DJIA down 166.13 (-1.39%) to 11,823.70
S&P 500 down 23.20 (-1.79%) to 1,276.34
Nasdaq down 68.36 (-2.48%) to 2,686.92
Hang Seng down 0.68%
Nikkei down 1.13%
FTSE down 1.4%
Movers to the upside, downside and options action detailed in this week's post.
BGP continues evening surge seen after company secures refinancing
commitment from GE Capital.
TMRK sold to Verizon.
RVBD rebounds from evening decline; results beat.
CSR interest expressed in taking company private.
F results weaken from last year's.
MSFT results slow from year-ago period, beat Street view.
AMZN beats with EPS but sales miss and guidance shows upcoming quarter
PMCS continues evening decline that followed earnings miss.
SNY reports disappointing breast cancer study results.
SNDK gives up evening gain; beats with Q4 results.
CVX misses sales estimates.
SLE confirms plans to split in two.
Real gross domestic product, the broadest measure of the U.S economy,
rose at a 3.2% annualized rate in the fourth quarter, up from a 2.6%
rate in the third quarter. Economists polled by MarketWatch expected Q4
GDP to rise of 3.5%.
Consumer spending rose at a 4.4% annual rate in the final three months
of the year, the fastest pace since the first quarter of 2006.
Inventories were a big drag on growth in the fourth quarter but this was
largely offset by a positive contribution from net exports. For the
year, GDP advanced 2.9%, compared with a 2.6% drop in 2009. This is the
strongest growth rate in five years.
In other economic data, the Thomson Reuters/University of Michigan
consumer sentiment index fell to 74.2 from 74.5 in December.
Looking out to next week, earnings season continues to roll on, with
Baidu.com (BIDU) and Gannett (GCI) slated to post financials on Monday,
followed by Archer Daniels Midland (ADM), Broadcom (BRCM), Electronic
Arts (ERTS) and UPS (UPS) on Tuesday. On Wednesday, traders will see
results from BMC Software (BMC), Hartford Financial (HIG), News Corp.
(NWS) and Visa (V). GlaxoSmithKline (GSK), International Paper (IP), Las
Vegas Sands (LVS) and JDSU (JDSU) will report on Thursday, with Aetna
(AET) and Tyson Foods (TSN) coming in on Friday.
On the economic front next week, personal income/spending data, PCE
Prices and Chicago PMI are slated for release Monday. Construction
spending, the ISM index, and truck and auto sales will be distributed on
Tuesday, followed by Challenger job cuts, ADP employment change and
crude inventories on Wednesday. Initial claims, factory orders, and ISM
services data are due on Thursday, and unemployment data will close out
the week on Friday.
ADRs of Sanofi-Aventis (SNY) saw disappointing results from an
experiment breast cancer drug it was developing. Sanofi's BSI-201 did
not slow a certain type of aggressive breast tumor, Sanofi said in a
statement. The news comes as a setback for Sanofi, which has been trying
to acquire Genzyme (GENZ).
Borders (BGP) said late Thursday it has received a commitment from GE
Capital, Restructuring Finance to provide a $550 million senior secured
credit facility. Upon completion, it will include $125 million of
additional junior debt financing via the conversion of vendor payables
and/or external sources. And, it will provide Borders with the financial
flexibility and an appropriate level of liquidity to move forward with
its strategy to reposition its business model and the Borders brand.
Boston Scientific Corp. (BSX) U.S. Justice Department reportedly sued
the medical device manufacturer, alleging it sold defective cardiac
devices. The government, in an email statement to Bloomberg news, said
Boston Scientific didn't fully reveal problems with the devices.
Savvis Inc. (SVVS) Verizon Communications Inc. (VZ) moved to acquire a
Savvis rival for $1.4 billion. The deal for Terremark Worldwide, Inc.
(TMRK) had other firms in the cloud-computing security space higher,
including Equinix Inc. (EQIX) and Rackspace Hosting Inc. (RAX).
Sara Lee (SLE) confirming plans to split into two entities focusing on
North American meats and international coffee and tea. The separation
would include a $3-per-share special dividend and should be completed
early in 2012.
