Options Trading News

July 29, 2013  Mon 7:13 AM CT

Stocks are down slightly before a flood of economic news and corporate earnings this week.

Stock futures hit their lows late last night as worries about China's economy and a strong Japanese yen triggered losses of 2 percent to 3 percent in Asia. But Europe received a boost from earnings and merger news, lifting markets in Frankfurt, Paris, and London by more than 0.25 percent. S&P 500 futures have also recovered, and are now down by less than 0.2 percent. Treasury bond yields are also edging lower.

Pending home sales at 10 a.m. ET are the only item on today's agenda, but the calendar grows more active each day. Tomorrow brings consumer confidence data, the Case-Shiller index of home prices and economic sentiment data from Europe. Wednesday is packed with private-sector payrolls, second-quarter gross domestic product and the Federal Reserve's interest-rate decision.

Thursday features Europe's purchasing managers index and central-bank news, plus initial jobless claims and the Institute of Supply Management's forward-looking manufacturing index. Non-farm payrolls, perhaps the most important release each month, is scheduled for Friday morning.

Today's big earnings announcements include Hertz Global, Tenneco, Franklin Resources, Masco, and Herbalife.

The S&P 500 has spent more than a week hovering slightly above its previous all-time highs from May. Our researchLAB market scanner shows evidence of investors growing more cautious during that time by favoring non-cyclical health-care stocks over industrials. Transports have also lagged.

Other industry groups have shown strength. Gold and silver miners have outperformed, trying to rebound from more than a year of weakness. Chinese Internet companies, emerging markets, oil refiners, and videogame stocks have also been rallying in the last week.

Precious metals are up more than 1 percent today, which may continue to favor the miners. Brent crude is leading oil modestly higher, which could support refiners. Copper also rose fractionally despite the weakness in China overnight.

Trading in the foreign-exchange market is more cautious as the safe-haven Japanese yen posts small gains across the board. Currencies associated with risk appetite, such as the euro and Australian dollar, are also down slightly.

In company-specific news, advertising firm Omnicom rose about 4 percent after agreeing to merge with France's Publicis Groupe. Casino operator Wynn Resorts is down 1.5 percent after earnings and revenue missed expectations. Luxury retailer Saks also agreed to be acquired by Canada's Hudson's Bay department-store chain.
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