Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:50 AM ET
S&P 500: +16.50; 1,443.00
NASDAQ 100: +36.25; 2,068.75
Dow: +113; 13,068
NIKKEI 225: -0.45%; 15,153.78 (-69.07)
HANG SENG: +0.59%; 27,371.24 (+161.03)
SHANGHAI SE COMPOSITE: -1.19%; 4,803.39 (-57.72)
BSE SENSEX 30: -0.99%; 18,938.87 (-188.86)
FTSE 100: +1.06%; 6,205.70 (+65.00)
CAC 40: +1.31%; 5,505.29 (+71.12)
XETRA-DAX: +1.45%; 7,640.64 (+109.29)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.01%; $94.41 (-$0.01)
Gold: -2.09%; $804.00 (-$17.20)
Natural Gas: -0.86%; $7.49 (-$0.06)
Silver: -1.19%; $14.475 (-$0.175)
U.S. Breaking Newssee today's Wall Street Breakfast for earlier news
SunPower Rises on Formation of Joint Credit Facility with Morgan
Shares of solar power device manufacturer SunPower Corp. rose 4.33% in pre-market action Wednesday (as of 8:14 AM ET) as the company announced Morgan Stanley would provide it with up to $190 million in financing for future commercial solar projects. The funding will take the form of a jointly held credit facility to which SunPower will contribute an additional $10 million of its own. SunPower can access the funds for "future commercial and public agency solar electric power installations" through 2008 under the auspices of its SunPower Access program. The program allows partnering electric power facilities to purchase electricity generated by SunPower's solar systems and resell it directly to consumers. The terms of SunPower and Morgan Stanley's arrangement, including the extent of revenue sharing, weren't disclosed. SunPower CEO Tom Werner said in the press release, "This agreement with Morgan Stanley offers our customers a more efficient and cost-competitive process to realize the financial savings and environmental benefits of solar power." Morgan shares were up 1.53% in pre-market action (as of 8:15 AM ET).
Commentary: Falling Module ASPs Could Impact Solar Companies • Solar Stocks Are Overheated • Cramer on SPWR
Stocks to watch: SPWR, MS. Competitors: STP. ETFs: PBW, QCLN, GEX
Earnings call transcript: SunPower Q3 2007
Syntax-Brillian Outlook Below Estimates on New China Strategy
High-definition TV maker Syntax-Brillian (BRLC) said Wednesday its F2008 revenue would not meet analyst estimates due to anticipated changes in its China business model. Shares are down 6% to $3.08 in pre-market trading. Syntax said it now expects F2008 sales of $650-685 million, excluding sales through its Chinese distributor. Had those sales been made by Syntax, they would bring yearly LCD sales to $1.1-1.3 billion. Analysts had been expecting revenue of $877 million. "Under the new business model, we will earn royalties based upon the net sales of Olevia branded LCD TVs in China by our exclusive distributor," CEO James Li said. The distributor is responsible for sourcing components, making, marketing and selling Olevia-brand TVs. FQ2 revenue will be from $155-175 million, vs. analyst forecasts of $303 million, the company said. "Due to the recently announced change in our business model for China, we recognize the need to provide investors with a better understanding of the anticipated effect on net sales and gross margins," Li said (press release).
Nintendo Wii Flying Off Shelves, Facing Supply Shortages
Nintendo achieved its best week for Wii sales in the U.S. last week since the console's debut-week sales a year ago, with 350,000 units sold, compared to 300,000 sold the week prior. While the strong sales keep Nintendo on track to meet its upward revised fiscal target of 17.5M console sales, the company has a major problem of replenishing store shelves. Nintendo of America president Reggie Fils-Aime called the shortage of Wii consoles a "disappointment," saying "a shortage benefits no one." Fils-Aime blamed the company's misestimate of demand and said, "We need to be more bullish about the potential for the Wii," in an interview with the Associated Press. Nintendo has increased its monthly volume of Wii production to 1.8M consoles, from 1.2M previously, but will still not be able to meet demand. Nintendo's original estimate for fiscal 2008 (ending in March) Wii sales was 14.5M consoles. Nintendo said it also sold 653,000 DS portable consoles during the week Nov. 18 - 24. Nintendo's sales in Japan remain robust, but the Wii was surpassed by Sony's PlayStation 3 for the first time in the weeks ended Nov. 11 and Nov. 18, after Sony released a cheaper 40GB model PS3, according to a leading game magazine's survey. Ordinary shares of Nintendo gained 0.2% to ¥62,200 in Tokyo. Nintendo's ADRs rose 0.5% to $71.90 on Tuesday.
Commentary: Sony Climbs on News of Dubai Investment; PS3 Tops Wii • Nintendo Looks to Sustain Popularity of DS, Wii • Nintendo Raises Forecast; FQ2 Mostly In-line
Stocks to watch: OTCPK:NTDOY. Competitors: SNE, MSFT
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Today's Market (via Sam Collins, ChangeWave.com)
Recap of Yesterday's Action
Yesterday, a cash infusion by the Abu Dhabi Investment Authority into Citigroup (NYSE:C) brought buyers to C and to other financial stocks. Even though investors in the last couple of days had been focusing on retail sales numbers, the good news with the financial sector dominated trading and overshadowed a consumer confidence number of 87.3, which was much less than the expected 91.0 and down from 95.2 in October.
