Stock futures (/ES) are trading slightly higher as investors hope the market can get back to its winning ways. The market will have a little help from shares of Dow component Disney (DIS), which are trading up roughly 1.0% following the company's better than expected earnings report last night. Yesterday saw downward pressure into the close as the small caps (RUT, IWM) once again led equities lower. Option volatility picked up steam as investors bought protection, albeit modestly. The CBOE volatility index (VIX) continues to languish at low levels as fear to the downside is low. Historically this complacency can get traders in trouble if they ignore downside risk.
Treasuries are little changed to mixed, consistent with gains in most other sovereign debt markets amid a global risk-off theme. Japan's Nikkei reopened after being closed since Friday and promptly dropped 2.9%. Bank of Japan Minutes showed a unanimous vote for unchanged policy, disappointing hopes for some indication the Bank might provide further stimulus down the road. Additionally, Japan's services and composite PMIs dropped below 50 to weigh on Asian equities, along with weaker than expected Australian retail sales. European markets extended declines amid ongoing Ukraine worries and steep declines in German and French industrial production. Attention is turning to Fed Chair Yellen's upcoming JEC testimony at 9:00 am CT. Data today is thin with just Q1 productivity and unit labor costs, along with March consumer credit. The MBA reported mortgage applications rebounded 5.3% in the week ended May 2 after falling 5.9% previously. This gave pre-market stock futures a boost ahead of the open.
Stock Stories:
Whole Foods (WFM) – Spoiled –The natural foods grocer posted lower than expected quarterly results after the close yesterday. The company blamed competition and falling margins on the miss. The option market was anticipating a stock move of 5% but the shares are off 16% in the pre-market after multiple analyst downgrades.
Disney (DIS) – Un-Frozen – The company reported better than anticipated earnings last night as the company beat on the top and bottom lines. The entertainment giant grew in theme parks and movie revenue but its ESPN franchise declined. The stock is up 1% in the pre-market.
Major Economic Reports:
6:00 am CT – MBA Purchase Applications – up 5.3% last week
7:30 am CT – Productivity and Costs
9:00 am CT – Testimony of FOMC Chair Yellen
9:30 am CT – Oil Inventories
12:00 pm CT – 10-year Note Auction Results
2:00 pm CT – Consumer Credit
Notable Earnings:
Wednesday 5/7:
Before Market: AGN, AOL, ARIA, CHK, CTSH, DVN, EE, HTZ, HUM, TAP, MDLZ, VSI
After Market: NLY, CAR, CZR, CTL, GMCR, MDR, PRU, SCTY, TSCA, RIG, Z
