Hurricane forces closure of U.S. stock markets. All U.S. equity and options markets - including the NYSE, Nasdaq and Nymex - will be shut today because of Hurricane Sandy, which is due to make landfall by early tomorrow morning. The Securities Industry & Financial Markets Association has called for bond trading to close at noon; a decision over whether to open trading tomorrow will be made later.
Earnings announcements delayed. Several companies are delaying the release of their latest quarterly reports because of Hurricane Sandy. Pfizer (PFE) will report on Thursday instead of tomorrow, Entergy (ETR) on Monday next week instead of tomorrow, and NRG Energy (NRG) on Friday instead of Wednesday. However, some companies are still reporting today and tomorrow, with Loews (L) and CNA Financial (CNA) having already done so.
Thousands of flights delayed. Hurricane Sandy has caused the grounding of over 6,800 commercial flights. The cancellations are likely to hurt Q4 earnings, says consultant R.W. Mann & Co, although the airlines could make up some of the revenue as passengers reschedule flights. Affected operators include AMR (OTC:AAMRQ), United Continental (UAL), Delta (DAL), JetBlue (JBLU) and US Airways (LCC).
Refiners scale back operations. Phillips 66 (PSX) yesterday began shutting its 238,000 bpd Bayway refinery in New Jersey in preparation for Hurricane Sandy, while Philadelphia Energy Solutions (CG, SUN), PBF Energy and Hess Corp (HES) have started to cut output at refineries in the storm's expected path. Phillips 66 has also temporarily shut oil terminals, while pipelines such as Colonial and Buckeye (BPL) have been preparing their contingency plans. Gasoline futures were +1.1% at $2.73 a gallon.
Insurers prep response teams. Insurers such as Allstate (ALL) are preparing to send their rapid-response teams of claims specialists to assess the damage once the storm passes. The cost to insurers is likely to be less than it would have been in the past, as they've been raising home-insurance rates, tightening underwriting standards, and scaling back sales of policies in hurricane-prone areas.
Personal income and spending data to be released on schedule. Despite most markets and much of the government closing because of Hurricane Sandy, the Commerce Department still intends to release data on personal income and spending for September at 8:30 ET this morning. Household spending is expected to have increased 0.6% and personal income 0.4%. However, the Fed will delay its regularly scheduled reports on selected interest rates and commercial paper issuance.
For market-relevant updates on Hurricane Sandy, click here.
Top Stock News
Honda cuts guidance. Honda (HMC) has slashed its FY outlook due to the strong yen and Japan's islands dispute with China, and now expects net profit of ¥375B ($4.7B) vs consensus of ¥491.7B. Sales are seen at ¥9.8T and sales volume at 4.12M vehicles. FQ2 net profit jumped 36% to ¥82.23B and sales 20% to ¥2.271T. Honda's shares dropped 4.65% in Tokyo, while those of Toyota (TM) fell 1.6% on concerns about what it's got in store.
Petronas to try again for Progress Energy. Petronas intends to renew its C$5.17B ($5.2B) acquisition of Progress Energy (OTC:PRQNF), Reuters reports, and is assessing the steps it needs to take to assure Canada's government that the deal would provide a "net benefit" to the country. Canada blocked the deal on the grounds it wouldn't, although sources say that approving the deal would also tie the government's hands over CNOOC's (CEO) $15.1B bid for Nexen (NXY).
Pearson, Bertelsmann agree to bind their books together. Pearson has agreed to merge its Penguin book-publishing unit with Bertelsmann’s Random House in a deal that brings together companies with a combined 2011 operating profit of £272M and revenues of £2.48B. The joint venture, to be called Penguin Random House, will be 53% owned by Bertelsmann and 47% owned by Pearson. Confirmation of the tie-up follows reports that News Corp (NWS) had expressed interest in acquiring Penguin.
UBS jumps on reports of massive job cuts. UBS (UBS) shares rose 4.7% in Swiss trading on reports that the company is set to unveil 10,000 job cuts at its investment bank, one-sixth of the entire firm's workforce. Anything too capital-intensive - fixed-income trading, for instance - will be completely eliminated. The cuts are expected to be announced along with Q3 earnings tomorrow.
Las Vegas Sands, authorities in talks to settle allegations. Las Vegas Sands (LVS) is in negotiations with federal prosecutors over settling allegations that the casino company failed to report potentially suspicious financial transactions by two big customers who were later charged with crimes, the WSJ reports. LVS would pay a fine and alter the way it handles customer money in return for the threats of indictments being dropped.
Abbott Labs spin-off plans $10B+ bond issue. AbbVie, which is due to be spun off from Abbott Labs (ABT) on January 1, is set to this week sell over $10B in bonds - Hurricane Sandy permitting - in what would be one of the 10 largest U.S. investment-grade debt offerings in recent memory, the WSJ reports. AbbVie will use the money to pay a dividend to Abbott, which will itself use the cash to pay off its own debt.
Top Economic & Other News
Data boosts confidence in China's economy. Net profit at Chinese industrial companies increased for the first time in six months in September, rising 7.8% on year to 464.3B yuan ($74.3B) vs a 6.2% fall in August. The figures follow data that shows accelerating industrial output and retail sales, as well as improving PMI, indicating that economic growth may be picking up once more.
Japan's retail sales fall sharply. Japanese retail sales dropped 3.6% on month, the biggest fall for around a year and a half. The expiry of government subsidies for car purchases hurt the figures, with auto sales slumping 13.9%. The data adds to signs that Japan's economy is in danger of shrinking in H2.
In Asia, Japan flat at 8929. Hong Kong -0.2% to 21511. China -0.3% to 2059. India +0.1% to 18636.
In Europe, at midday, London -0.6%. Paris -1.0%. Frankfurt -0.6%.
U.S. markets closed but stock futures have been trading. At 7:20: Dow -0.6%. S&P -0.6%. Nasdaq -0.75%. Crude -0.7% to $85.70. Gold flat at $1712.60.
Today's economic calendar:
8:30 Chicago Midwest Mfg. Index
8:30 Personal Income and Outlays
10:30 Dallas Fed Manufacturing Outlook
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