The Week In Review
9/17-9/21/12
Sept 21, 2012Equities began the session on a higher note as quadruple witching contributed to a volume surge at the start. However, after reaching session highs within the first few minutes of trade, the major averages spent the rest of the day drifting towards the unchanged line. As a result the S&P 500 finished flat. Telecom stocks outperformed as the sector traded higher by 0.6%. MetroPCS (PCS 11.62, +0.43) added 3.8% after the company announced it will carry ZTE's Anthem 4G smartphonethe first ZTE 4G device available in the U.S. Other telecom names were also on the rise as Sprint (S 5.65, +0.21) jumped 3.9% while AT&T (T 38.10, +0.16), 0.21) and Verizon (VZ 45.69, +0.20) both gained 0.4%. Meanwhile, Inteliquent (IQNT 9.38, -1.02) slid 9.8% after the company's President and Chief Operating Officer, Surendra Saboo announced he will resign from the company, effective October 1, 2012. In addition, IQNT's Chief Financial Officer, Robert Junkroski will also step down on October 1, 2012. Following the pair of resignations, Raymond James downgraded shares of Inteliquent from 'market perform' to 'underperform.' The healthcare sector was also one of the top performers. Within the group, Dehaier Medical (DHRM 2.45, +0.91) soared 59.1% after winning a three-year procurement agreement from a major Ukrainian medical equipment manufacturer. Elsewhere, Halozyme Therapeutics (HALO 7.95, +1.54) surged 24.0% after announcing with partner ViroPharma (VPHM 30.31, +2.13) that the Federal Drug Administration has enabled ViroPharma to resume clinical studies of Cinryze in combination with rHuPH20. Shares of VPHM gained 8.3% after the announcement. On the downside, VIVUS (VVUS 21.00, -2.72) slumped 11.5% after the company announced it expects to receive an opinion recommending against the approval for weight loss drug Qsiva (trade name Qsymia in the U.S.) from the Committee for Medicinal Products for Human Use in Europe.
The Dow Jones Transportation Average shed 1.0% as it continued its recent underperformance. Expeditors International (EXPD 36.78, -0.75), UPS (UPS 71.88, -0.73), and Norfolk Southern (NSC 65.00, -1.11) all slid between 1.0% and 2.0%. Only Overseas Shipholding Group (OSG 7.31, +0.15) managed to stay positive within the group of twenty transportation stocks.
Shares of Indian companies rallied after India's Sensex index advanced 2.2% to close at its highest level in 14 months. The general strength resulted from the announcement of economic reforms in the country. As a result, The India Fund (IFN 22.50, +0.33) rose 1.5%.
U.S. listings of Indian companies made broad advances as financials ICICI Bank (IBN 39.74, +2.09) and HDFC Bank (HDB 36.78, +0.77) added 5.6% and 2.1%, respectively. Elsewhere, copper producer Sterlite Industries (SLT 7.74, +0.40) jumped 5.5% and car maker Tata Motors (TTM 25.35, +0.70) ended firmer by 2.8%. Shares of tire makers were under pressure after KeyBanc downgraded Goodyear (GT 12.73, -0.65) and Cooper Tire (CTB 19.94, -2.05) from 'buy' to 'hold.' The downgrade resulted from uncertainty over expiring Chinese tariffs, as well as declining tire prices. Goodyear slipped 4.9% while Cooper Tire slid 9.3% in the wake of the rating cut.
Sept 20, 2012
Stocks got off to a slow start after bearish data from around the world overshadowed investor optimism. Japan reported a wider-than-expected trade deficit while the French and Eurozone PMI readings were well short of expectations. Domestically, the weekly initial claims exceeded expectations. After marking session lows thirty minutes into the trading day, the major averages set off on a day-long climb towards positive territory. As a result, the S&P 500 finished flat.
