Stocks Shed 1%-1.6% to Start Week

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Includes: DIA, QQQ, SPY
by: Midnight Trader

4:24 PM, May 23, 2011 --

  • NYSE down 108 (-1.3%) to 8,249.50
  • DJIA down 130.8 (-1.1%) to 12,381.26
  • S&P 500 down 15.90 (-1.2%) to 1,314.05
  • Nasdaq down 44.42 (-1.6%) to 2,753.13

GLOBAL SENTIMENT

  • Nikkei down 1.5%
  • Hang Seng down 2.1%
  • Shanghai Composite down 2.9%
  • FTSE-100 down 1.7%

UPSIDE MOVERS

(+) SNTS reports positive developments for RHUCIN study.

(+) CFSG sold for $9 per share.

(+) SGMO presents data on applications for ZFP Therapeutics.

(+) KKD beats with Q1 results.

(+) SQNS gets favorable comments from Jim Cramer.

(+) CTICD among morning actives.

(+) LTD dips despite downgrade.

(+) GPS off despite upgrade.

DOWNSIDE MOVERS

(-) GIVN gets FDA approval for PillCam ESO 3.

(-) ORCT reports better-than-expected results, guidance.

(-) CPB tops with Q3 results, guides for 2011 at top end of range.

(-) MHS dips despite analyst upgrade.

(-) DIS dips despite analyst upgrade.

(-) YGE gained then fell; upgraded.

(-) ERIC downgraded.

(-) ALU tracks lower telecom trade after ERIC downgrade.

(-) PCG downgraded.

(-) LDK downgraded.

MARKET DIRECTION

Major stock averages end down over 1% but are off the day's worst levels. Disappointing Chinese manufacturing data and the fallout from credit actions for Europe on Friday combined to ignite global market concerns, including in the U.S. With no major U.S. economic reports scheduled for release today, investors focused on the sovereign debt crisis, which is sparking a financial sector rout. A stronger dollar - hitting its highest vs. the euro in some two months - weighed on commodities prices.

In fact, banking share declines led the broader market lower, with Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC) and JPMorgan (NYSE:JPM) shares down between 1% and 2%. Goldman Sachs (NYSE:GS) was an exception, with shares up around 1% at one point.

Bank stocks moved lower following a Fitch Ratings downgrade of Greece and a lowered outlook for Italy by Standard & Poor's.

Also today, Chinese stocks are down after HSBC's preliminary purchasing managers' index fell to a 10-month low of 51.1 in May, from April's final reading of 51.8. News of weakening Chinese manufacturing growth is adding to the selling pressure felt around the globe's stock markets.

In company news:

Shares of Apple (NASDAQ:AAPL) fell following an explosion Friday at a production facility in southwest China that produces the company's popular iPad2 tablet. MarketWatch quoted Ticonderoga Securities analyst Brian White as saying the "tragedy is likely to have some impact on iPad 2 production."

Shares of Eli Lilly & Co. (NYSE:LLY) dropped after the company said today that it has entered into agreements with private investors Care Capital and NovaQuest Capital to establish BioCritica, a newly-formed and privately-held biotechnology company.

Vertex Pharmaceuticals (NASDAQ:VRTX) today announced that the U.S. Food and Drug Administration has approved its INCIVEK (telaprevir) tablets for a broad group of people with genotype 1 chronic hepatitis C with compensated liver disease (some level of damage to the liver but the liver still functions), including cirrhosis.

Caterpillar (NYSE:CAT) fell after it said late Friday the Department of Justice cleared its planned acquisition of Bucyrus International (NASDAQ:BUCY). The transaction is expected to close in mid-2011.

Kodiak Oil and Gas (NYSE:KOG) says it has entered into a definitive purchase and sale agreement with a private oil and gas company to acquire Bakken/Three Forks leasehold and producing properties in the Williston Basin. The purchase price for the leasehold interests and associated assets is approximately $85.5 million, which will be paid through the issuance of 2.5 million common shares of Kodiak and cash. Kodiak Oil and Gas will also assume the seller's contract for a new build drilling rig and will reimburse the seller for seller's $2.5 million cash deposit on the rig.

VeriFone Systems (NYSE:PAY) and Hypercom (NYSE:HYC) fell after the companies on Friday said they scrapped plans to sell Hypercom's U.S. payment systems business to Ingenico SA to alleviate antitrust concerns about VeriFone's proposed purchase of the rest of HYC. They abandoned the planned transaction a week after the Justice Department sued to block both VeriFone's purchase of Hypercom and the sale of Hypercom's U.S. business to Ingenico.

Shares of Walt Disney Cop. (NYSE:DIS) eased as the company said it plans to accelerate 2011 store opening schedule and expand into new markets, according to a company statement. Disney Store plans to open its interactive concept stores in more than 40 locations in 2011, the statement said.

Shares of Sears Holdings (NASDAQ:SHLD) eased after it said late Friday CFO Michael D. Collins resigned.

Krispy Kreme Doughnuts (KKD) gained after it said Q1 revenue was $104.6 mln, better than the analyst consensus of $97 million on Thomson Reuters. Earnings were $0.13, above expectations of $0.09 per share.

In the commodities space, July crude futures closed down 2.4% at $97.70 a barrel. Gold for June delivery added $6.50, or 0.4%, to $1,515.40 an ounce on the Comex division of the New York Mercantile Exchange. That's the contract's highest settlement since May 10.