Early indications point to a steady open on Wall Street, as investors brace for a busy day of economic and stock news. Less than an hour before the opening bell on Wall Street, stock index futures indicate the Dow Jones Industrial Average might gain 50 or 60 points at the open. The NASDAQ is set to add 10 or 15.
Economic news is in focus early after a report showed Gross Domestic Product [GDP] shrinking at a 6.1 percent annualized rate during the first quarter of 2009. While slumping growth was expected, economists had predicted a more modest decrease, of 4.7 percent. The decline follows a 6.3 percent drop in the fourth quarter of 2008.
Stock index futures were higher ahead of the GDP numbers and held on to most of the gains despite the grim headline.
Bonds are little changed. The benchmark ten-year Treasury is down a few ticks and yields about 3 percent.
Focus now shifts to the Federal Reserve's decision on interest rates due out this afternoon. While no changes in rates are expected, investors will scrutinize the post-meeting statement (due at 2:15 eastern time) for clues about what Fed officials might do next.
Meanwhile, some of the banks are seeing early gains. Dow component BofA (BAC) is up 3.6 percent ahead of an annual shareholder meeting beginning at 10:00 a.m., which is expected to include a proxy vote to decide whether Chief Executive Ken Lewis will remain on the Board as chairman.
Citi (C) seized 3.8 percent to move back beyond the $3 mark. JP Morgan (JPM) is up 1.6 percent.
Qwest (Q) shares gained about 5 percent on better-than-expected earnings news. Dendreon (DNDN) will be watched after nose-diving 40 percent in the regular session Tuesday, but then rallying more than 120 percent on positive Provenge data in the after hours. Etrade (ETFC) is under pressure after reporting a 41-cent per share quarterly loss.
Crude oil is up 48 cents to $50.40 a barrel ahead of weekly inventory data due out at 10:30 a.m. Gold is up $6.40 to $900 an ounce.
The dollar edged higher, up .23 to 96.77 against the yen. The euro rallied .0118 to 1.3250 on the buck.
Volume has been light in the options market, as two days of choppy and aimless trading might have sidelined some players. The Dow Jones Industrial Average slipped 9 points Tuesday. The CBOE Volatility Index (.VIX) edged down .37 to 37.95 and approximately 6.4 million calls along with 5.8 million puts traded across the exchanges.
Dow Chemical (DOW) calls have been active for the past two days and ahead of earnings due out Thursday. Shares gained 39 cents to $13 and December 16 calls led the order flow. 26,400 contracts, including a block of 18,600 for $1.40--which was a purchase tied to DOW shares delta neutral. 14,000 calls traded on Dow Monday, with buyers of May 15 calls responsible for a lot of that volume.
Bullish trading was also seen in Shaw Group (SGR), Etrade Financial (ETFC), and W and T Offshore (WTI).
The iShares Long-Term Bond Fund (TLT) fell $1.65 to $99.35 and some investors in the options market appear to be anticipating additional weakness in the exchange-traded fund. Options volume rose to 5X the typical levels Tuesday and May 99 puts lead the order flow, with nearly 50,000 contracts traded and data indicates that 85 percent was opening customer buys.
Bearish trading also surfaced in DR Horton (DHI), Disney (DIS), and PF Changs (PFCB).
Frederic Ruffy
WhatsTrading.com
