Early indications point to a morning of losses on Wall Street, as investors return from the three-day weekend and find few reasons to bid stock prices higher. Less than an hour before the opening bell on Wall Street, stock index futures hint at a possible 150-point early loss for the Dow Jones Industrial Average.
The automakers are in focus as General Motors (GM) and Chrysler submit recovery plans to the government to justify massive loans. Concern about the fate of the carmakers is seen weighing on early trading. Ford Motor (F) is not taking loans.
Meanwhile, President Obama is due to sign the massive fiscal stimulus bill today in Denver. With passage of the bill already expected, the event is seen having little market impact, however.
In other economic news, the latest NY Empire State Index plummeted in February. The gauge of regional manufacturing activity fell to -34.65 from -22.2. Economists had predicted a decline to -23.75.
The National Association of Homebuilders [NAHB] releases its builder sentiment index [HMI] later today.
Bonds are solidly bid in early pit trading and following the plunge in the NY state index. The benchmark ten-year Treasury rose more than 1 point and its yield sank to 2.72 percent
Crude oil slid $2 to $35.51 a barrel and gold gained $24.8 to $967 an ounce.
Among the stocks to watch, Wal-mart (WMT) edged higher after reporting quarterly earnings of $1.03 per share, which beat Street estimates by four cents. Teva Pharmaceutical (TEVA) shares are seeing early weakness after posting better-than-expected earnings, but revenues the fell shy of analyst estimates. Chesapeake (CHK) might see action ahead of earnings due out after the closing bell.
Weakness in overseas markets is weighing on US trading as well. While US markets were closed Monday, stocks fell in Asia after economic data showed Japan's economy contracting by 3.3 percent in the fourth quarter. The action continued Monday, with Japan's Nikkei falling 1.4 percent. Shares are broadly lower across Europe, with a 2.4 percent drop in UK's FTSE pacing the decline.
The buck is trading up to 91.96 on the yen and the euro slipped back towards 1.26 on the US currency.
Trading slowed in the options market Friday, as stocks slumped and many people left early to enjoy a three-day weekend. The Dow Jones Industrial Average lost 82 points and approximately 5.6 million calls and 4.7million puts traded. The CBOE Volatility Index (.VIX) gained 1.68 to 42.93.
A number of coal mining names saw increasing activity midday Friday after an appeals court over-turned mountain top environmental rules, which was seen as a victory for companies in the industry. Patriot Coal (PCX), Foundation Coal (FCL), and Massey Energy (MEE) saw an uptick in call volume. AK Steel (AKS) were active on takeover chatter. Bullish trading also picked up in YRC Worldwide (YRCW), Union Pacific (UNP), and the SPDR Homebuilders Trust (XHB).
US Steel (X) saw a second day of bearish trading. Open interest in March 25 puts saw an increase of almost 4,000 after volume picked up Thursday. Friday, March 30 puts saw the most activity. More than 14,000 traded and it appeared the activity was driven by put buyers and is perhaps in reaction to talk US Steel might be interested in acquiring AK Steel (AKS). Bearish trading was also seen in Kohl's (KSS), Autodesk (ADSK), and Patterson Energy (PTEN).
Frederic Ruffy
WhatsTrading.com
