Futures Flat as Investors Catch Their Breath

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Posted 2/22/2012 8:20 AM from Schaeffer's Investment Research in Investing, Options
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Referenced Stocks: ADI, ANGI, BEAT, HPQ, SAM

After its first foray north of the 13,000 mark mark since 2008, the Dow Jones Industrial Average (DJIA) is flat heading into today's session. With Greece's fiscal-driven drama seemingly tempered at the moment, and existing home sales the only notable economic report on the domestic docket, traders appear hesitant to make any major moves on the lack of big market news. Against this muted backdrop, futures on both the DJIA and the broader S&P 500 Index (SPX) are trading just below breakeven.

Dow, S&P and Nasdaq futures

In earnings news, Dell (DELL - 18.21) booked a fourth-quarter profit of $764 million, or 43 cents per share, down 18% from last year's earnings of $927 million, or 48 cents per share. Excluding items, DELL raked in 51 cents per share, while revenue edged up 2.2% to $16.03 billion. The results were mixed, as Wall Street was looking for a profit of 52 cents per share on $15.96 billion in revenue. For the current quarter, DELL is expecting revenue to retreat about 7% sequentially to $14.91 billion, falling short of the average analyst estimate of $15.17 billion. DELL is set to drop 7% right out of the gate.

Elsewhere, Cheesecake Factory (CAKE - 31.57) revealed a fourth-quarter profit of $29.9 million, or 54 cents per share, up 37% from $21.9 million, or 36 cents per share, in the year-ago period. Excluding items, earnings came in at 53 cents per share. Meanwhile, revenue rose by 14.6% to $477.7 million, boosted by a 2.7% increase in same-store sales. The results beat analysts' forecast for adjusted earnings of 52 cents per share on revenue of $471.7 million. Looking ahead, the company expects to open seven to eight new locations within the U.S. in the coming year, and as many as three locations in the Middle East. CAKE is trading 3.7% lower ahead of the bell.

After the close last night, Herbalife Ltd. (HLF - 62.46) unveiled a fourth-quarter profit of $105.4 million, or 86 cents per share, up 18% from $86.3 million, or 69 cents per share, in the year-ago quarter. Meanwhile, revenue rose 20% to $884.6 million. The results easily bested Wall Street's forecast for a per-share profit of 73 cents on $856.6 million in sales. Looking ahead, HLF believes its current-quarter earnings will range between 76 cents and 80 cents per share, while analysts are anticipating earnings of 78 cents per share. The nutritional supplements retailer also upped its 2012 profit outlook to a range of $3.40 and $3.60 per share, encompassing the average analyst estimate of $3.49 per share. HLF is up more than 5% in pre-market trading.

Finally, Intuit Inc. (INTU - 57.52) banked a fiscal second-quarter profit of $118 million, or 39 cents per share, a 62% year-over-year increase from $73 million, or 23 cents per share. Excluding items, earnings arrived at 51 cents per share. Revenue was also on the rise, jumping 16% to $1.02 billion. Both figures topped analysts' expectations for adjusted earnings of 45 cents per share on $1.01 billion in revenue. Looking ahead, the tax software specialist upwardly revised its outlook for the current quarter, predicting adjusted earnings of $2.47 to $2.51 per share on revenue ranging between $1.95 billion and $1.99 billion. Analysts, meanwhile, are calling for a third-quarter profit of $2.49 per share on $1.98 billion in sales. INTU is set to start the session with a 3.4% lead.

Earnings Preview

Today's earnings docket will also feature reports from Hewlett-Packard ( HPQ ), Analog Devices ( ADI ), Angie's List ( ANGI ), Boston Beer ( SAM ), CardioNet ( BEAT ), Caribou Coffee (CBOU), Clean Harbors (CLH), Dollar Tree (DLTR), Express Scripts (ESRX), Fluor (FLR), Garmin (GRMN), Limited Brands (LTD), MGM Resorts (MGM), NuVasive (NUVA), Onyx Pharmaceuticals (ONXX), Questcor Pharmaceuticals (QCOR), Skullcandy (SKUL), and Toll Brothers (TOL). Keep your browser at SchaeffersResearch.com for more news as it breaks.

Economic Calendar

Today's calendar features the latest data on existing home sales. On Thursday, we'll hear the usual report on weekly jobless claims, along with the holiday-delayed update on domestic crude inventories. Also on tap is the FHFA housing price index. The week wraps up on Friday with the final Thomson Reuters/University of Michigan consumer sentiment index for February, as well as new home sales data.

Market Statistics

Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,537,133 call contracts traded on Tuesday, compared to 954,523 put contracts. The resultant single-session put/call ratio arrived at 0.62, while the 21-day moving average was 0.61.

NYSE and Nasdaq summary

Volatility indices

Overseas Trading

Asian markets ended mostly higher today, but the gains were relatively modest amid lingering Greek caution. In China, traders cheered a four-month peak in HSBC's flash purchasing managers index (PMI), even as the indicator pointed to an ongoing contraction in the country's manufacturing sector. The reading seemed to leave room for further easing measures out of Beijing, following the central bank's weekend decision to trim its reserve requirement ratio for banks. In Tokyo, exporters traded higher as the U.S. dollar gained ground on the yen, while energy stocks advanced as crude prices touched a nine-month high. By the close, Japan's Nikkei rose nearly 1%, China's Shanghai Composite added 0.9%, Hong Kong's Hang Seng tacked on 0.3%, and South Korea's Kospi edged up 0.2%.

European equities are pointed south at midday, as traders respond to a disappointing euro-zone PMI reading. Markit's index retreated to a preliminary 49.7 in February, dropping from January's reading of 50.4. The unexpected slowdown in regional activity suggests that recession is still a threat for the fiscally fractured euro zone, sending most major benchmarks lower. At last check, London's FTSE 100 and the French CAC 40 have both shed 0.3%, while the German DAX is down 0.6%.

Overseas markets

Currencies and Commodities

The greenback is headed higher this morning, with the U.S. dollar index up 0.3% at $79.30. After finishing yesterday's session at a nine-month high, crude oil is looking to pare some of those gains , with the front-month contract down 0.6% at $105.64 per barrel. Gold futures have pulled back, as well, with the malleable metal 0.2% lower to trade at $1,755.00 an ounce.

Currencies and commodities

Unusual Put and Call Activity:

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Unusual options activity - puts

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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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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