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No follow through at the open

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Stock futures are decidedly lower this morning and yesterday's late afternoon attempt at a comeback doesn't look like it is going to see much follow through this morning.

S&P futures (sp02u) currently trade down 13.1 points at 907.50, while NASDAQ futures (nd02u) are off 6.0 points at 1,024.00 and Dow futures (dj02u) are lower by 112 points at 8,550.

With S&P futures down 13.1, that's well below today's S&P fair value of $0.98. HL Camp & Company has their computers set for program buying at $2.18 and set for program selling at $-1.87. Fair value for the NASDAQ-100 today is $3.45.

The U.S. Dollar continues its torrid descent this morning as the U.S. Dollar Index (dx00y) $104.16 -0.49 shows weakness in the early morning hours.

One thing that may begin to concern stock investors is the still falling US Dollar, which was combined yesterday with some selling in U.S. Treasuries. While it would be too soon to say this would be a firm sign that foreign investors are not only selling their US Dollar's, the selling in U.S. Treasuries also needs to be monitored near-term, especially if equities don't begin to firm. The thought being that the decline in the U.S. dollar has foreign investors pulling out of the U.S., but the rise in the Treasury YIELDS hinting that Foreign investors are also pulling out of the U.S. Treasury debt.

The only way I know how to envision what foreign investors are doing with their cash is to monitor not only stocks, but the U.S. dollar combined with Treasuries. The more "defensive" the move between the U.S. Dollar and Treasuries, then I would expect gold trade higher.

Currently, December Gold futures (gc02q) are quiet and trading fractionally lower at $321.50 -0.21%.

GM's earnings rose in second quarter

The world's No. 1 automaker and Dow component General Motors (NYSE:GM) $47.92 said earnings rose in the second quarter on improved performance for its global auto operations, which more than doubled profit from a year ago.

GM said it earned $2.43 a share, or $1.3 billion, which was inline with consensus from Multex and 8-cents better than the average estimates of analysts as polled by First Call. Last year, GM earned $477 million, or $1.03 a share.

The automaker said sales for the recent quarter totaled $48.3 billion, up from year-ago levels of $46.2 billion.

Excluding charges and satellite media group Hughes' performance, the company said it earned $2.63 a share, or $1.5 billion, or revenue of $46.02 billion. The Hughes operation put a $156 million gash in the company's results and a $55 million charge, worth 10-cents a share, from its European auto operations also cut into results.

There has been some confusion this morning as to what analysts were or were not factoring into their estimates regarding GM's earnings estimates. At the time of this writing, it is unclear if analysts were factoring in the Hughes' division operating results in their forecasts.

GM officials said "We are pleased by the strong performance of GM's North American operations in the second-quarter and the solid results at GMAC (finance arm), and are determined to maintain our momentum in the second half of the year."

Industrial Production at 09:15

Investors will get some economic data just before the open of trading at 09:15 AM EST with the release of Industrial Production. Economists are looking for a gain of 0.5% in June, compared to May's 0.2% gain.

Equity bulls need to see this number come inline or higher than expectations after yesterday's 0.2% gain in Inventories, which has many investors concerned that consumer demand is beginning to drop off.

Jeff Bailey
Senior Market Technician
Option Investor

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