Healthcare stocks were generally higher as they benefited from the day's risk-off sentiment. Within the sector, Questcor (QCOR 30.33, +3.98) closed higher by 15.1% after losing nearly 49.0% during yesterday's sell-off which was sparked by doubts as to whether insurance companies will cover Questcor's Acthar gel. Providers of health care equipment and supplies also saw strength within the defensive sector. CryoLife (CRY 5.90, +0.14), Meridian Bioscience (VIVO 18.84, +0.38), and Masimo (MASI 24.87, +0.39) all posted gains between 1.6% and 2.4%. On the downside, Horizon Pharmaceuticals (HZNP 3.48, -1.10) slumped 24.0% after pricing a $75 million public offering of common stock and warrants at $3.50 per unit.The Dow Jones Transportation Average ended lower by 2.8% as it trailed the broader market. The bellwether group showed considerable weakness as railroads weighed on the complex. The four railroad components of the average were firmly lower after Norfolk Southern (NSC 66.11, -6.58) cut its guidance due to slumping demand, and decreasing revenues from fuel surcharges. Norfolk Southern slid 9.1% while CSX (CSX 21.49, -1.30), Kansas City Southern (KSU 76.90, -2.22), and Union Pacific (UNP 120.95, -4.10) all fell between 2.8% and 6.0%. Only Overseas Shipholding Group (OSG 7.16, +0.15) managed to stay positive within the transportation average while CH Robinson (CHRW 57.55, +0.15) spent the session hovering around its flat line. Looking at the industrial sector, CLARCOR (CLC 43.75, -5.82) slumped 11.7% after delivering a disappointing quarterly report. The company missed on earnings and revenues and the conference call contributed to the negative sentiment as management issued downside fourth quarter and full-year guidance. Apogee Enterprises (APOG 19.50, +1.88) was a notable outlier among industrial stocks. The producer of building materials advanced 10.7% after beating on earnings and revenues. Management was upbeat in its conference call as upside guidance was issued for full-year 2013. Green Mountain Coffee Roasters (GMCR 27.84, -2.97) shed 9.6% after Starbucks (SBUX 51.19, +1.07) announced it will begin selling a single-serve brewing machine for $199.00. The Verismo will first be sold online before becoming available at Starbucks cafes next month. In addition to the $199.00 model, the company will also sell a $399.00 version which contains a larger water tank and an LCD display. Starbucks' presence in the single-serve market is expected to take a chunk out of a market previously dominated by Green Mountain's Keurig machines. Two names made their exchange debut today. Online real estate search service, Trulia (TRLA 24.00, +1.90) surged 41.2% in its public debut. Shares of the company began trading at $22.00 after the initial public offering was priced at $17.00. Trulia's peer, Zillow (Z 46.17, +0.62) has risen over 130.0% since the company went public in July of last year. Meanwhile, Susser Petroleum (SUSP 22.91, -0.49) added 11.8% to its initial public offering price of $20.50. The latest weekly initial jobless claims count totaled 382,000, which is higher than the 375,000 that had been expected. The tally is above the revised prior week count of 385,000. As for continuing claims, they fell to about 3.272 million from 3.304 million. Separately, the Philadelphia Fed Survey rose to -1.9 for September. The reading shows an improvement over last month's -7.1. Economists polled by Briefing.com had expected that the Survey would improve to a -4.0 reading. Lastly, leading indicators for August decreased by 0.1%, which is worse than the unchanged reading that had been widely expected to follow the prior month's 0.4% increase. There are no notable releases on tomorrow's economic calendar. However, it is important to note that quadruple witching occurs tomorrow. This means that stock index futures, stock index options, stock options, and single stock futures are all set to expire.
Sept 19, 2012
Equities began today's session on a slightly higher note after the Bank of Japan raised its asset purchase target in an attempt to inject additional liquidity into the market and to weaken the yen. Stocks were also boosted slightly by positive economic data which indicated an uptick in existing home sales as well as building permits. However, late day selling pushed the major averages off their best levels of the session as the S&P 500 settled higher by 0.1%. Consumer discretionary stocks were the top performer of the day. Two names within the group advanced after reporting earnings. AutoZone (AZO 369.95, +12.11) added 3.4% after delivering a mixed quarterly report. The auto parts retailer beat on earnings, but missed on revenues and reported an increase in inventory. General Mills (GIS 40.02, +0.71) advanced 1.8% after beating on earnings and missing on revenues. The company issued in-line guidance and the management sees "a slow improvement in price and volume trends across [the company's] retail food categories." Elsewhere within the sector, Chiquita Brands (CQB 7.32, +0.87) and Del Monte (FDP 25.40, +1.37) jumped 13.5% and 5.7%, respectively. The two listings rallied after BB&T upgraded shares of both companies from 'hold' to 'buy.' The energy sector underperformed the broader market with oil sliding another 3.6% to continue its recent weakness. The energy component has fallen nearly 9.0% since last week. In addition, the Department of Energy reported that during the past week oil inventories saw a build of 8.534 million barrels against expectations of a build of 1.4 million. Northern Oil and Gas (NOG 17.91, -0.66) shed 3.6% and increased options activity was spotted in the stock. The October 19 puts have traded 1310 contracts against an open interest of just 100. Meanwhile, PDC Energy (PDCE 30.99, -1.93) slumped 5.9% after announcing it is no longer looking to develop its Utica Shale as part of a joint venture. Instead, the company will continue to work independently on the southeast Ohio property. Approach Resources (AREX 30.77, -1.88) was another notable laggard which slid 5.8% after announcing an offering of five million shares of its common stock in an underwritten public offering. Groupon (GRPN 5.34, +0.65) surged 13.9% after the company launched a mobile payment service which it claims is "the lowest-cost option" available to merchants. According to reports, merchants who have active deals with Groupon will pay 1.8% of the total transaction price plus a 15 cent surcharge when using Visa, MasterCard, or Discover. Payments made with American Express will be subject to a 15 cent surcharge as well as 3.0% of the total transaction. In addition, Groupon Chief Executive Officer, Andrew Mason appeared on CNBC where he said the company is growing 50% year-over-year and described Groupon as "more than just a coupon company." Questcor (QCOR 26.35, -24.17) plunged 47.8% after reports indicated insurer Aetna denied coverage of the company's Acthar gel. The rejection was followed by a negative research report released by Citron. Shares of Questcor responded to the comments with an initial drop of nearly 56.0%. Following a trading halt, the stock has been able to recover some of its losses after Piper Jaffray suggested Aetna's comments are not a blanket statement of 'no coverage.' Instead, coverage may be available after a patient is subject to a steroid treatment first.
