Stocks are indicated lower Wednesday morning, as investors react to another round of mixed and uninspiring economic data. Less than an hour before the opening bell on Wall Street, futures point to another triple digit early loss for the Dow Jones Industrial Average. The NASDAQ is indicated more than 20 points lower.
Economic data is in focus early. A report on housing starts came in a bit better-than-expected. According to the latest stats, builders broke ground at an annualized rate of 791,000 homes in October; which is down from an upwardly revised 828,000 the month before, but better than economist estimates of 780,000.
Building permits, a better gauge of future activity, fell to an annualize rate of only 708,000, which was down from 805,000 in September and well below economist estimates of 774,000.
Meanwhile, a separate report from the Labor Department showed consumer prices falling more than expected last month. The Consumer Price Index [CPI] edged down 1 percent in October, compared to economist forecasts for a .8 percent decline. Excluding food and energy, the core CPI fell .1 percent. Economists were looking for a gain of .1 percent.
Stock index futures were already under water when the numbers were released and didn't do much when the news hit the wires.
Minutes from the latest Federal Reserve Open Market Committee [FOMC] meeting comes into focus this afternoon. The text is due out at 2:00 p.m. ET.
Bonds are holding higher on the low CPI and tumbling stocks. The benchmark ten-year Treasury bond is up 23/32nd and now yields just 3.46 percent.
The dollar has been coiling into a tight trading range against other key currencies over the past few days. The buck is at 96.62 on the Japanese Yen. The euro is also flat, at 1.2634 against the US currency.
Crude oil is down 48 cents to $53.91 a barrel ahead of weekly inventory data due out at 10:30 a.m. ET. Gold gained $7.00 to $735.70 an ounce.
Overseas, stocks traded quietly in Asia, but losses are mounting in Europe. Japan's Nikkei edged down .7 percent and Hong Kong's Hang Seng dipped .8 percent. Major averages were trading down between 2 to 3 percent across Europe, with a 2.8 percent loss in Germany's DAX pacing the decline.
Solar stocks are in focus. Trina Solar (TSL) shares are lower after the company posted better than expected third quarter results, but guided revenue estimates lower for the fourth quarter. LDK Solar (LDK) reported 77 cents per share for the quarter, which topped analyst estimates by 6 cents. Sunpower Tech (STP) reports tomorrow.
Retailers are in focus with results from Ross Stores (ROST) and BJ Wholesales (BJ) are due to report this morning. Limited (LTD), Hot Topic (HOTT), and Intuit (INTU) are among a number of companies scheduled to report after the closing bell. Chip-equipment maker KLA Tencor (KLAC) said it was cutting its 15 percent of its workforce.
Trading activity picked up in the options market Tuesday, as the Dow bounced back and recovered 151 points of the 223-point drop from the day before. The NASDAQ added 1.2 points. Approximately 6.8 million puts and 6.4 million calls traded on the options exchanges. After hitting an afternoon high of 73.13, the CBOE Volatility Index (VIX) finished down 1.51 to 67.64.
Eastman Kodak (EK) saw unusual order flow, as more than 39,000 December 7.5 puts traded. With open interest is only 5,472 contracts and nearly all of the day's volume (92 percent) trading on the bid-side of the bid-ask spread, it appears that some investors were aggressively selling EK puts as the stock moved higher. Bullish trading also surfaced in Chesapeake (CHK), Lifetime Fitness (LTM), Newell (NWL), and the Japanese Spot Price Index (.XDN)
Meanwhile, increasing volume was seen in Trina Solar (TSL) ahead of its earnings, with November 7.5 puts and December 10 puts topping the most actives list. Some players snapped up short-term puts on concerns about further weakness in shares of the solar energy company. Bearish trading was also seen in American Express (AXP), Corning (GLW), and Interactive Brokers (IBKR) Tuesday.
Frederic Ruffy
WhatsTrading.com
