Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:05 AM ET
S&P 500: -2.00; 1,572.00
NASDAQ 100: -1.25; 2,198.00
Dow: -9; 14,170
NIKKEI 225: +0.16%; 17,358.15 (+26.98)
HANG SENG: +2.44%; 29,540.78 (+702.41)
SHANGHAI SE COMPOSITE: +2.15%; 6,030.09 (+126.82)
BSE SENSEX 30: +3.47%; 19,058.67 (+639.63)
FTSE 100: -0.07%; 6,726.10 (-4.60)
CAC 40: +0.14%; 5,851.85 (+7.90)
XETRA-DAX: -0.16%; 8,028.52 (-12.74)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +1.39%; $84.85 (+$1.16)
Gold: +0.94%; $760.90 (+$7.10)
Natural Gas: +2.60%; $7.16 (+$0.18)
Silver: +0.99%; $14.04 (+$0.137)
U.S. Breaking Newssee today's Wall Street Breakfast for earlier news
Mattel's Q3 Profit Down on Recalls, Misses Estimates
Mattel reported Q3 net income declined 1% to $236.8 million or $0.61/share, compared to analyst expectations of $0.70/share. Revenues rose 3% to $1.84B, also missing estimates of $1.91B. Mattel took approximately $40M of charges related to its massive toy recalls. (See full story). Mattel was helped by a 10% increase in international sales, which partially offset a 2% decline in domestic sales. Among Mattel's core brands, worldwide sales of Barbie fell 4% and American Girl was flat, while Hot Wheels climbed 10% and Fisher-Price jumped 19%. "Despite the challenges the company faced during the third quarter, the business has performed fairly well, even with some supply chain disruptions that impacted our sales during the quarter," commented CEO Robert A. Eckert in a statement. Mr. Eckert added, "U.S. Barbie performance was soft and remains an area of focus, although a good portion of the decline in the quarter was directly related to the supply chain disruptions." Mattel said it repurchased 28.3M shares of its common stock at a cost of $645M during Q3. Mattel's earnings conference call is at 8:30 AM (check later for Mattel's earnings call transcript). Shares of Mattel fell 0.8% to $22.45 on Friday and were last up 2.1% to $22.93 in thin pre-market trading.
Commentary: Why is Mattel Apologizing to the Chinese? • Mattel Announces Third Toy Recall • Is the Recall Frenzy Affecting Toy Stocks?
Stocks to watch: MAT. Competitors: HAS, JAKK
Telik Jumps After FDA OKs Phase III Trial Resumption
Biotech company Telik Inc. said Monday that the FDA lifted a partial hold on clinical trials for its cancer drug Telcyta, which will allow it to resume clinical development of the drug. In early June the FDA asked Telik to halt clinical trials for potential ovarian and lung cancer treatment Telcyta over safety concerns, after Phase III trials performed worse than expected (full story). Telik engages in the discovery and development of small molecule therapeutics for the treatment of cancer and inflammatory diseases. Shares jumped 15.3% to $3.99 in pre-market trading.
Commentary: Telik Plummets After Its Only Drug Fails Phase-3 Testing
Stocks to watch: OTCQB:TELK
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• Diversified industrial manufacturer Eaton Corp. (NYSE:ETN) saw sales rise 7% during its latest quarter, to $3.3 billion, while net income was up 4% to $258 million. EPS were $1.71, vs. $1.62 a year ago. Consensus analyst estimates were for EPS of $1.67 on revenue of $3.24 billion (source: Dow Jones Newswires).
• W.W. Grainger (NYSE:GWW) reported Q3 net of $109.2 million, good for EPS of $1.29 vs. $1.16 a year ago, on strong international sales. Consensus analyst estimates for the building maintenance company were for EPS of $1.26 (source: Reuters).
Today's Market (via Sam Collins, ChangeWave.com)
On Friday there was just one stock that reported earnings, General Electric (NYSE:GE) with a report that came in on target. But there was a surprise associated with the GE report -- how the market reacted to the news. At the end of the day, GE lost 1.4%.
Another surprise was the market's move to refocus on the economic reports to find both the Producer Price Index and retail sales data encouraging -- especially the retail sales figure, which was up 0.6% when just an increase of 0.2% was expected. The Producer Price Index rose just a bit more than anticipated, but the core inflation rate was up by just 0.1%, and the economy can certainly handle that small increase.
But despite the selling of GE, the Dow Jones Industrial Average gained ground as a result of buying in the stock of General Motors (NYSE:GM). The good news there was that GM's overseas sales were very strong, so the stock jumped 6.6%. Since it is one of the thirty Dow stocks, that development had a big impact on the performance of the stock average.
And on Friday, M&A news was back with Oracle (NYSE:ORCL), one of the technology movers and shakers, making an offer for BEA Systems (BEAS). Despite a story this weekend that BEAS and its shareholders might not go for the deal, the overture resulted in a new wave of tech buying which drove the Nasdaq to a 1.21% rise for the day.
