Futures point to bounce at the open following Monday’s huge declines. Financials took a major hit yesterday, but are seeing some of these losses recouped in premarket trading. After seeing the largest 5-session gain in 75 years, the major market indices gave back about half of these gains in one session Monday. Tuesday’s economic calendar is on the light side following bad news on construction spending and the ISM Index Monday. We could see a bounce from a 50-percent retracement of last week’s gains, but the future could see a retest of November’s lows.

Auto makers will be in focus with General Motors (GM) on the Hill pleading its case for bailout monies. Data on auto sales in November will also be released today and estimates are dismal. Nonetheless, GM shares are sharply higher in pre-market trading, up nearly 13 percent to a price above $5. Ford (F) shares are also up more than 10 percent in the pre-market.

Financial stocks took a huge hit on Monday, but are seeing mild bounces in pre-market trading. Goldman Sachs (GS) fell 16.75 percent on Monday, closing at a price of $65.76. The Wall Street Journal reported that the company could take a quarterly loss equal to $5 a share, which would be the company’s first quarterly loss as a public company. Goldman is considered the most sound investment bank, yet its shares are trading sharply below their 52-week high near $230.

Job cuts in the banking sector keep adding up with JPMorgan (JPM) announcing it will cut more than 9,000 jobs from the acquisition of Washington Mutual and Bank of America (BAC) set to cut 10,000 investment banking jobs from its acquisition of Merrill Lynch (MER). Both JPM and BAC are higher in pre-market trading, but up only a portion of Monday’s huge losses.

In the retail sector, Sears (SHLD) and Staples (SPLS) both fell more than 12 percent on Monday. SPLS was able to report a profit of 42-cents a share, a penny ahead of expectations. The company benefited from the purchase of Corporate Express, which if excluded, sales would have fallen 3 percent instead of rising 34 percent. SHLD missed earnings estimates by 41-cents a share on an 8.3 percent decline in revenues. The company announced it will close several more underperforming stores, but will buy back up to $500 million of its shares. Both SHLD and SPLS are slightly lower in pre-market trading.

Though economic data will be light today, this will change starting Wednesday when several reports on the jobs market are released. It will be interesting to see if the bulls are able to recoup a good portion of Monday’s losses or if the bears will use yesterday’s momentum to take stocks toward November’s lows.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site