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The Dow Jones Industrial Average (DJI - 13,285.26) is off seven points, or 0.1%, as a weaker-than-anticipated jobs report has investors hoping for another round of quantitative easing measures by the Fed. Specifically, the Labor Department revealed that nonfarm payrolls rose by just 96,000 in August, falling far short of Wall Street's expectations for an increase of 125,000. Elsewhere, the CBOE Market Volatility Index (VIX - 14.76) is 0.8 point, or 5.4%, lower.
Here are a few noteworthy stats at midday:
- The equity put/call volume ratio across all 10 options exchanges stands at 0.65, with 5.0 million calls being traded so far today, versus 3.3 million puts.
- Among the equities with call-skewed activity is Smith & Wesson Holding Corporation (NASDAQ:SWHC - 10.35), which has climbed about 15% today -- and touched a new multi-year high of $11 -- after the company revealed better-than-expected fiscal first-quarter earnings and raised its full-year outlook. Currently, calls make up 89.6% of the gun maker's intraday option volume.
- The put/call volume ratio on the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX - 9.54) -- which tagged a new record low of 9.45 earlier this morning -- checks in at 0.61, with calls nearly doubling puts.
- The New York Stock Exchange (NYSE) shows an advance/decline ratio of 1.86, confirming that the number of upward movers outweighs the decliners by a margin of nearly two to one.
- Among the NYSE's major advancers is Alpha Natural Resources, Inc. (NYSE:ANR - 6.73), which gained almost 14% in intraday action after China unveiled plans to spend more than $150 billion on infrastructure projects -- news that triggered a sector-wide rally for resource stocks.
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After a massive rally to twelve-year highs yesterday, the Nasdaq Composite (COMP) had many reasons to sell off sharply today. Prior to the market's open, bellwether Intel Corporation (NASDAQ:INTC) lowered its guidance for the third quarter, based upon "weaker-than-expected demand in a challenging macroeconomic environment." This isn't the first sign of recent weakness in tech land, as Dell Inc. (NASDAQ:DELL) and Hewlett-Packard Company (NYSE:HPQ) both lowered their third-quarter guidance at the end of August. In addition to this, the monthly nonfarm payrolls data came in very weak, indicating that there are less people actively looking for and gaining new employment.
Despite signs of a sputtering PC sector, and weakening macroeconomic environment, other areas of technology have helped usher the index higher on what appears to be a paradigm shift within the space itself. PC demand looks to be dying, but that money has been flowing into other sectors within the broad technology space; namely, portable devices.
Shares of Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), and Amazon.com, Inc. (NASDAQ:AMZN) are all currently sitting at or near multi-year highs. In the case of AMZN, it is currently trading at an all-time high on the heels of yesterday's new Kindle Fire release. In other related news, AAPL is set to release the iPhone 5 in the next few weeks, and GOOG recently released Android activation data that surpassed expectations, stating about 1.3 million new activations per day.
It's pretty apparent the lesson for technology companies is "adapt or die." The last time the COMP saw these levels, companies such as INTC, Cisco Systems, Inc. (NASDAQ:CSCO), and JDS Uniphase Corporation (NASDAQ:JDSU) were leading the charge. Twelve years later, things have changed quite dramatically. Going forward, technology will go as far as AAPL, GOOG, and AMZN take it.
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After enjoying a rally to multi-year highs on Thursday, the market could face some headwinds today in the wake of a disappointing jobs number. While investors try to decide the next move for their portfolios, here are some stocks to watch today:
- Earnings News: Lululemon Athlethica inc. (NASDAQ:LULU) reported a 49% surge in second-quarter profit as revenue expanded to $282.6 million. The yoga apparel name said third-quarter profit is on pace to hit 34 cents to 36 cents per share, edging past analysts' estimates (MarketWatch); Smith & Wesson Holding Corporation (NASDAQ:SWHC) is targeting strong gains today after the company posted a record profit in its first quarter, easily topping analysts' estimates. Looking forward, the company projects fiscal-year earnings to come in nearly one-third higher than the previous year, surging ahead of Wall Street's expectations. (CBS News)
- Dell Inc. (NASDAQ:DELL) has disclosed the terms of its first-ever quarterly dividend, which was previously announced in June. Shareholders of record as of October 1 will receive eight cents per share on October 22. (Bloomberg Businessweek)
- They didn't announce a smartphone in the works, but Amazon.com, Inc. (NASDAQ:AMZN) did unveil shiny new Kindle Fire tablets to compete with the Apple Inc. (NASDAQ:AAPL) iPad. The new devices will range in price from $159 (a WiFi-only 7-inch version) to $599 (featuring an 8.9-inch high-definition screen and 64 gigabytes of storage). (Reuters)
- Sears Holdings Corporation (NASDAQ:SHLD) is eliminating layaway fees for shoppers at its eponymous and Kmart chains. Competition for layaway customers is growing among retailers, as Toys "R" Us, Inc. dropped its fee earlier this week while Wal-Mart Stores, Inc. (NYSE:WMT) has lowered its to $5 from $15. (USA Today)
- Microsoft Corporation (NASDAQ:MSFT) is looking to the 1980s model created by PepsiCo, Inc. (NYSE:PEP) to take on Google Inc (NASDAQ:GOOG). With its own "Pepsi Challenge" of sorts, the Seattle software giant is hoping to convince people that its Bing search engine is preferred to the dominant Google. Take the test yourself at bingiton.com. (CNNMoney)
- Finally, all you speed demons? Head down to the Lone Star State. Texas has opened a stretch of highway with the highest speed limit in the country -- 85 miles per hour. The 41-mile stretch of open road lies between Austin and San Antonio. Be careful out there. (USA Today)
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Analysts are weighing in today on private education provider Apollo Group Inc (NASDAQ:APOL - 30.39), petroleum refiner Sunoco, Inc. (NYSE:SUN - 47.67), and graphic chip maker NVIDIA Corporation (NASDAQ:NVDA - 13.73). Here's a quick roundup of today's bearish brokerage notes.
