Stocks are set to open modestly lower on disappointing economic news Thursday. Less than an hour before the opening bell on Wall Street, index futures indicate that the Dow Jones Industrial Average might lose another 10 or 20 points in early trading. The NASDAQ is indicated modestly higher.
Stock index futures slumped after weekly jobless claims rose more than expected. According to the Labor Department, filings for jobless benefits increased by 32,000 to 637,000 in the week ended May 9. Economists were looking for a more modest rise, of only 5,000. Continuing claims set yet another record at 6.56 million.
A separate report from the Labor Department showed inflation picking up a bit more than expected. The Producer Price Index [PPI] rose .3 percent last month. Economists had predicted a .2 percent increase.
Stock index futures were lower prior to the data and after stocks suffered steep losses in the US Wednesday. The selling spilled over to overseas markets Thursday. Japan's Nikkei lost 2.6 percent and Hong Kong's Hang Seng sank 3 percent.
Major averages are broadly lower across Europe, with a .9 percent drop in France's CAC 40 pacing the decline.
Bonds are holding steady after big gains seen the day before. The benchmark ten-year Treasury bond is up 8/32nd and now yields 3.10 percent.
The dollar is down .187 to 95.54 on the Japanese yen. The euro battled back from early losses and is up .0001 to 1.3571 on the buck.
Crude oil fell $1 to $57.02 and gold lost $3.90 to $922 an ounce.
Among the stocks to watch, Wal-mart (WMT) shares are steady after the retailer posted quarterly earnings of 77 cents per share, which was in-line with Street estimates. Sony (SNE) is trading modestly lower after posting a $1 billion first quarter loss, its first net loss in 14 years.
GM is in focus after the Wall Street Journal reported the automaker has moved forward a date to pay suppliers. GM is making the move prior to bankruptcy deadline. However, a GM spokesperson said the decision shouldn't be read as a definite signal that GM will file for bankruptcy later this month.
In the options market, volume and volatility picked up ahead of the expiration and as the Dow Jones Industrial Average sank 184 points Wednesday. Approximately 9.8 million calls and 8.3 million puts traded on the session. The CBOE Volatility Index (.VIX) rallied off seven-month lows to close up 1.85 to 33.65.
Options volume picked up in FCStone Group (FCXS) Wednesday. The national brokerage firm specializes in commodities and risk management services. Shares gained 24 cents to $4.07 ahead of an expected announcement related to OTC Derivates, which could potentially lead to exchange-listing and more business for FCSX (and others like MF, ICE, and CME). Some details were released late Wednesday. In the options market, volume jumped to 23X the usual, with 3000 FCSX calls and only 76 puts traded the day.
Bullish trading was also seen in the Intercontinental Exchange (ICE), Nordstrom (JWN), and Advanced Micro (AMD).
Wholefoods Markets (WFMI) puts were busy ahead of earnings. Shares slipped $2.07 to $20 in the regular session and options volume rose to 10X the normal levels, with 42,000 puts and 38,000 calls traded. May 20 and June 20 puts were among the most actives, with about 18,000 traded total. Some traders might have been caught on the wrong side of the market, however. WFMI is trading up 3 percent in the pre-market action after the company reported quarterly earnings of 24 cents, which beat analyst estimates by 6 cents.
Bearish trading also surfaced in Wyndam Worldwide (WYN), Sony (SNE), and Costco (COST).
Frederic Ruffy
WhatsTrading.com
