U.S. stock futures are mired in the red once again this week, with the Dow Jones Industrial Average poised to log its eighth-consecutive loss. Traders are fretting over lackluster corporate earnings and a flood of key economic data on tap for the rest of the week.
Ahead of Friday’s July jobs report, the July ADP private-sector hiring report is due today, alongside Markit’s July services sector index and the ISM services sector index.
Against this backdrop, futures on the Dow Jones Industrial Average have fallen 0.16%, S&P 500 futures are down 0.15% and Nasdaq-100 futures have shed 0.16%.
Options activity rebounded on Tuesday, as traders flooded into ETFs as protection against possible fallout from Friday’s jobs report. Overall, 15.1 million calls and 14.4 million puts crossed the tape yesterday. On the CBOE, the single-session equity put/call volume ratio held at a four-week high of 0.72, while the 10-day moving average resumed its uptrend, ticking higher to 0.66.
Driving yesterday’s equity options activity, Apple Inc. (NASDAQ:AAPL) was hit with a downgrade by Daiwa Securities, while Ford Motor Company (NYSE:F) stock was punished following poor U.S. sales data. Finally, Fitbit Inc (NYSE:FIT) is set to rebound from yesterday’s nearly 4% loss due to better-than-expected second-quarter earnings.
Apple Inc. (AAPL)
AAPL stock has rallied more than 8% since last week’s well-received quarterly earnings report, but some analysts are not on board with the rally. Yesterday, analysts at Daiwa Securities downgraded Apple stock to “outperform” from “buy,” citing the stock’s brisk run higher in the past week.
Daiwa also noted that the price risk factor is worse than expected in the smartphone market, and that concerns remain in the supply and demand environment as well as management policy changes at Apple.
AAPL bulls in the options pits held on to hope despite the downgrade, with calls accounting for 62% of the 923,000 contracts traded on Tuesday. With AAPL struggling to overtake $105, this strike has become quite contentious in terms of open interest in the August series. Currently, more than 68,000 calls have accumulated at this overhead strike, representing peak OI for the series and a point of potential options-related resistance for AAPL going forward.
Ford Motor Company (F)
F stock was smacked with a 4% loss yesterday, sending the stock below long-term support at $12. Driving the shares lower was Ford’s poor July sales report, which saw a 2.8% dip in overall sales year-over-year. Van sales were a modest bright spot, with a 26% year-over-year gain, while F-150 sales declined 1% on the same basis. Fleet sales also rose 6% year-over-year.
Options traders didn’t wait to accelerate toward F stock puts, with these typically bearish bets making up 60% of the 377,000 contracts traded on Ford yesterday. F stock could have some options related-support following yesterday’s plunge, as more than 42,000 puts have taken up residence at the $12 strike in the August series — reinforcing long-term technical support in the area. Another 23,700 puts are open at the $11.50 strike in August.
Fitbit Inc (FIT)
Anticipating a poor quarterly performance, traders sent FIT stock lower by nearly 4% on Tuesday. Those bears may be hurting today, however, as FIT is up nearly 8% premarket following a better-than-expected second-quarter report. For the quarter, Fitbit reported earnings of 12 cents per share on revenue of $587 million, versus expectations for 11 cents per share on revenue of $578 million.
Fitbit also placed third-quarter guidance at $490 million to $510 million compared to Wall Street’s target of $497 million.
Options traders were far from enthusiastic ahead of the news, with calls only garnering 55% of the 204,000 contracts traded on FIT stock. At last check, FIT is set to open north of $14, placing the stock above the two heaviest call OI accumulations in the weekly August 5 series.
However, there are still 3,400 calls at $14.50 and 4,128 calls open at $15 — in addition to market headwinds that could stall the stock’s advance today.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
