White House formulates compromise plan. The Obama administration is working on yet another debt-reduction plan that combines elements of proposals from John Boehner, Harry Reid and Mitch McConnell and would allow all the sides to claim some kind of victory. The hope is to send the program for a vote early next week, in time for Tuesday's debt-ceiling deadline. The move comes as Boehner delayed a House vote on his plan after an analysis found it cut spending less than he claimed and following opposition in the GOP.
Amazon Q2 net profit falls on investment splurge. Reflexively wary of high-spending companies, Wall Street may now be buying Amazon's strategy of investing prodigiously to fuel growth. Shares jumped 6.4% post-market despite the company's Q2 EPS sliding to $0.41 from $0.45 a year earlier, although it did beat forecasts. Revenue leapt 51% to $9.9B, but operating expenses soared as well as the company invested in new distribution centers, hiring workers, adding capacity to Amazon Web Services, and its digital offerings. Disappointingly for some, though, there was no word on the widely rumored tablet.
S&P expects another Greece restructuring. Greece is likely to need a new and bigger debt restructuring within the next two years, David Beers, S&P's global head of sovereign ratings, has told CNBC. He added that a further downgrade was "pretty certain." His comments undermine EU hopes they'd grasped the Greek nettle once and for all, and follow Moody's cutting the country's debt rating to just above default.
EU banks fall on Goldman downgrade. The STOXX Europe 600 Banks index was -2% at midday in Europe after Goldman Sachs (NYSE:GS) downgraded the EU bank sector to Neutral from Overweight, saying market doubts are beginning to creep back after the initial euphoria over Greece's second bailout. Domestic demand is likely to remain weak, hurting loan prospects, while concerns about capital raising remain high. Meanwhile, worries that contagion may spread resurfaced after German Finance Minister Wolfgang Schaeuble said Berlin is against the carte blanche use of the EU's rescue fund to buy bonds on the secondary market.
Meda denies Valeant approach. Swedish drugmaker Meda has denied it's received a takeover approach from Valeant (NYSE:VRX) "of the kind that is described" in a WSJ report, which yesterday said any deal could be worth over $4B. That would compare with Meda's value of around $3.4B when the report was published. Valeant is on the lookout for acquisitions, having lost out to Teva (NYSE:TEVA) in a bid to buy Cephalon (NASDAQ:CEPH).
Dow Chemical profit surges 74%. Dow Chemical's (NYSE:DOW) Q2 EPS jumped 74% to $0.84 and beat expectations as revenues rose 18% to $16B, the second-highest quarter in the company's history. The company enjoyed double-digit gains in all operating segments and geographic areas. Dow added that it remains on target to reach its near-term earnings targets, although growth could be "uneven and jagged" in developed markets due to high U.S. unemployment and sovereign debt concerns in Europe.
Dunkin' raises $423M in IPO. Dunkin' Brands (NASDAQ:DNKN) is due to start trading today after it raised $422.75M in its IPO from selling 22.25M shares at $19 each. This was above a previously set range of $16-$18 and gave the company a $2.4B market cap. Dunkin' will use the money to repay some of its debt, which increased in November to allow its private-equity owners to pay themselves a $500M dividend. And even after the IPO, the company will still owe $1.5B.
HP Chairman: Rebound will take time and investment. Just as Amazon (NASDAQ:AMZN) is increasing spending to bring growth, HP (NYSE:HPQ) Chairman Ray Lane believes his company will need more investment to turn itself around after serial cost-cutting under two previous CEOs. Decrying former CEO Mark Hurd, "who burned the furniture to please Wall Street," Lane said the revival would be a long-term project. His comments follow two disappointing quarters marked by reductions in sales expectations, while shares have slumped 11% since Leo Apotheker took over as CEO eight months ago.
Teva Q2 net profit beats forecasts. Teva's (TEVA) Q2 EPS excluding items rose to $1.10 from $1.08 a share a year earlier and beat expectations as revenue increased 11% to $4.21B. The company benefited from a 24% rise in sales of its flagship Copaxone multiple sclerosis drug and the weak dollar, while higher European sales after last year’s acquisition of Ratiopharm offset declining revenue in the U.S. Teva anticipates growth in its U.S. generics drugs business in the second half, as well as continued expansion across all its operations.
Banks argue over foreclosure settlement. A settlement with major banks over inappropriate foreclosure practices is being delayed because the banks are arguing about how to divide the costs, sources said. Well Fargo (NYSE:WFC) believes it should pay less than Bank of America (NYSE:BAC) or JPMorgan (NYSE:JPM), because it has fewer problematic mortgages, while Citigroup (NYSE:C) thinks it should be rewarded for having stronger controls on foreclosure practices. Another sticking point is whether the banks should be released from other mortgage claims, a move state attorneys-general oppose.
Clorox rejects second Icahn bid. Clorox (NYSE:CLX) has again spurned Carl Icahn, rejecting his revised $80 share bid and saying the proposal is "inadequate and unlikely to be completed." It also "lacks detail and contains significant conditionality."
Intel veteran Bryant to become chairman. Intel (NASDAQ:INTC) has appointed Chief Administrative Officer and former CFO Andy Bryant as Vice Chairman in preparation for him to replace Jane Shaw as Chair at the company's stockholders meeting in May next year.
Earnings Results: Today Premarket, Yesterday After-Hours
In Asia, Japan -0.5% to 10047. Hong Kong -0.1% to 22542. China +0.8% to 2723. India -0.5% to 18432.
In Europe, at midday, London -0.3%. Paris -0.8%. Frankfurt -0.4%.
Futures at 7:00: Dow flat. S&P -0.1%. Nasdaq -0.1%. Crude -0.7% to $98.87. Gold +0.2% to $1620.00.
Wednesday's Economic Calendar:
7:00 MBA Mortgage Applications
8:30 Durable Goods
8:30 Chicago Fed Midwest Mfg. Index
10:30 EIA Petroleum Inventories
10:30 Results of $35B, 5-Year Note Auction
2:00 PM Fed's Beige Book
Notable earnings before Wednesday's open: AET, AN, ARW, ATI, BA, COP, CP, DAL, DOW, DPS, ECL, ELN, ENR, EXC, GD, GLW, HES, HSP, IACI, LM, LVLT, LZ, MCO, MT, MWV, MYL, NDAQ, NEE, NOC, PX, RES, ROC, SO, STD, TEVA, TMO, TUP, WLP, WYN, ZMH
Notable earnings after Wednesday's close: AEM, AFL, AKAM, AMKR, AMP, ARRS, AVB, BDN, BMC, CBG, CCI, CINF, CLF, CMO, COG, CROX, CTXS, DOX, DRE, DRYS, EFX, EQR, GG, GMCR, HMA, IDCC, ISIL, KBR, KEX, LOGI, LRCX, LSI, MUR, OI, OII, ORLY, SEE, STR, SYMC, TER, TMK, TQNT, UHS, V, WFM, WLL
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