The major theme of today’s trading will be the response of the energy sector in the aftermath of Hurricane Gustav. Index futures point to strong openings as crude oil and natural gas continue to sell off after posting losses during special trading sessions over the weekend and Labor Day holiday.
The storm, which barreled through the heart of Gulf Coast oil production and refining, failed to intensify as strongly as forecasters feared. Crude traded below $107 overnight, hitting 5-month lows. The dollar hit 6-month highs against the euro overnight, trading briefly over 0.69 Euros to the dollar. Commodities across the board are weaker today.
Shares of Lehman Brothers (LEH) are bid 7% higher this morning at $17.25 as the Korean state-owned Korea Development Bank confirmed reports that it is mulling an investment in the troubled broker-dealer. Financials in general are expected to fare well today.
Oil: $107.92 Dollar/Yen: 108.92
Nat Gas: $7.45 Dollar/Euro: 0.6901
Gold: $795.70
Economic data:
10:00 – July construction spending: Expected -0.3%
10:00 – Aug ISM Index: Expected 50.2
The ISM Index is a national survey of purchasing managers. A value over 50 indicates expansion, below 50 is contractive.
Upgrades: JAKK, LEAP, PCLN, AMLN, SCRX
Downgrades: ISIL, HZO, PSUN, MCCC, TSM, NSC
ETFs to watch:
UYG () 2X financials long
DUG () 2X oil and gas equities short
Selected earnings announcements today:
Pre-market
DHT – Double Hull Tankers, crude oil shipping; $8.91
Beat by 3 cents; earned 29 cents EPS on $27.8 million in revenues
Analysts expected 26 cents EPS on $26.2 million in revenues
Market cap: $268 million. P/E: 9.6. Div. yield: 11.2%
52-week trading range: $8.39 – $15.74
After hours
XIN – Xinyuan Real Estate, Chinese real estate; $6.92
One analyst expects $99.7 million in revenues
Market cap: $513 million. P/E: N/A
52-week trading range: $4.88 – $18.00
SNDA – Shanda Interactive, Chinese gaming; $26.49
Analysts expect 51 cents EPS on $115.3 million in revenues
Market cap: $1.9 billion. P/E: 10.75
52-week trading range: $20.85 – $40.71
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