At the final bell, the Dow Jones Industrial Average gained 78 points, almost erasing Thursday's sell-off, the S&P 500 gained seven points to 1,562 and the Nasdaq added 33 points and closed at 2,806. Volume on the Big Board was low again at just one billion shares but the Nasdaq traded almost two billion. Breadth was positive on both the NYSE and the Nasdaq -- the NYSE by 5-to-3 and Nasdaq by 9-to-5.
For the week, the Dow Industrials gained 0.2%, the S&P 500 was up 0.3%, and the Nasdaq gained 0.9%. For the year the DJIA is up 13.1%, the S&P 500 is up 10.15%, and the Nasdaq is up 16.2%.
On Friday, crude oil (November contract) closed at a record high of $83.69 a barrel, up 61 cents. The Amex Energy SPDR (NYSEARCA:XLE) gained 61 cents to close at a new high of $77.17. The December gold contract fell $1.50 to $755.20 per troy ounce, and the Philadelphia Gold/Silver Index [XAU] rose $2.36 to a new high at $179.04.What the Markets Are Saying
The markets are telling us that there is a lot of speculation, especially in the high-tech names. With the sentiment indicators telling us that almost everyone who has the potential to buy has already bought, who's going to keep this juggernaut rolling? You already know the answer to that.
With prices now inflated, the risk for a sudden round of selling has risen beyond where the majority of investors find the risk/reward ratio to be in their favor. Violent rounds of selling at a time when speculation has driven stocks beyond normal value can occur as a result of an unrelated news event that would normally not even cause a flutter of selling or, like last Thursday, result from absolutely nothing at all.
Is this the end of the bull market? No -- just a pause in a powerful run higher. But now is the time to sock away some cash since those who do will certainly welcome the pause that refreshes.Today's Trading Landscape
The only economic report due today is the Empire State Index and will come before the markets open.
Look for earnings from the following companies: Alfacell (OTC:ACEL), Eaton (ETN) (read above), Genentech (DNA), W.W. Grainger (GWW) (read above), Koninklijke Philips NV (PHG), Mattel (MAT) (read above), Nuveen Investments (JNC), Posco (PKX), Robbins & Myers (RBN), Sonic Corp. (SONC), Sun Bancorp (SNBC), Werner Enterprises (WERN) and Zila Inc. (ZILA).
Citigroup (C) announced better-than-expected earnings but the estimate was previously adjusted lower several times. The creation by major banks of a "super fund" to help shore up the credit markets may be announced today and that should have a positive impact on the credit markets and stocks, too.
Asian Headlines (via Bloomberg.com)
• Asian Stocks Advance on Oil Price; PetroChina Overtakes GE by Market Value Asian stocks rose, led by energy companies, as crude oil prices traded near a record. PetroChina Co. surged as much as 10 percent, surpassing General Electric Co. to become the world's second-largest company by market value.
• Nomura to Report First Quarterly Loss in Four Years, Exit U.S. Home Loans Nomura Holdings Inc., Japan's largest securities company, will post its first quarterly pretax loss in more than four years after losing 73 billion yen ($620 million) on U.S. home loans.
• PetroChina Overtakes GE as World's Second-Largest Company as Shares Surge PetroChina Co. rose the most in five months in Hong Kong trading as oil traded above $84 a barrel, vaulting the state-owned oil producer over General Electric Co. to become the world's second-largest company.
• AGL Energy Shares Plunge Most in 20 Years After Earnings Forecast Is Cut AGL Energy Ltd., Australia's biggest electricity and gas retailer, fell the most in 20 years after the company slashed a two-month-old profit forecast.
• Alibaba.com's Hong Kong IPO May Raise as Much as $1.3 Billion, People Say Alibaba.com Ltd., operator of China's largest trading Web site for companies, and its parent may raise as much as HK$10.3 billion ($1.3 billion) in a Hong Kong initial public offering that attracted investors including Yahoo! Inc.
European Headlines (via Bloomberg.com)
• European Stocks Fall, Led by Philips, UPM-Kymmene; BP, Shell, Elan Advance European stocks dropped for the first time in five days after Royal Philips Electronics NV, the region's biggest consumer electronics maker, and Finnish papermaker UPM-Kymmene Oyj reported lower profits.
• H&M Sales Rose More Than Estimated in September on Fall Jackets, Skirts Hennes & Mauritz AB, Europe's second-largest clothing retailer, said sales rose the most in six months in September as shoppers bought jackets for cold weather and the company added stores from Germany to the U.S.
• LVMH Third-Quarter Sales Advance, Beating Estimates, on Watches, Handbags LVMH Moet Hennessy Louis Vuitton SA, the world's largest luxury-goods maker, said third-quarter sales rose 9 percent, beating analysts' estimates, after Japanese shoppers snapped up a new range of Neverfull handbags.
• UPM-Kymmene Says Third-Quarter Profit Declined on Wood Costs, Euro Rate UPM-Kymmene Oyj, Europe's second- largest paper maker, said third-quarter operating profit excluding special items fell because of higher wood costs and the strong euro.