Wall Street Recap: Thursday, June 14th

by: The Value Investor

The major averages managed to recover yesterday's lost ground. In a choppy afternoon trading session the S&P 500 managed to close 1.08% higher. The Dow Jones Industrial Average gained 1.24% while the Nasdaq ended 0.63% higher.


Markets in Europe ended on a mixed note again with the periphery outperforming Germany. The EuroStoxx 50 ended the day with small gains of 0.22%. The German DAX 30 fell 0.23% while Italian and Spanish indices were outperforming once again. The Italian MIB gained 1.47%, the Spanish IBEX-35 rose 1.22%.

There was plenty of corporate news in Europe. Nokia (NOK1V) gave yet another profit warning resulting in shares to fall below the 2 euro mark. The company might consider selling parts of its patent portfolio in order to raise cash, but it will not do so at fire-sale prices. Furthermore the company plans to cut as many as 10,000 jobs.

The Swiss Central Bank urged Credit Suisse to "markedly" increase its capital levels in preparation for a possible worsening of the European sovereign debt crisis. Currently the bank holds 5.9% in capital against its risk-weighted assets. In case assets sales and withholding of dividends do not raise enough money to improve capitalization ratios, the bank might be forced to sell new shares. Shares in Credit Suisse (NYSE:CS) fell as much as 11%.

Wall Street Opening

Equity markets opened with small gains and rose in their first hour of trading despite the fact that the Labor Department announced that initial jobless claims rose by 6,000 over the past week to 386,000. The four-week average has risen now three weeks in a row to 382,000 creating low expectations for the June monthly payroll report.

Markets consolidated their gains, trading about 1% higher during most of the session. In the final hour of trading rumors about a possible global central bank intervention, in case of an unfavorable outcome of the Greece elections, hit trading desks and stocks extended their gains.

Corporate News

Quest Software (QSFT) the developer of enterprise management software ended the day 9.2% higher at $26.06 after the company said a "strategic bidder" proposed to buy the company for $2.15 billion, or $25.50 per share. The unidentified bidder would be paying about $150 million more than a previous $2 billion bid from Insight Venture Partners. Traders are speculating that computer manufacturer Dell (NASDAQ:DELL) might be the company behind the bid.

Microsoft (MSFT) ended the day 0.7% higher despite the fact that its partner Nokia said the cellphone business is deteriorating quickly. The developments could temper Microsoft's ambitions in the mobile phone industry. Microsoft has partnered with Nokia in an attempt to become a worthy competitor of Apple's (NASDAQ:AAPL) iPhone and Google's (NASDAQ:GOOG) Android operating system. On the positive side, a potential acquisition of the entire company has become cheaper as shares in Nokia hit their lowest level since 1996.

Kroger (KR) the food retailer rallied more than 6% in today's trading session after the company released its first quarter results today. The company reported a strong 4.2% growth in same store sales. Furthermore store traffic was on the rise, while many competitors have reported dismal traffic results recently. The announcement of a $1 billion share repurchase program and a raise in its full year profit outlook attributed to a strong sentiment as well.

Huntsman (HUN) the manufacturer of organic and inorganic chemical products saw a strong spike in its shares in the final hour of trading. Shares rallied from trading flat to gains of 9% at the close. Reportedly Bank of America was checking interest among private equity players for the company. KKR& Co and Apollo Global Management were reportedly looking at the company and considering making a bid.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.