Asian markets higher again today, thanks to optimism about the progress at Japan’s crisis-stricken Fukushima Daiichi nuclear power plant. Echoing that sentiment, the World Bank said the effects of the nation’s nuclear crisis will be “short-lived.” By the close, Japan’s Nikkei index added 2.7%, Hong Kong’s Hang Seng Index ticked 1.7% higher, and South Korea’s Kospi index advanced 1.1%. Elsewhere, China’s Shanghai Composite added a milder 0.08%, as investors digested the country’s highly anticipated interest-rate hike.
Elsewhere, European markets were also headed higher, as traders cheer encouraging comments from Japan and AT&T’s bid for rival T-Mobile USA. Leading the pack was Germany’s DAX – last up more than 2% – with telecom titan Deutsche Telekom pacing the advancing equities. At last check, France’s CAC 40 has added nearly 2%, London’s FTSE was up 1.3%, Stockholm-listed stocks were up 1.3%, and Madrid-based securities have advanced 1.7%.
Currencies and Commodities
The U.S. dollar is lingering south of breakeven this morning, as the U.S. Dollar Index was seen down about 0.1% at 75.64. Elsewhere, crude futures are headed higher, after Western forces launched air strikes against oil-saturated Libya this weekend. In electronic trading, the April crude futures contract has added almost 1.9% to $103.73 per barrel. Finally, gold futures have also powered into the black, advancing nearly 0.9% to flirt with the $1,428.50 level.
For an explanation of how to use this information, check out our Education Center topics onOption Volume and Open Interest Configurations.
