Stock index futures fell and point to early losses for the major averages after the latest data on retail sales showed unexpected weakness during the month of March. Less than an hour before the opening bell on Wall Street, stock index futures indicate that the Dow Jones Industrial Average might lose 20 or 30 points in early trading. The NASDAQ is poised to open little changed.
Retail sales unexpectedly fell last month. According to data released from the Commerce Department Tuesday morning, total sales fell 1.1 percent in March. Economists were looking for a .3 percent increase. Excluding autos, retail sales declined .9 percent. Economists were expecting no change in sales ex-autos.
A separate report from the Labor Department showed inflation falling more than expected. The Producer Price Index [PPI], a gauge of prices at the wholesale level, fell 1.2 percent in March. Economists were looking for no change in the PPI.
Stock index futures fell on the data, bonds saw a modest lift off the lows of the day. The benchmark ten-year Treasury was recently down 4/32nd and yielding 2.86 percent.
The dollar is down .76 to 99.57 on the Japanese yen. The euro slipped .0126 to 1.3250 on the buck.
A report on business inventories is due out at 10:00 a.m. eastern time. Economists expect the report to show a decline of 1.2 percent for February, which follows 1.1 percent decline the month before.
President Obama speaks about the economy at 11:30. Federal Reserve Chairman Ben Bernanke delivers a speech "Four Questions about the Financial Crisis" today as well.
Among the stocks to watch, Goldman Sachs (GS) shares traded lower after the investment bank announced better-than-expected earnings, but also said it will raise $5 billion in a stock offering to repay funds issued by the government. Overseas banks were helped higher by the earnings news, but GS shares fell 2.5 percent.
Dow component Johnson & Johnson (JNJ) is trading up 2.2 percent after reporting quarterly earnings of $1.26 per share, which topped analyst estimates by four cents.
Intel (INTC) might see active trading ahead of earnings due out after the closing bell.
Crude oil is rebounding from losses suffered the day before. Crude gained $1 to $51.05 a barrel. Gold slipped $4 to $892.60 an ounce.
Trading was active in the options market Monday, as the major averages shook off early weakness to finish the day mixed. While the Dow Jones Industrial Average lost 25 points, the S&P 500 and the NASDAQ finished with modest gains.
The CBOE Volatility Index (.VIX) edged up 1.28 to 37.81 and off its 2009 lows set Thursday. Approximately 6.3 million puts and 10.4 million calls traded across the options exchanges.
Take Two (TTWO) saw a second day of bullish order flow. After gaining 5.3 percent on renewed takeover chatter Thursday, TTWO added another $1.05 to $9.45 Monday. Options volume jumped to 12X the typical levels, with 10,000 calls and less than 900 puts traded. While April 10 calls were being sold, it appears that some investors were snapping up May 10 and June 10 calls in anticipation of additional gains in Take Two's share price.
Bullish trading was also seen in Etrade Financial (ETFC), Goldman Sachs (GS), and Monster Worldwide (MWW).
Gamestop (GME) options were actively traded after a web site posted an article noting that the company could be in violation of FTC rules after selling used video games as new products. It doesn't appear from the article, which was posted on kotaku.com, that there is any evidence the FTC is actively looking at Gamestop. Nevertheless, the news seems to have stirred up some activity in the options market. 8,600 puts traded, compared to 2,400 calls. Monday's put volume represents about 2X the typical volume for Gamestop.
Bearish trading also surfaced in Teradyne (TER), Alcatel Lucent (ALU), and Masco (MAS).
Frederic Ruffy
WhatsTrading.com