Jefferies (JEF) says revised Q4 EPS was $0.31, a penny below the Thomson
Reuters mean of $0.32.
Microsoft (MSFT) reported Q2 revenue of $19.95 billion, better than the
analyst consensus of $19.1 billion on Thomson Reuters. EPS was $0.77 per
share, vs. expectations of $0.68 per share. But profit eased from the
Amazon.com (AMZN) reporting Q4 sales of $12.95 billion, below the
analyst consensus of $13 billion on Thomson Reuters. EPS was $0.91, vs.
expectations of $0.88 per share. For Q1, the company is guiding for
sales of $9.1 to $9.9 billion, vs. the Street view of $9.3 billion.
Chevron (CVX) said it earned $2.64 per share in Q4, including items.
Sales were $52 billion. The Thomson Reuters mean was for $55.96728
billion in sales and $2.41 per share in earnings, usually less items.
Ford (F) reported Q4 earnings of $0.30 per share, down from year ago
levels. Revenue was $32.5 billion, down from $34.8 billion last year.
The Street view was earnings of $0.48 per share on revenue of $30.3
billion. Looking forward, Ford said it plans to deliver continued
improvement in pre-tax operating profit and Automotive operating-related
cash flow in 2011.
Oplink (OPLK) reporting Q2 revenue of $52 million, better than the
Street view of $50 million. EPS was $0.52, vs. expectations of $0.41 per
share. For Q3, the company sees revs of $52 to $56 million and EPS of
$0.49 to $0.55 per share. The Street view is $48 million in revenue and
earnings of $0.38 per share
Commodities finished trading higher with crude oil and gold futures
jumping as the violent protests in the Middle East raised concern about
oil supplies and economic stability.
Light, sweet crude oil for March delivery finished up 4.3%, or $2, to
$89.34 a barrel. In other energy futures, heating oil was up 1.2% to
$2.68 a gallon while natural gas was up 0.12% to $4.32 per million
British thermal units.
Meanwhile, gold futures climbed as unrest in Egypt drove investors to
the perceived safety of bullion.
Gold for February delivery finished up $22.30 to $1,340.70 an ounce. In
other metal futures, silver was up 2.68% to $27.75 a troy ounce while
copper rose 0.32% to $4.35 a pound.
Nabors Industries (NBR) is trading down 39 cents to $23.89 and some players seem to view the weakness as an opportunity to enter bullish trades on the oil and gas driller. 11,000 calls and 1,125 puts have traded in the name so far. The February 25 calls, which are now $1.11 out-of-the-money with three weeks of life remaining, are the most actives. More than 6,000 traded. February 24 and 26 calls are seeing some interest as well. Investors might be taking bullish positions and looking for good news to lift shares before the contracts expire. The company releases earnings on February 15 and just a few days before the expiration.
Bullish trading was also seen in Symantec (SYMC), Celldex Therapeutics (CLDX), and Nuance Communications (NUAN).
Glaxo SmithKline (GSK) is down $1.12 to $36.34 on talk the company has stopped the development of a medical device used to treat insomnia (per Briefing). Shares are lower and options volume is 13X the recent average daily. 24,000 puts and 2,400 calls have traded on the pharmaceutical giant, a ratio of 10-to-1. The February 37.5 puts have traded 16,700X and are the most actives. February 39 puts are seeing interest as well. It looks like some investors are opening new positions, as volume exceeds open interest in both contracts. Implied volatility is up 13 percent to 25, as some investors appear concerned about additional losses in GSK in the weeks ahead.
Bearish flow also surfaced in Genco Shipping and Trading (GNK), Waste Management (WM), and Cephalon (CEPH).
The CBOE Volatility Index (.VIX) is surging on worries about earnings, the economy, and problems abroad. VIX has been trading in a narrow range since mid-December, but is up 3.79 to 19.94 and within striking distance of 20 for the first time since early-December. The rally in the VIX is being driven by increasing interest in index puts. 575,000 puts and 245,000 calls have traded on the S&P 500 Index (.SPX) today. Since VIX tracks the expected volatility in the S&P 500, it is rallying Friday because investors are showing increasing interest in portfolio protection.