Citigroup (up 52 cents) is a Dow stock and its influence on the Industrial Average was profound, especially when the good news had an impact on other financials in the index, such as American International Group (NYSE:AIG), up $1.93, American Express (NYSE:AXP), up $2.08, and JPMorgan Chase (NYSE:JPM), up $1.89.
The impact from the big cash purchase of 4.9% of Citigroup brought in buyers to other sectors, too, and so the market reversed from key support lines on the major indices and at least, for now, relieved some of the concern that the market would break sharply lower.
At the close, the Dow Jones Industrial Average was higher by 215 points at 12,958. The S&P 500 gained 21 points at 1,428, and the Nasdaq was up 40 points at 2,581. Volume on the Big Board totaled 1.6 billion shares and on the Nasdaq 2.1 billion shares traded. Breadth was a positive 2-to-1 on the NYSE and positive 4-to-3 on the Nasdaq.
Crude oil prices had a sharp drop, with the January contract closing at $94.42, down $3.28 a barrel. The Amex Energy SPDR (NYSEARCA:XLE) was off 79 cents and closed at $70.70.
Gold had a rough day, closing down almost 2% with the December contract off $12.50 at $814 per troy ounce. The Philadelphia Gold/Silver Index [XAU] lost 55 cents, closing at $168.96, but the index is now severely oversold and a rebound to just under $180 is expected.
What the Markets Are Saying
Yesterday's rally came at just the right time, since another day like Monday would have taken the major averages close to the August low.
But on the surface, Citigroup's injection of cash by Abu Dhabi may have just resulted in a relief rally from a grossly oversold stock market that was already due for a rebound. For a reversal to stick, the major averages will have to surmount the highs of the last three days to create a floor from which to attack the immediate overhead resistance at Dow 13,270, S&P 1,430, and the Nasdaq 2,630.
Until then we remain cautious.
Today's Trading Landscape
Earnings are expected today from Aeropostale, Anglo Irish Bank, Beacon Roofing, Brown Shoe, CBRL, Coldwater Creek, Dollar Tree, Jo-Ann Stores, Men's Warehouse, Shanda Interactive, Sycamore Networks and TIVO.
The October durable goods orders report (flat expectation), the existing home sales figures (expect down just a bit), and the Fed's Beige Book in the afternoon are the only economic reports due today.
As Wells Fargo (NYSE:WFC) and Freddie Mac (FRE) announced new write-offs, foreign stocks continue to shine. Porsche's four-month revenue showed a 15% increase, and Canada's Bombardier said that its Q3 net jumped 23%. However, the focus today will be on the impact of the new write-offs.
Asian Headlines (via Bloomberg.com)
Asian Stocks Fall as Metal, Oil Prices Retreat; BHP Billiton, Rio Decline Asian stocks fell, led by BHP Billiton Ltd. after metal and oil prices dropped on concern a slowdown in the U.S. economy will erode demand for raw materials.
Trichet Says China May Let Yuan Rise; Wen Backs `Gradual' Changes to Rate European Central Bank President Jean-Claude Trichet said China may allow the yuan to rise more against the euro even as Chinese officials signaled faster gains are unlikely.
Sinotruk Plunges on Trading Debut After $1.2 Billion Hong Kong Share Sale Sinotruk (Hong Kong) Ltd., China's largest maker of heavy trucks, plunged 16 percent on its first day of trading, the second initial public offering to flop as Hong Kong's market heads for its worst month since 2001.
BHP's Kloppers Says Rivals Can't Match Rio Offer; Won't Comment on New Bid BHP Billiton Ltd., under pressure from investors to increase its unsolicited $128 billion offer for Rio Tinto Group, said rivals could not match the proposal and it wouldn't speculate on making a higher bid.
All Nippon, Buying 50 787s, Will Use Cash to Help Keep Debt at 15-Year Low All Nippon Airways Co., the first customer for Boeing Co.'s Dreamliner, will pay cash for at least 20 percent of the cost for the 50-plane order to keep borrowing at a 15-year low.
European Headlines (via Bloomberg.com)
Stocks in Europe Rise as Compass, Anglo Irish Beat Estimates; UBS, BA Gain European stocks advanced for the first time this week after earnings from Compass Group Plc and Anglo Irish Bank Plc beat analysts' estimates and brokerages recommended buying shares in UBS AG and British Airways Plc.
Euro-Area Inflation May Reach 3 Percent This Month, Give ECB a `Headache' Inflation in the euro area may accelerate to a six-year high of 3 percent this month, increasing pressure on the European Central Bank to raise interest rates, economists said after prices jumped in Germany.
Candover to Acquire Stork for $2.2 Billion, Sell Dutch Company's Food Unit Candover Investments Plc agreed to buy Stork NV for 1.5 billion euros ($2.2 billion), ending a five-month struggle for the Dutch maker of aircraft parts and food-processing equipment.
Dollar Rises on Speculation Decline Exaggerated, European Stocks Advance The dollar gained the most in two weeks against the euro on speculation traders were scaling back bets on further declines in the U.S. currency as stocks rallied.
Dutch Fret Over Irrelevance as ABN Amro Leads $200 Billion of Asset Sales Dutch fund manager Corne van Zeijl may be out of a job within a decade because there won't be enough local companies in which to invest.
Porsche Says It's Optimistic About Annual Earnings as Cayenne Lifts Sales Porsche SE, the maker of the 911 sports car, said four-month sales gained 15 percent on demand for an upgraded Cayenne sport-utility vehicle and that it's ``carefully optimistic'' about full-year performance.