Stocks are indicated modestly lower Thursday, but stock index futures came off their lows of the day on better-than-expected economic data. Less than an hour before the opening bell on Wall Street, stock index futures indicate that both the Dow Jones Industrial Average and the NASDAQ will open little changed.
Retail sales fell less-than-expected last month. According to the Commerce Department, total sales fell .1 percent in February. Economists had predicted a .7 percent drop. Excluding autos, sales increased .7 percent, compared to expectations for a .1 percent decline.
A separate report from the Labor Department showed jobless claims moving up more than expected last week. Filings for jobless benefits increased by 9,000 to 654,000 in the week ended March 7. Economists expected a decline to 644,000.
The stronger-than-expected retail sales numbers overshadowed the weekly jobless claims numbers. Stock index futures rose on the news and moved back towards unchanged.
A report on business inventories is due out at 10:00 a.m eastern time. Data on import/export prices, trade balance, and the University of Michigan consumer sentiment index are scheduled for Friday.
Attention then turns to the G20 meeting of finance ministers and central bankers over the weekend. The group meets in southern England and investors will be interested in what policymakers have planned to stabilize the troubled global economy.
Stock index futures were weighed down early, as overseas markets traded mostly lower ahead of the G20. UK's FTSE is off 1.4 percent, Germany's DAX lost 2 percent, and France's CAC 40 gave up 2.2 percent. In Asia, Japan's Nikkei gave back 2.2 percent, but Hong Kong's Hang Seng edged up .6 percent.
Bonds are giving back some early gains and moving back to unchanged. The benchmark ten-year Treasury is flat and yields 2.91 percent.
The dollar lost .61 to 96.7 against the Japanese yen and the euro edged up .0006 to 1.2812 against the US currency.
Crude oil is up $1.11 cents to $43.44 a barrel and gold gained $1.00 to $911.70 an ounce.
Among the stocks to watch, Genentech (DNA) is up 2 percent after Roche finalized an agreement to acquire the company for $95 per share. Ebay (EBAY) added 3.6 percent after reaffirming earnings guidance. Freddie Mac (FRE) will be watched on news it is receiving billions dollars of additional government support after suffering a massive quarterly loss.
Sentiment remained bullish in the options market Wednesday, even as the Dow Jones Industrial Average traded in a narrow 147-point range and rose just 4 points. The CBOE Volatility Index (.VIX), which fell 5.31 to 44.37 Tuesday, lost another .85 to 43.52 and approximately 6.1 million puts and 9.5 million calls traded on the options exchanges.
Axsys Technologies (AXYS) saw heavy trading Wednesday after Reuters reported that the company is putting itself up for sale. The maker of surveillance equipment is looking for $60 per share. The stock finished $8.90 to $36.27 and options activity surged to 31 times the normal levels. 8,800 calls and 1,700 puts traded, as some bullish investors snapped March calls at the $35 and $40 strikes. Shares are indicated modestly higher this morning after the company confirmed it was up for sale.
Bullish trading was also seen in Freeport McMoran (FCX), Sun Microsystems (JAVA), and CF Industries (CF).
Bearish traders surfaced in Vulcan Materials (VMC) Wednesday. Shares finished up 57 cents to $36.92 and total options activity rose to 3 times the normal levels. Most of the activity was in the May 35, May 30, April 35 and April 30 puts. All four traded 3000 times. It appears that traders were buying bearish spreads in both expiration months (buying 35 puts and selling 30 puts) and bracing for a possible decline in the share price over the next month or two.
Bearish trading also surfaced in Vornado Realty (VNO), Johnson Controls (JCI), and Marriott (MAR).
Frederic Ruffy
WhatsTrading.com
