Today is Thursday and we have jobs numbers out which always have the potential to move markets. Looking at overseas markets, Asia was down today and Europe is higher - so not a lot of guidance for direction this morning. US futures are essentially flat at this time, and we imagine that after yesterday's large drop investors are trying to figure out the direction at this time and then will trade accordingly once they recognize which way we will be moving.
We have economic news due out today and it is as follows:
Initial Claims - 370k
Continuing Claims - 3250k
Trade Balance - -$45.5 Billion
Asian markets finished lower:
All Ordinaries - down 0.71%
Shanghai Composite - down 1.63%
Nikkei 225 - down 1.51%
NZSE 50 - up 0.31%
Seoul Composite - down 1.19%
In Europe markets are trading higher this morning:
CAC 40 - up 0.28%
DAX - up 0.39%
FTSE 100 - up 0.27%
OSE - down 0.13%
Investors pushed shares of JDS Uniphase (JDSU) higher after AT&T said that they would invest $14 billion in their network over the next three years. The spending will upgrade and significantly expand the company's wireless network and high speed internet offerings - the two growth areas of the industry at this time. The increased spending will result in almost a 30% increase over previous expectations per year. The market expects JDSU to gain a healthy portion of this spending and it was one of a handful of technology stocks higher in yesterday's trading session as the equipment manufacturers rose on the higher capital expenditure news.
In the technology world there has been an ever growing wave of patent lawsuits and cases actually going to trial. VirnetX (VHC) is the latest victor in the patent wars having won their lawsuit against Apple and in the process winning a judgment of $368 million after it was determined that four of the company's patents were infringed upon. Obviously the case will be appealed, but for VirnetX this was a major victory, as the movement in the shares indicated by rising nearly 30% in trading yesterday. We would expect shares to pull back as this will be a drawn out process, but the company does have other cases out there so this will be one to watch moving forward.
An Obama victory may have been bad for the general market, at least that is how it behaved yesterday, but for some stocks it was a good thing - especially for HCA Holdings (HCA). The stock rose $2.92 (9.44%) to close at $33.85/share in the session after the President's victory as Obamacare will not be unwound as Romney promised to do. The action in hospital stocks on Wednesday made up for the underperformance on Tuesday when the industry traded lower as it was believed that Romney would win the election. Investors and analysts now expect four years of improving economics for the hospital industry as hospitals should see margins rise with the new legislation.
Branch Banking & Trust (BBT) fell $1.47 (5.3%) in sympathy with the rest of the financials to close at $27.78/share after the industry's candidate failed to win the election. This is not a Wall Street bank, nor one of those banks with a balance sheet in disarray or a poorly structured business model. Rather this is one of the best banks out there and on these pullbacks we think that establishing positions or adding to existing positions is the way to go. We view the company as one who has the ability to increase profits moving forward and significantly add to the dividend payout and/or increase share buybacks. It is always a good idea to purchase well run companies with solid business models on pullbacks when given the opportunity.
Molycorp (MCP) will release their earnings today and after hitting a new 52-week low in yesterday's trading we want to cover all the bearish bets now, even those still in play because it is the house's money. Good money has been made here being on the winning side of this trade but with earnings on deck and the possibility for the company to come to the stock's defense, we want nothing more than for readers to book the profits as the risk for a reversal is too high at this point. The company has a history of releasing news along with their earnings and there is a lot of good news they could potentially release - more than bad is our feeling. We will be watching to see exactly where the company stands in ramping up production as well as their manufacturing capabilities.