All indices were down in the US yesterday as the fears regarding Europe are becoming ever more real. The losses could have been worse, but markets found themselves rallying into the close to finish off of the lows for the day. With the earnings from last night it looks to be a tough day from our vantage point this morning. Yesterday saw not only the disappointments after the bell but also before and it is becoming obvious that Europe is finally beginning to take a toll on the world economy and show up in earnings here at home.
We will get another batch of economic data pertaining to the housing industry today as the MBA Mortgage Index will be released along with the New Home Sales figures (Consensus 373k). Also due out are the Crude Inventories, which in this market probably will not move prices one way or the other. Tomorrow we get jobs numbers, durable goods numbers and more housing data.
Looking at Asian markets we see markets are lower:
All Ordinaries - down 0.24%
Shanghai Composite - down 0.49%
Nikkei 225 - down 1.44%
NZSE 50 - down 0.05%
Seoul Composite - down 1.37%
In Europe markets are trading higher:
CAC 40 - up 0.58%
DAX - up 0.48%
FTSE 100 - up 0.23%
OSE - up 0.34%
The situation at Clearwire (CLWR) appears to be getting worse and we have earnings due up on Thursday. Actually the company will not report any income but rather another loss, and that is the issue here. The stock set a new 52-week low after shares fell $0.10 (9.80%) to close at $0.92/share as 11.6 million shares traded hands. Investors are getting antsy regarding the company's liquidity as it is apparent that the losses will continue and the industry is adjusting to the spectrum limitations without going through Clearwire. It will be an interesting few days here for the company and its investors and we will continue to watch it as it should lend some clarity as to where the industry is going.
The biotech sector seems to be the area to watch these days and the news items have created a lot of buzz and excitement in the markets lately. The companies covered today are generally speculative in nature and we would recommend for traders only, not investors due to the volatility and inherent risk. Sarepta Pharmaceuticals (SRPT) saw its shares rise $5.06 (146.24%) to close at $8.52/share after trading 16.9 million shares. The shares more than doubled after the company announced data relating to a study where 12 patients took their muscular dystrophy drug and saw good results. Although the shares rallied sharply on the news, they fell just short of a new 52-week high. Volume should be strong once again tomorrow as we saw about 100 times the three month daily volume average traded yesterday.
This will be one of those to watch and trade in and out as the company's drug goes forward through the process of seeking approval, which today is a long way off. When it comes to Alzheimer's drugs we have a tale of two companies and their fortunes this morning. StemCells Inc. (STEM) last week moved dramatically higher after announcing the results of treating Alzheimer's in animals test subjects with the company's technology. That is the old news, but the shares were up $0.19 (10.05%) yesterday to close at $2.08/share while trading 9.6 million shares.
What pushed the shares up and got investors excited was the news that Elan's (ELN) bapineuzumab, the company's Alzheimer's drug, failed a clinical trial. While StemCells saw its shares rise, Elan's fell $1.99 (14.73%) to close at $11.52/share with 21.1 million shares traded. This drug had questions raised from the beginning and it has found its way into the news in the past with analysts and financial media questioning whether it would be a success.
Regions Financial (RF) reported better than expected earnings, but not for the reasons we expected. We thought investors would see a rise in residential mortgages pushing growth as the bank saw deposit expenses fall like the rest of the industry. That blend of growth and cost cutting was not the cause of the beat, rather it was due to some cost cutting and an improvement in the balance sheet. Each quarter the company has fewer and fewer problems, and that is most certainly a good thing. Shares rose $0.26 (4.07%) to close at $6.65/share. Volume was strong as one would expect with 55.1 million shares trading hands. It appears we were early in our thinking that the company would once again be growing through new business rather than getting their house in order, but we do like the results as did the market yesterday.