The Day Ahead: Options Expiration May Boost Volume

 | Sep 16, 2011 | 8:28 AM EDT  | Comments
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In the Headlines

Wall Street appeared set for a lower open Friday, as news from Europe continues to drive market direction.

The euro, which got a bounce yesterday following the European Central Bank's (ECB) move to boost liquidity at the region's banks, edged lower before Wall Street's open. Treasury Secretary Timothy Geithner is attending a meeting in Poland today with eurozone finance ministers, which occurs amid continuing doubts that Greece can meet requirements for its next round of bailout money.

European stocks were trading higher early Friday, with financials showing large percentage gains. The European liquidity infusion also lifted Asian stocks on Friday. Indices throughout the region ended the session higher. Exporters rose on a strengthened euro, and financials got a boost on greater sector-wide optimism.

Being the third Friday of the month, today is options expiration day on Wall Street. That frequently results in heavier trading volume on the session.

Commodities Corner

Gold remains in the spotlight. With equities on the rise this week, the precious metal has trended lower. Early Friday, it was up $6 to $1,787.40 per ounce. West Texas Intermediate crude dropped by $0.11 in Nymex trade and was changing hands at $89.29 per barrel.

Economic Docket

There's not much on the economic docket today.

At 9 a.m. EDT, the Treasury Department will issue its report on July's Treasury International Capital (TIC). The data are old by the time they hit the Street, a factor that often diminishes this report's effect on stocks. The bond market tends to pays more attention, though. The TIC report shows the sum total of Treasury securities and other debt instruments into and out of the U.S.

At 9:55 a.m. is the University of Michigan's preliminary reading for September consumer sentiment. Economists are expecting an increase to 56.3 from August's level of 55.7. This report generally gets quite a bit of media attention, and has potential to affect stocks if the reading is sharply higher or lower than the estimate.

Early Movers

There are no significant corporate earnings due out today, though some stocks were moving in early trade following Thursday's reports.

A prominent decliner was Research In Motion (RIMM), which plunged $5.65 in premarket trade, a loss of 19.13%, to $23.89. As many could have guessed by simply observing the marketplace, the company is rapidly losing ground to Apple (AAPL) and wireless gear using Google's (GOOG) Android platform. RIM said sales of its PlayBook tablet were less than half of what analysts had expected, and that estimate had already been slashed.

People are still devouring snack foods by Diamond (DMND), though. Shares of the maker of Pop Secret popcorn, Kettle brand potato chips and Emerald nuts rose $4.067, or 5.2%, to $82.30 ahead of the bell. The company's fourth-quarter results late Thursday came in better than expected, and Diamond raised its full-year outlook.

Other premarket movers included Texas Instruments (TXN), advancing $0.79, 2.85%, to $28.50. On Thursday, the chipmaker raised its quarterly dividend to $0.17 per share, a 31% increase.

Dell (DELL) continued to bask in the glow of this week's $5 billion share buyback announcement, rising $0.33, 2.16%, to $15.64 in the premarket. Going into Friday's session, the stock was up 9.6% for the week on heavier volume.

Analyst Actions

MasterCard (MA), which rallied to an all-time high Thursday, was downgraded to Neutral from Outperform at Robert W. Baird, which cited valuation.

Citigroup upgraded online brokerage TD Ameritrade (AMTD) to Buy from Hold, saying the company remains the most likely acquirer of fellow brokerage E-Trade (ETFC). TD Ameritrade shares climbed $0.58, 3.89%, to $15.48 ahead of the open.

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