Stocks are set to open lower on mixed earnings new and weakness in the financials Wednesday. About an hour before the opening bell on Wall Street, stock index futures indicate the Dow Jones Industrial Average might lose 70 or 80 points in early trading.
Morgan Stanley (MS) shares are down 7.3 percent after reporting a 57-cent per share loss for the quarter, which was well below analyst estimates for an 8-cent loss. Revenues totaled $3 billion, or about 60 percent of what was expected.
Wells Fargo (WFC) slipped 3.4 percent despite posting 56 cents per share for the quarter, and a penny better than pre-announced earnings of 55 cents per share. Investors might be reacting to some of the details of the numbers, which includes accruing numbers of loans past due 90 days or more.
Dow components BofA (BAC) and Citi (C) are both down more than 5 percent in pre-market action.
Yesterday, bank stocks bounced higher after Citi CEO Pandit said he expects to see his bank rebound and Treasury Secretary Tim Geithner said many banks have more than enough capital.
Geithner speaks again, 9 a.m. eastern time at the Economic Club of Washington to discuss the economy.
Boeing (BA) gained 4 percent after posting quarterly earnings that missed street estimates, but issuing in-line guidance for the full year.
Yahoo (YHOO) rose 3 percent after reporting 15 cents per share for the quarter, which topped analyst estimates by 7 cents.
Apple Computer (AAPL) is due to report after the closing bell.
With no economic data due out today, bonds are holding steady in early trading. The benchmark ten-year Treasury bond is little changed in early pit action and still yields 2.9 percent.
The dollar edged down .75 to 97.80 against the yen. The euro is up .0005 to 1.2951 on the dollar.
Crude oil slipped 16 cents to $48.39 a barrel ahead of weekly inventory data due out at 10:30. Gold gained $6.2 to $888.90 an ounce.
Stocks moved higher Tuesday with help from a rebound in the financials. The Dow Jones Industrial Average recaptured 128 of the 289 points lost Monday. The CBOE Volatility Index (.VIX) slipped 2.10 to 37.08. Approximately 8.5 million calls and 7.3 million puts traded across the exchanges.
Retailer Pacific Sun (PSUN) finished up 46 cents to $3.02 and options volume jumped to 19X the usual Tuesday. 4,287 calls and only 261 puts traded. June 2.5 and June 5 calls led the order flow, with more than 3,700 traded and about 70 percent hitting ask-side of the bid-ask spread. It looks like buyers were dominating the action. There was no obvious news to explain the bullishness. Earnings are expected in mid-May.
Bullish trading was also seen in Halliburton (HAL), FMC Corp. (FMC), Terex (TEX), and the Select Sector Basic Materials Fund (XLB).
Computer wholesaler Scansource (SCSC) saw bearish trading activity Tuesday. Shares moved up 59 cents to $21.93 and total options volume rose to 347X the normal levels. Most of the activity was in the June 20 puts. 5000 contracts traded, compared to open interest of only 30. The top trade of the day, 4,821 contracts for $1.45 on NYSE when the bid-ask was $1.15 to $1.50. Looks like an opening buyer and comes ahead of earnings due out on April 23.
Bearish trading also surfaced in Yahoo (YHOO), Pharmaceutical Product and Development (PPDI), MGA International (MGA), and the iShares South Korea Fund (XLY).
Frederic Ruffy
WhatsTrading.com
