Morning Market Update: Tuesday, March 22, 2011
Opening View: Futures Flat as Bulls Take a Breather
Japan’s Nikkei skyrocketed more than 4% on optimism about the recovery
by Andrea Kramer (akramer@sir-inc.com) 3/22/2011 8:08 AM
The Dow Jones Industrial Average (DJIA) extended its winning streak to three straight sessions on Monday, thanks to a round of merger-and-acquisition news and hopes for a stabilizing nuclear crisis in Japan. However, stocks could take a respite from their post-earthquake rebound today, with futures trading just north of breakeven. With the economic calendar fairly light today, the Street will likely take its cues from the handful of earnings reports on tap, and should continue to monitor the nuclear situation in Japan and the escalating geopolitical tension in the Middle East. At last check, the Dow was about 6.5 points higher, the S&P 500 Index (SPX) was flirting with fractional gains, and the Nasdaq Composite (COMP) was about 1.5 points in the red.
In equities news, Walgreen Company (WAG) said second-quarter net earnings rose to $739 million, or 80 cents per share, from $669 million, or 68 cents per share, in the year-ago period. Excluding items, the company’s earnings docked at 80 cents per share, roughly in line with estimates. Meanwhile, the drugstore chain said quarterly sales rose 8.9% to $18.5 billion, exceeding the Street’s forecast, while same-store sales climbed 4.1%. Ahead of the bell, the shares of WAG are down roughly 0.4%.
Meanwhile, Dollar General (DG) said fourth-quarter earnings – excluding items – came in at 65 cents per share, surpassing the Street’s prediction for earnings of 59 cents per share. Furthermore, the discount retailer said sales rose 9.4% to $3.49 billion, while same-store sales jumped 3.8%. For the year, Dollar General said it expects same-store sales to increase by 3% to 5%, while earnings should come in around $2.20 to $2.30 per share. At last check, the shares of DG have soared about 7%.
Finally, Apple Inc. (AAPL) is suing Amazon.com Inc. (AMZN) for infringing on its “App Store” trademark, which the iPad maker registered in July 2008. “Consumers of mobile software downloads are likely to be confused as to whether Amazon’s mobile software download service is sponsored or approved by Apple,” Apple said in its complaint, filed Friday in Northern California. Ahead of the bell, the shares of AAPL are trading slightly higher, while AMZN is poised to dip at the open.
Earnings Preview
The earnings calendar features reports from the likes of Carnival Corp. (CCL), Express Inc. (EXPR), and Adobe Systems (ADBE). Keep your browser at SchaeffersResearch.com for more news as it breaks.
Economic Calendar
The economic calendar will feature more housing data today, 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) estimate 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 1,605,341 call contracts traded on Monday, compared to 801,238 put contracts. The resultant single-session put/call ratio fell to 0.50 while the 21-day moving average remained at 0.63.
Overseas Trading
Japanese shares shot higher today, as traders found comfort in encouraging comments about the stabilizing nuclear crisis. Furthermore, a Dow Jones report suggested the Group of Seven (G7) could once again step into the forex market to cool a soaring yen. By the close, Japan’s Nikkei index skyrocketed almost 4.4%, Hong Kong’s Hang Seng Index ticked 0.8% higher, and China’s Shanghai Composite added 0.5%.
Elsewhere, European markets are struggling to extend their winning streak to four straight sessions today. Leading the advancers were financial and insurance issues – the latter of which continue to bounce back from their post-earthquake lows. Meanwhile, auto stocks like BMW were leading the laggards. At last check, Germany’s DAX has shed 0.2%, London’s FTSE 100 is down nearly 0.1%, while France’s CAC 40 has added 0.2%.
Currencies and Commodities
The U.S. dollar is once again lingering south of breakeven this morning, as the U.S. Dollar Index was seen down about 0.2% at 75.28. Elsewhere, crude futures are positioned to pare some of their recent gains. In electronic trading, the April crude futures contract has given back about 0.4% to $102.70 per barrel. Finally, gold futures have also surrendered some of Monday’s gains, retreating nearly 0.2% to flirt with $1,424.20 an ounce.
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