Early indications point to a flat open Wednesday, as investors react to a round of mixed stock news. About than an hour before the opening bell on Wall Street, stock index futures indicate that the Dow Jones Industrial Average might open with a modest loss and the NASDAQ could see early gains.
Alcoa (AA) shares are in focus. The aluminum company is the first Dow company to release first quarter results. While Alcoa posted a 59-cent per share loss, which was two cents worse than Street estimates, revenues were a bit better-than-expected. AA is up 2.7 percent to $8 on the news.
Bed, Bath, and Beyond (BBBY) is up 14 percent after reporting better-than-expected earnings.
Meanwhile, the homebuilders are in focus after Pulte Homes (PHM) unveiled plans to buy Centex (CTX) to create the nation's largest homebuilding company. CTX rallied 25 percent.
Some of the insurance names--Genworth (GNW), Hartford (HIG), Lincoln Financial (LNC)--are set to open higher after the WSJ reported the Treasury Department will expand bailout funds to help some of the struggling companies in the industry.
With no data to guide the early action in the bond pits, the benchmark ten-year Treasury note is holding modest gains in early pit trading. The ten-year is up 4/32nd and now yields 2.89 percent.
The dollar slipped .50 to 100.16 on the yen. The euro is down .0017 to 1.3255 on the buck.
A report on wholesale inventories is the sole stat on the economic calendar today. Economists expect a decline of .6 percent for February. The number is due out at 10:00 a.m. eastern time.
Crude oil is down $1.06 to $48.09 a barrel ahead of weekly inventory data at 10:30 a.m. Gold gained $1.20 to $884.50 an ounce.
The CBOE Volatility Index (.VIX) fell .54 to 40.39 despite a 20-point loss in the S&P 500 Index Tuesday. Volatility fell amid light volume in the options market, with approximately 6.1 million calls and 5.8 million puts traded.
Lockheed Martin (LMT) finished up 51 cents to $73.79 and sentiment in the options market seemed bullish after the Defense Department released changes to the 2010 budget Monday. According to Freidman Billings analysts, LMT is likely to be one of the winners coming out of the new budget. Some options traders seem optimistic as well. Total volume in LMT rose to 4X the typical levels, with 12,000 calls and 7,600 puts traded. April 75 and May 85 calls were the day's most actives.
Bullish trading was also seen in Gap Stores (GPS), Teck Cominco (TCK), and Textron (TXT).
Costco (COST) saw increasing activity Tuesday. Shares fell $1.35 to $46.39 and 17,000 puts traded on the retailer, compared to 1,470 call options. The put volume represents 3.5 times (353 percent) the expected for Costco. July 45 puts were the most actives. 7,850 traded and, with 84 percent hitting ask-side of the bid-ask spread, it appears that some investors were buying premium on concerns about a possible decline below $45 per Costco share or less through the July expiration.
Bearish trading also surfaced in Wynn Resorts (WYNN), Bed, Bath and Beyond (BBBY), and Hasbro (HAS).
Frederic Ruffy
WhatsTrading.com