- APOL -- which has swallowed a loss of roughly 44% so far this year -- was cut to "sell" from "hold" at Deutsche Bank earlier this morning. The equity has also underperformed the broader S&P 500 Index (SPX) by about 15 percentage points during the last 60 sessions. Given this technical weakness, it's no surprise that skeptics have been converging on the stock. Short interest on APOL ramped up by more than 14% during the past month, and now accounts for over 14% of the security's float. It would take 10 days to buy back these shorted shares, at the equity's average pace of trading.
- SUN was downgraded to "neutral" from "buy" at Citigroup ahead of the opening bell, which could chip away at the stock's year-over-year gain of close to 53%. Nevertheless, traders have been showing an affinity for calls over puts, as the stock sports a 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 258.76. In other words, calls bought to open have outpaced puts by a margin of nearly 259 to one during the past couple of weeks. This ratio is just two percentage points shy of a yearly peak, conveying that traders have been snatching up calls over puts at a near annual-high pace.
- Down more than 2% in pre-market trading, NVDA was lowered to "hold" from "buy" at Cantor Fitzgerald today, after it was revealed that Amazon.com, Inc. (NASDAQ:AMZN) used processors made by Texas Instruments Incorporated (NASDAQ:TXN) for its new Kindle Fire tablets instead of NVDA's Tegra 3 chip. Although the stock is down about 3% on a year-over-year basis, near-term calls more than double puts, according to the security's Schaeffer's put/call open interest ratio (SOIR) of 0.44. This ratio arrives in the 31st annual percentile, denoting a healthier-than-usual appetite for calls over puts among short-term speculators.
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Analysts are weighing in today on discount travel website Priceline.com Inc (NASDAQ:PCLN - 604.00), coffee giant Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR - 24.58), and Internet marketplace Amazon.com, Inc. (NASDAQ:AMZN - 251.38). Here's a quick roundup of today's bullish brokerage notes.
- PCLN was upgraded to "buy" from "neutral" and saw its price target lifted to $740 from $700 at Nomura ahead of the open. Currently, the stock sits on a gain of more than 29% so far this year, which may be enticing call players. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 1.19, meaning calls bought to open have outstripped puts during the past two weeks. This ratio arrives in the bullishly skewed 76th annual percentile, signaling that traders have been scooping up calls over puts at a faster-than-usual pace.
- Despite being down about 45% year-to-date, GMCR was started with a "buy" rating at Lazard Capital this morning, after the company announced yesterday the launch of "Wellness Brewed" drinks for its Keurig coffee maker. In the short-term options pits, calls narrowly outweigh puts, as evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.95. This ratio is docked in the 38th percentile of its annual range, reflecting a stronger-than-usual preference for calls over puts. What's more, the equity's Schaeffer's Volatility Index (SVI) of 52% ranks higher than 9% of all other readings taken during the past year, meaning near-term options are relatively cheap right now.
- After debuting a new line of its Kindle Fire tablets on Thursday, AMZN scored price-target hikes at Lazard Capital ($300 from $275) and ThinkEquity ($285 from $250) today. With a year-to-date advance of more than 45%, it stands to reason that calls are the options of choice on the security. In fact, the stock's 10-day ISE/CBOE/PHLX call/put volume ratio checks in at 1.40, confirming that traders have bought to open 140 calls for every 100 puts during the past 10 sessions. This ratio ranks in the 85th annual percentile, confirming that traders have picked up calls over puts at a faster clip just 15% of the time during the past year.
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