Existing home sales for August hit an annualized rate of 4.82 million units, which was stronger than the rate of 4.58 million units that had been generally expected among economists surveyed by Briefing.com. The pace for August is up from the prior month rate of 4.47 million units.
Housing starts hit an annualized rate of 750,000 units during August. Economists polled by Briefing.com had expected for housing starts to hit an annual rate closer to 770,000. Prior month figures were revised downward to reflect an annual rate of 733,000 housing starts.
As for building permits, they slipped from the prior month's downwardly revised rate of 811,000 to 803,000 for August. In tomorrow's economic data, weekly initial and continuing claims will be reported at 8:30 ET. Also of note, the September Philadelphia Fed Survey and leading indicators will be released at 10:00 ET
Sept 18, 2012
Today's session was mostly uneventful as equities remained near their opening levels throughout the day. The major averages showed some divergence as the S&P 500 shed 0.2% while the Dow added 0.1%. Stocks within the consumer staples sector were the top performer of the day. Within the group, Energizer (ENR 75.22, +7.30) surged 10.7% after announcing preliminary results of a comprehensive review of the company's cost structure. As a result of the review, Energizer expects annualized cost savings of $175-200 million. Beverage and cigarette stocks were also on the rise within the defensive sector. Coca-Cola (KO 38.62, +0.27) and British American Tobacco (BTI 104.81, +2.70) ended higher by 0.9% and 2.6%, respectively. The Dow Jones Transportation Average slipped 1.1% as it trailed the broader market. Disappointing guidance from FedEx (FDX 86.55, -2.73) spilled over to other group components as all twenty names within the transportation average traded lower. Airlines showed the biggest weakness as Delta (DAL 8.96, -0.27) and United Continental (UAL 19.27, -0.46) both fell near 2.5%. Shipping stocks were also pressured with Matson (MATX 21.84, -0.43) and Overseas Shipholding Group (OSG 6.76, -0.09) ending lower by 1.9% and 1.5%, respectively. Technology stocks have traded mostly in-line with the broader market. AMD (AMD 3.62, -0.39) slumped 9.7% after Senior Vice President and Chief Financial Officer, Thomas Seifert announced his resignation. The company announced that Devinder Kumar will serve as interim Chief Financial Officer while a search for a replacement takes place. Meanwhile, OCZ (OCZ 4.13, -0.33) slid 7.4% after Chief Executive Officer, Ryan Peterson resigned. The board of directors has appointed Amex Mei as interim Chief Executive Officer. The change at the top resulted in several analysts moving their ratings. Craig Hallum upgraded the stock from 'hold' to 'buy' while Stifel Nicolaus downgraded OCZ from 'buy' to 'hold.' Elsewhere, F5 Networks (FFIV 108.62, +4.16) jumped 4.0% after Piper Jaffray commented on the company's attractive valuation, and said that the network provider is likely to beat earnings estimates. Other networking names finished lower with Cisco Systems (CSCO 19.04, -0.11) and Juniper Networks (JNPR 18.94, -0.43) slipping 0.6% and 2.2%, respectively. For-profit education stocks were broadly higher today. Career Education (CECO 4.09, +0.27) and Corinthian Colleges (COCO 2.84, +0.14) added 7.1% and 5.2%, respectively. The advances did not appear to be news-driven as other education listings also made notable advances. Strayer Education (STRA 70.82, +2.85) and Bridgeport Education (BPI 11.64, +0.42) both gained near 4.0%. The current account deficit for the second quarter totaled $117.4 billion, which was lower than the $126.8 billion deficit that had been broadly anticipated. The July net long-term TIC flows print indicated a $67 billion inflow of foreign capital into U.S. denominated assets. Lastly, the NAHB Housing Market Index for September registered a reading of 40, which was ahead of prior month's 37, and better than the reading of 38 that had been expected among economists polled by Briefing.com. In tomorrow's economic data, the weekly MBA Mortgage Index will be reported at 7:00 ET, while housing starts and building permits will be released at 8:30 ET. Lastly, existing home sales will be announced at 10:00 ET.
