Asian and European markets are lower this morning and it appears that the US markets will be as well. We have plenty of economic news coming out today, and a number of those have the ability to move markets higher. We have noticed some lighter volume in certain sectors but the school year is starting and Wall Streeters will soon enough all be back in their New York City trading desks, so volume should be increasing in the weeks ahead.
We have a ton of economic news out today, and it is as follows (data set - consensus):
- MBA Mortgage Index - N/A
- CPI - 0.2%
- Core CPI - 0.2%
- Empire Manufacturing - 5.0
- Net Long-Term TIC Flows - N/A
- Industrial Production - 0.6%
- Capacity Utilization - 79.3%
- NAHB Housing Market Index - 35
- Crude Inventories - N/A
Looking at Asian markets we see markets are mostly lower:
- All Ordinaries - down 0.24%
- Shanghai Composite - down 1.10%
- Nikkei 225 - down 0.05%
- NZSE 50 - up 0.62%
- Seoul Composite - CLOSED
In Europe markets are higher as well:
- CAC 40 - down 0.36%
- DAX - down 0.40%
- FTSE 100 - down 0.35%
- OSE - down 0.19%
Shares in NCR (NCR) fell $2.47 (9.83%) to close at $22.65/share on volume of 9.9 million shares after the company stated that it might be in violation of the Foreign Corrupt Practices Act in a regulatory filing yesterday. The alleged illegal activities center around the African, Chinese and Middle Eastern markets, however the company seemed to indicate that the supposed whistleblower had submitted some information which may be factually inaccurate. Nothing is certain here it seems, except for the fact that investors pushed shares down enough to register as the top percentage loss day in the past couple of years.
FBR Capital downgraded shares of Ciena (CIEN) from Outperform to Market Perform yesterday which sent shares lower by $1.25 (6.98%) to close at $16.65/share on volume of 11.2 million shares. The analyst downgraded shares due to worries about increased competition (mainly Cisco and their restructuring of divisions which has made them a more formidable competitor). Volume was almost double the three month daily average on the news and the downgrade. It should also be noted that Ciena was trading around its 52-week high before the report and the subsequent pullback.
Arena Pharmaceuticals (ARNA) saw shares rise $1.02 (14.09%) to close at $8.26/share on volume of 27.1 million shares. Investors rushed in to purchase shares after rumors started circulating that the company could be the target of a takeover. In our opinion their distribution partner would be the most logical choice, but with the lack of blockbuster drugs being developed by 'Big Pharma' an acquisition by someone trying to prop up their drug portfolio is quite realistic. The stock finished near the highs of the day, but we still believe that the shares are a buy right now, all the way up to $10/share.
Investors saw shares in Estee Lauder (EL) catch fire yesterday as they rose $5.12 (9.31%) to close at $60.13/share on volume of 8.8 million shares. The company reported solid earnings, with revenue rising 9% for the quarter while net income rose 25%. Investors were also pleased that the company provided a rosy outlook for the next year and the upcoming quarter. It appears that women do continue to purchase their cosmetics even in bad economic times.
Michael Kors Holdings (KORS) had volume of 18.5 million shares as the stock rose by $6.98 (16.48%) to close at $49.33/share on good quarterly results. Investors were pleased with the better than expected sales from their existing stores as well as the company revealing that they would increase their annual profit expectations during the upcoming year. In yesterday's trading the shares traded within a range that traded about $1/share away from the company's 52-week high.