Red Option
Market Commentary
2/6/2014
Stock futures are suggesting a slightly higher open for the broader market. A higher open does not necessarily mean a higher close, as the market has opened higher and closed lower numerous times since the market downtrend started a few weeks ago. The ‘Buy on the Dips’ trend has not worked this year and the struggle may continue for stocks. Volatility in the option markets rose yesterday as equities continue to be under pressure. The CBOE Volatility Index (VIX) rose 4% and finished the day slightly below the $20 level. We should see volatility fall sharply when the market opens if stocks remain in positive territory.
Treasuries are slightly lower as risk appetite picked up cautiously overnight ahead of central bank announcements. The 10-year Treasury yield is modestly higher at 2.7%. The Bank of England and the European Central Bank (ECB) both left interest rates unchanged this morning. There were a few expectations that the ECB may take some action but clarity will come from the press conference this morning. Today's calendar includes more job data with initial jobless claims for the week ended February 1 and Challenger announced layoffs for January. There's also preliminary Q4 productivity and December trade statistics. The big number that traders are awaiting will be tomorrow's U.S. January employment data.
Stock Stories:
Green Mountain Coffee Roasters (GMCR) –Who Knew Something – The single-serve coffee company reported a mixed quarterly result after the close last night. They also announced that Coca-Cola (KO) is taking a 10% stake in the company for $1.25 B. The stock has been steadily rising despite the overall market downturn and a sell-off in its competitors shares in the space. The stock is up over 40% ahead of the opening bell.
Twitter (TWTR) – Not good enough?! – The social media company beats earnings expectations on the top and bottom lines after the close yesterday. New user growth was lower than expected according to estimates. Investors are punishing the stock as it is down 20% in the pre-market.
Major Economic Reports:
7:30 am CT– Weekly Jobless Claims
7:30 am CT– International Trade
7:30 am CT – Productivity and Costs
9:30 am CT – Natural Gas Inventories
Notable Earnings:
Before Market: AAP, ADS, AET, AMAG, AOL, AZN, BCE, BDC, BR, CMI, CS, DNKN, DO, EXC, GM, GPK, HERO, IT, K, KKR, NILE, NU, NYT, PRGO, SBH, SNA, SNE, TEVA, TW, USG, VMC, WEC
After Market: AAN, AIV, BEBE, BKH, BRKS, ELON, EXPE, G, LNKD, NCR, NFG, OPEN, PM, VRSN, WWWW
Friday – 2/7: BEAM, CBOE, CI, MCO
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