Sept 17, 2012
Stocks began today's session on a negative note after the September Empire Manufacturing Survey registered its worst reading since April 2009. The bearish sentiment was then extended as unfounded rumors of tapping into the strategic petroleum reserve sent the major averages to fresh session lows. As a result, the S&P 500 ended lower by 0.3%. Healthcare stocks outperformed the broader market on strength in biotech companies. The iShares Nasdaq Biotechnology ETF (IBB 143.15, +1.39) advanced 1.0% as Gilead Sciences (GILD 65.80, +3.78) added 6.1% after positive comments were made by analysts before the open. Meanwhile, Spectrum Pharmaceuticals (SPPI 12.91, +0.90) and Onyx Pharmaceuticals (ONXX 81.26, +4.59) gained between 6.0% and 7.5%. In M&A news, medical equipment supplier, IRIS (IRIS 19.54, +6.12) surged 45.6% after announcing that the company will be acquired by Danaher (DHR 54.84, +0.08) for $19.50 per share. The purchase price represents a 45.3% premium to IRIS' Friday closing price of $13.42. Following the acquisition, Feltl & Co downgraded shares of IRIS from 'buy' to 'hold.' Elsewhere, Complete Genomics (GNOM 3.02, +0.35) jumped 13.1% after the company entered into a definitive merger agreement with China-based BGI-Shenzhen. Per the agreement, a wholly-owned U.S. subsidiary of BGI-Shenzhen will launch a tender offer to purchase all outstanding shares of GNOM for $3.15 per share, representing an 18.0% premium to GNOM's Friday closing price of $2.67. The Dow Jones Transportation Average slipped 1.5% as it underperformed the broader market. Within the bellwether group, only UPS (UPS 74.23, +0.55) and CSX Corp (CSX 23.26, +0.10) managed to stay marginally positive. Airline stocks were generally lower after Southwest Airlines (LUV 9.05, -0.02) and Delta (DAL 9.23, -0.04) raised roughly 10% of their round trip fares by $10. The two carriers both shed near 0.3%. Trucking and railroad stocks also showed considerable weakness as Con-way (CNW 29.22, -1.33) and Kansas City Southern (KSU 81.24, -2.39) ended lower by 4.4% and 2.9%, respectively. Shares of major financials showed weakness after last week's broad rally. The SPDR Financial Select Sector ETF (XLF 16.13, -0.15) slipped 0.9% as most major names posted losses in the neighborhood of 1.0%. Bank of America (BAC 9.30, -0.25) and Morgan Stanley (MS 17.80, -0.44) both fell near 2.5%, while JPMorgan Chase (JPM 41.19, -0.38) and Goldman Sachs (GS 119.90, -1.46) lost near 1.0% each. The materials sector was the weakest performer. The SPDR Materials Select Sector ETF (XLB 37.76, -0.59) slumped 1.5% as steel producers lagged after a series of downgrades. AK Steel (AKS 5.53, -0.34), Cliffs Natural Resources (CLF 42.36, -3.19), Reliance Steel & Aluminum (RS 54.99, -2.67), and United States Steel (X 21.31, -1.04) all posted losses between 4.5% and 7.0% after JP Morgan downgraded shares of the steelmakers from 'overweight' to 'neutral.' Looking at tomorrow's earnings, FedEx (FDX 89.28, -0.87) will report its first quarter results before the bell. The company will be in focus after it recently lowered its earnings guidance to $1.37-1.43 from the original forecast of $1.45-1.60 per share. The Empire Manufacturing Survey for September registered a reading of -10.4, which was down from the prior month's reading of -5.9. Economists polled by Briefing.com had expected that the Survey would rise to -3.0. A handful of economic data points will be reported tomorrow. The current account balance will be released at 8:30 ET, while net long-term TIC flows and the NAHB Housing Market Index will be reported at 9:00 ET and 10:00 ET, respectively.