Equities Update: China, Alcoa Disappoint, Lead Stocks Down

Includes: AA, EA, HIG, NVAX, ZRBA
by: Midnight Trader

4:13 PM, Jan 12, 2010 --

  • NYSE down 78.52 (1.1%) to 7,370.54.
  • DJIA down 36.7 (0.3%) to 10,627.
  • S&P 500 down 10.8 (0.9%) to 1,136.
  • Nasdaq down 30.10 (1.3%) to 2,282.


  • Hang Seng down 0.38%
  • Nikkei up 0.75%
  • FTSE down 0.85%


(+) SVU beats with Q3 EPS, though sales miss; guides above Street.

(+) SNTA issues positive study data.

(+) SPPI gets milestone payment.

(+) CRUS sees sales above estimates.

(+) CDII inks new deals.

(+) INFY beats with results, guidance.

(+) LFUS hikes outlook.

(+) MGM gets upgrade.

(+) VICL says licensee gets FDA OK for special protocol assessment for Phase 3 trial.

(+) VLNC gets purchase order.


(-) AA misses with results.

(-) NVAX turns lower despite positive preclinical results for vaccine candidate.

(-) KBH lower after latest earnings; tax benefit helped.

(-) KFN prices notes offering.

(-) TIF guides for full year results above Street estimates.

(-) ERTS continues evening slide that followed guidance warning.


Stocks declined after earnings season kicks off with disappointments. Industrial bellwether Alcoa (NYSE:AA) missed with results late Monday, suggesting that the economic recovery is still dicey. Its 11% decline proved a major drag on the Dow Jones Industrial Average. Chevron (NYSE:CVX) also warned that Q4 EPS would fall below Q3.

The dollar was firmer, sending gold lower. Oil pulled back from 15-month highs amid warmer weather forecasts and a surprise attempt by China to tighten monetary policy. China raised the proportion of deposits that banks must hold in reserve, a step toward removing liquidity from the market. Bonds rose, pushing down Treasury yields, after a well-received 3-year note auction.

An early report showing a wider trade gap based on rising imports also weighed on stocks, though to a limited degree.

The U.S. trade deficit widened by 9.7% in November to $36.4 billion, the Commerce Department said this morning. The trade deficit was above the consensus forecast of Wall Street economists for a deficit of $34.8 billion. Exports rose for the seventh straight month, even though imports rose at a faster pace in November.

The focus keyed in on Alcoa (AA), which reported Q4 EPS, ex items, of $0.01 per share, below Street estimates of $0.06 per share.

Other decliners included Electronic Arts (ERTS) after the company set its Q3 and FY 2010 guidance below expectations.

On the upside, Novavax (NASDAQ:NVAX) gained after announcing it successfully completed a pre-clinical safety and efficacy study of its RSV vaccine candidate in cotton rats.

Hartford (NYSE:HIG) jumped after the company says it sees core Q4 EPS between $1.45 and $1.60, including an after-tax DAC unlock benefit of $110 million, or $0.26 per diluted share. It is above prior guidance, the company says. The Thomson Reuters mean, usually less items, is for $0.82.

In mergers and acquistions news, Zareba Systems (ZRBA) jumps on a $9 per share cash buyout from a unit of Woodstream.