Ultimate Market Recap: Caterpillar Gave Markets Hope, Netflix Continues Fall to Earth

Monday Morning’s Top Stories

At the European talks this weekend, German Chancellor Angela Merkel and French President Nicolas Sarkozy said technical details for the euro-zone debt crisis had been discussed but finalized plans won’t come until Wednesday’s meeting. Leaders have agreed on a plan for banks to gather capital as opposed to the European Central Bank adding to the European Financial Stability Facility’s arsenal of funding. Outstanding issues still include a requirement for private-sector bondholders to accept increased haircuts on Greek debt holdings, which had previously been agreed upon in July.

Caterpillar Inc. (NYSE:CAT) reported its third quarter profit exceeded $1 billion.  The company’s profit rose to $1.14 billion ($1.71 a share) up from $792 million ($1.22 a share) from the same period a year ago. Revenue increased to $15.72 billion as compared to $10.45 billion. Without its recent Bucyrus acquisition, Caterpillar’s earnings were $1.93 a share in the third quarter, surpassing analysts’ expectations of $1.63 a share.

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Sprint (NYSE:S) goes to court today and will request a Washington judge to continue its lawsuit to block AT&T’s (NYSE:T) proposed acquisition of T-Mobile USA for $39 billion. The company is not alone in their request: the Justice Department has their own lawsuit blocking it.

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Google Inc. (NASDAQ:GOOG) is creating a music-download service with its Google+ social network. It will recommend songs from an online music library to users’  Google+ contacts; they will be able to listen to the songs for free and subsequently purchase them as MP3 downloads, most likely for 99 cent. Google may launch this within the next two weeks but will face selection challenges if it doesn’t receive participation from all four major record labels. The news should have an impact on trading in Pandora (NYSE:P) and Sirius XM Radio (NASDAQ:SIRI) today.

Monday Morning Hot Stocks

Caterpillar (NYSE:CAT) is trading nearly 5% higher in early trading as the company reports a 44% increase in its third-quarter profits.  Sales jumped 41% to $15.7 billion, which is a record for the construction and mining company.

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Shares of Netflix (NASDAQ:NFLX) are more than 2% higher this morning.  The online media company said it will launch its digital streaming service in the United Kingdom and Ireland in ealry 2012.  Netflix will also release third-quarter earnings later today.  Analysts are projecting a rise of 46.6% in revenue from the year-earlier quarter to $811.1 million. Competitors includeAmazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), and Dish Network (NASDAQ:DISH).

Oracle Corp. (NASDAQ:ORCL) is ticking slightly lower after announcing a $1.5 billion deal to buy RightNow Technologies (NASDAQ:RNOW).  Shares of RightNow Technologies are surging nearly 20% in early trading.  The deal is expected to be completed late this year or early 2012.

Cigna Corp (NYSE:CI) will be buying health maintenance organization HealthSpring (NYSE:HS) for $3.8 billion in cash to expand the health insurer’s Medicare business.  Shares of HealthSpring are up 33% on the news.

Sara Lee (NYSE:SLE) shares popped 3% after selling the majority of its North American foodservice coffee and tea operations to J.M. Smucker Co. (NYSE:SJM) for $350 million in cash.  Jan Bennink, executive chairman of the Sara Lee board said, “In recent years, our North American coffee business has been foodservice-based and largely unbranded, which is a challenge in a highly competitive marketplace.”

Monday Afternoon’s Trending Stocks

The Dow Jones Industrial Average closed up over 100 points at 11,913, the S&P 500 Index closed up over 1% at 1,254 and the Nasdaq closed up 61 points at 2,699 today. Here were the most buzzworth stocks hitting our trading screens:

  1. RightNow Technologies (NASDAQ:RNOW): Shares of RightNow Technologies closed higher today. Oracle announced it is buying the company. Shares closed up 19.41%. RightNow Technologies, Inc. provides on demand customer relationship management software and services. The Company’s solution uses a self-learning knowledgebase to deliver customer self-service, e-mail management, live interaction, issue tracking, and customer satisfaction measurement capabilities.
  2. SXC Health Solutions Corp. (NASDAQ:SXCI): Shares of SXC Health Solutions Corp. closed lower 23% today after Cigna purchased HealthSpring and elevated fear that SXC might lose a big customer. SXC Health Solutions Corporation provides pharmacy benefits management (AMEX:PBM) services and healthcare IT solutions to the healthcare benefits management industry. The Company’s product offerings and solutions combine a wide range of software applications, application service provider (NYSE:ASP) processing services, and professional services.
  3. Adolor Corporation (NASDAQ:ADLR): Shares of Adolor Corporation closed higher today. Cubist Pharmaceuticals (NASDAQ:CBST) has agreed to acquire Adolar for roughly $190 million in cash, or $4.25 a share. Adolor Corporation is a therapeutic-based biopharmaceutical company. The Company discovers, develops, and commercializes pharmaceutical products for the treatment of pain and the side effects that are caused by current narcotic pain treatments. Adolor’s small molecule product candidates are in clinical trials.
  4. Caterpillar Inc. (NYSE:CAT): Shares of Caterpillar Inc. closed higher over 5% today after delivering explosive 41% revenue growth in its latest quarterly earnings report this morning. Caterpillar Inc. designs, manufactures, and markets construction, mining, agricultural, and forestry machinery. The Company also manufactures engines and other related parts for its equipment, and offers financing and insurance. Caterpillar distributes its products through a worldwide organization of dealers.
  5. CIGNA Corporation (NYSE:CI): Shares of CIGNA Corporation closed higher today after announcing it will buy HealthSpring (NYSE:HS) for $3.8 billion to improve its medicare business. CIGNA Corporation, through its subsidiaries, provides group life and health insurance, managed care products and services, retirement products and services, and individual financial services worldwide. The Company also sells individual life and health insurance and annuity products in selected international locations.
  6. V.F. Corporation (NYSE:VFC): Shares of V.F. Corporation closed higher over 3% today after delivering a strong quarterly earnings report this morning. VF Corporation is an international apparel company. The Company owns a broad portfolio of brands in the jeanswear, outerwear, packs, footwear, sportswear and occupational apparel categories. VF Corp’s products are marketed to consumers shopping in specialty stores, upscale and traditional department stores, national chains and mass merchants.
  7. Exelixis, Inc. (NASDAQ:EXEL): Shares of Exelixis, Inc. closed higher over 20% today after positive results for its cancer drug study. Exelixis, Inc. is a development-stage biotechnology company dedicated to the discovery and development of small-molecule therapeutics for the treatment of cancer and other serious diseases. The Company is building a portfolio of compounds it believes could become pharmaceutical products. Exelixis has strategic alliances with pharmaceutical and biotechnology companies.
  8. Kimberly Clark Corp (NYSE:KMB): Shares of Kimberly Clark Corp closed lower today after showing a dip in its profits year-over-year in its latest quarterly report this morning. Kimberly-Clark Corporation is a global health and hygiene company that manufactures and provides consumer products. The Company’s products include diapers, tissues, paper towels, incontinence care products, surgical gowns, and disposable face masks. Kimberly-Clark’s products are sold in countries around the world.
  9. SemGroup Corp (NYSE:SEMG): Shares of SemGroup Corp closed higher 19.99% today. Plains All American has taken its offer to acquire SemGroup hostile. PAA is offering to acquire all outstanding shares for $24 each in cash. SemGroup Corp. moves energy through a network of pipelines, terminals and storage tanks. The Company purchases, sells, processes, transports and storages energy including crude oil, natural gas liquids, asphalt and refined products
  10. Lorillard Inc. (NYSE:LO): Shares of Lorillard Inc. closed flat today. Shares dipped following its quarterly earnings report, then rebounded nicely to close the day at par. Lorillard, Inc. manufactures and sells cigarettes. The Company produces cigarettes for both the premium and discount segments of the domestic cigarette market for sale to distributors and retailers in the United States.

Market Recap

Markets closed up on Wall Street today: Dow +0.89%, S&P+1.29%, Nasdaq +2.35%, Oil +4.73%, Gold +1.16%.

On the commodities front, Oil (NYSE:USO) climbed to $91.53 a barrel. Precious metals were also up, with Gold (NYSE:GLD) climbing to $1,655.00 an ounce while Silver (NYSE:SLV) rose 1.77% to $31.75.

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Today’s markets were up because:

1) Financials. As investors slowly become more optimistic about Europe’s handling of the debt crisis, with Germany and France making strides toward expanding the EFSF, banks are getting a boost. JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC) both climbed upwards of 3% today, while Citigroup (NYSE:C) popped 4.29%.

2) Mergers. A slew of merger announcements gave markets a boost today, as they signaled positive outlooks for many of the companies involved. In times of economic turmoil and uncertainty, when companies have grim prospects, they are much less likely to enter into multimillion or multibillion dollar mergers or acquisitions, as one can see by examining M&A activity over the last year, so the turn around is being taken as a good sign. Among those companies announcing deals are General Electric (NYSE:GE), Juniper (NYSE:JNPR), Kinder Morgan (NYSE:KMI), Entergy (NYSE:ETR), Oracle (NASDAQ:ORCL), and Cigna (NYSE:CI).

3) Earnings. Stocks are up as earnings season gets in full swing, with Caterpillar (NYSE:CAT) reporting record revenue for the third quarter and heavyweight Netflix (NASDAQ:NFLX) announcing today after the bell. Reports from Texas Instruments (NYSE:TXN) and Amgen (NASDAQ:AMGN) are also among the most anticipated this week.

After Hours Radar Stocks

Shares of Netflix (NASDAQ:NFLX) are playing out like a horror show.  Shares are down more than 27% in extended trading after reporting a miss in subscribers for the third quarter.  The company lost 810,000 subscribers between the second and third quarter.  Although the company reported a 60% increase in earnings, the company warns that future quarters are not looking so hot.  Competitors include Apple (NASDAQ:AAPL), Dish Network (NASDAQ:DISH), Google (NASDAQ:GOOG), and Coinstar (NASDAQ:CSTR).

Investing Insights: Netflix, Inc. Earnings Cheat Sheet: Beats Estimates, Shares Down.

Amgen Inc (NASDAQ:AMGN) is trading slightly lower after the closing bell.  The company reported quarterly profits of $454 million (50 cents per share), compared to $1.24 billion ($1.28 per share) last year.  Revenues increased 3% to $3.94 billion.

After reporting a 30% drop in net income on Monday, shares of Texas Instruments (NYSE:TXN) are down 1.40% in late trading.  The earnings were affected from a hit due to charges related to its acquisition of National Semiconductor. Third quarter profit came in at $601 million (51 cents per share), compared to $859 million (71 cents per share) last year.

Zions Bancorp (NASDAQ:ZION) fell 5.7% late Monday after beating estimates by only a penny.  The bank reported a profit of $109.1 million, compared to a loss of $47.3 million last year.

Morgan Stanley (NYSE:MS) continues to edge .17% higher in late trading.  The company announced it was unloading its residential mortgage-loan servicing unit, Saxon Mortgage Services, on Ocwen Financial (NYSE:OCN).  The deal is estimated to be completed by the end of the first quarter 2012.  Shares of Ocwen Fianancial are trading 1.11% lower on the news.  Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) are also trading lower.