Morning Watch, July 24
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July 24, 2008
Earnings reports heavy with automakers disappointing, but tech results better than expected. The Nasdaq ($COMPQ) looks to open higher Thursday morning, but futures for the S&P 500 ($SPX) and the Dow ($INDU) are lower. Jobless claims hurt futures a bit this morning, rising above a key level and traders are awaiting the existing home sales report due out shortly.
Jobless claims rose by 34,000 for the week ending July 19 to a level of 406,000. This is pushed the four-week moving average up slightly to 382,500. The Labor Department did note that there were several factors that affected the results and this is keeping traders from reading too much into the report.
In earnings news, Ford (F) reported a loss of $8.7 billion with Daimler (DAI) seeing profits fall 25 percent. Though DAI is only a 20 percent owner of Chrysler, this division hurt the company’s results. Ford stated that it would double its production of hybrids with Ford seeing sales of SUVs falling sharply. Ford shares are down nearly six percent this morning with DAI off nearly 10 percent.
In the tech sector, Amazon.com (AMZN) and Qualcomm (QCOM) both reported better than expected earnings, leading to strong gains in premarket trading. AMZN announced that earnings more than doubled and that revenues for the full-year would be stronger than currently expected. Though high gasoline prices are impacting broader retail sales, AMZN feels the ability to buy online and not travel to a store could be helping the company. AMZN shares are up more than 8 percent in premarket trading.
QCOM is up more than 20 percent after the company reported earnings and announced a new agreement with Nokia (NOK). QCOM matched earnings estimates and beat revenue forecasts, but its settlement with NOK is providing the boost in shares. A deal with phone maker Nokia has ended litigation with NOK paying QCOM an upfront payment and ongoing royalties.
Oil prices are slightly higher this morning, but remain nearly $20 below prices seen just a few weeks ago. Crude is a focus of traders and seems to be mentioned in nearly every earnings release. The hope is that a continued decline in crude prices will lower energy costs and provide improved sentiment. We will get data on the housing sector today and tomorrow and this could impact trading as well.
Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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