Ultimate Market Recap: FOMC, Spain, Netflix Sells Low
Tuesday Morning’s Top Stories
Standard & Poor’s Ratings Services (NYSE:MHP) said Spain’s general election from Sunday hasn’t affected its AA-minus credit rating. The rating agency maintained the country’s negative outlook rating and noted that that Popular Party’s clear win “could facilitate frontloaded implementation of reform measures.”
In addition, S&P noted that Spain’s weak economic growth prospects from private-sector debt reduction, high unemployment, inflexible labor markets and large net external debt have “constrained” Spain’s credit ratings.
Investing Insights: Spanish Bond Yields Surge to Record High.
South Korean (NYSE:EWY) lawmakers have ratified a free trade agreement with the U.S. The quick vote came on the same day as the country’s President Lee Myung-bak returned from a regional summit and state visit in the region. In October, the trade pact had been ratified by U.S. lawmakers and signed into law by President Barack Obama; it will take effect in early 2012.
With the failure of the congressional supercommittee to reach a deal on Monday, the ratings agencies kept their U.S. credit ratings the same. The ratings agency Standard & Poor’s (NYSE:MHP) said it will keep the U.S. credit rating at AA+; Moody’s Investors Service (NYSE:MCO) affirmed its AAA rating with a negative outlook; however, Fitch Ratings reiterated from an August statement that a supercommittee failure could result in a “negative rating action,” possibly a revision of its outlook to negative.
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The agency will conduct a review that is expected to be completed by month’s end.
Netflix (NASDAQ:NFLX) announced a $400 million concurrent common stock and convertible notes financing. Wedbush Morgan notes the “transactions were the result of Netflix’s deteriorating performance and the corresponding impact on its liquidity.”
Samsung Electronics (SSNLF.PK) is in last-stage discussions with Google Inc. (NASDAQ:GOOG) to roll out its Google TVs, according to the company’s TV division head. Google TV will enable viewers to access online videos and websites on their TVs and specialized apps including video games. The TV is expected to be rolled out with Google in 2012 but specifics haven’t been announced.
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Tuesday Morning Hot Stocks
Shares of Netflix (NASDAQ:NFLX) are sinking nearly 7% in early trading. The company announced it is selling $400 million of stock and debt. The decision led to two firms issuing sell ratings on the company.
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After releasing earnings late Monday, shares of Hewlett Packard (NYSE:HPQ) are down almost 2% early Tuesday. Net income for the diversified computer systems company fell to $239 million (12 cents per share), compared to $2.54 billion ($1.10 per share) a year earlier. The company reported adjusted net income of $1.17 per share. By that measure, the company beat the mean estimate of $1.13 per share. The earnings is affecting trading in Microsoft (NASDAQ:MSFT) and Dell (NASDAQ:DELL).
Campbell Soup (NYSE:CPB) is down 2% after announcing a decrease in net income. Net income for the processed and packaged goods company fell to $265 million (82 cents per share), compared to $279 million (82 cents per share) a year earlier. This is a decline of 5% from the year earlier quarter.
LDK Solar Co. Ltd. (NYSE:LDK) is falling 4.5% after falling short of estimates. The company reported a loss of $114.5 million (87 cents per diluted share). The company reported profit of $93.4 million (72 cents per diluted share) in the same quarter a year earlier. Revenue also fell by 30% to $471.9 million.
Medtronic Inc (NYSE:MDT) popped nearly 4% before the opening bell. The company’s net income jumped 54% in its fiscal second quarter. CEO Omar Ishrak said, “A majority of our business, and nearly all of our geographies, contributed to this growth.” Revenue also increased 6% to $4.13 billion.
Tuesday’s Trending Stocks
As Thanksgiving week continues, the Dow Jones Industrial Average trades above 11,500 and the S&P 500 Indext trades at 1,190 today. Here are the buzzing stock names on Wall Street:
- Focus Media Holding Limited (NASDAQ:FMCN): Shares of Focus Media Holding Limited are trading higher 5.5% today. Focus Media Holding Limited operates an out-of-home advertising network in China. The Company uses audiovisual television displays which are placed primarily in high-traffic areas of commercial office buildings such as in lobbies and near elevators, as well as in large retail chain stores and other venues.
- Medtronic, Inc. (NYSE:MDT): Shares of Medtronic, Inc. are trading higher 3.64% today. Medtronic, Inc. develops therapeutic and diagnostic medical products. The Company’s principal products include those for bradycardia pacing, tachyarrhythmia management, atrial fibrillation management, heart failure management, heart valve replacement, malignant and non-malignant pain, and movement disorders. Medtronic’s products are sold worldwide.
- Chico’s FAS, Inc. (NYSE:CHS): Shares of Chico’s FAS, Inc. are trading lower 14% today. Chico’s FAS, Inc. sells private label women’s casual clothing and related accessories. The Company’s clothing includes tops, pants, shorts, skirts, and dresses. Chico’s owns and operates stores throughout the United States.
- DSW Inc. (NYSE:DSW): Shares of DSW Inc. are trading flat today. DSW Inc., is a specialty branded footwear retailer operating in the United States. The Company offers a wide selection of brand name and designer dress, casual, and athletic footwear for women and men.
- Prana Biotechnology Limited (NASDAQ:PRAN): Shares of Prana Biotechnology Limited are trading higher 6% today. Prana Biotechnology Limited is an Australian biotechnology company which researches and develops therapeutic drugs used for treatment of Alzheimer’s Disease and other age-related degenerative disorders such as Parkinson’s Disease and cataracts.
- Campbell Soup Company (NYSE:CPB): Shares of Campbell Soup Company are trading lower 5.5% today. Campbell Soup Company, with its subsidiaries, manufactures and markets branded convenience food products. The Company’s core divisions include soups and sauces, biscuits and confectionery, and foodservice. Campbell’s distributes its products worldwide.
- Hormel Foods Corporation (NYSE:HRL): Shares of Hormel Foods Corporation are trading higher over 1% today. Hormel Foods Corporation manufactures and markets consumer-branded meat and food products. The Company processes meat and poultry products and produces a variety of prepared foods. Hormel markets its products around the world under a variety of branded names.
- Frontline Ltd. (NYSE:FRO): Shares of Frontline Ltd. are trading lower 40% today. Frontline Limited owns a fleet of very large crude carriers and Suezmax tankers that transport crude oil and oil products between ports. The Company’s vessels are managed by ship management companies. Frontline conducts activities worldwide.
- Collective Brands Inc. (NYSE:PSS): Shares of Collective Brands Inc. are trading lower 12% today. Collective Brands, Inc. retails footwear and related accessories. The Company, through its various retail stores, offers a wide range of branded footwear products.
- Brocade Communications Systems, Inc. (NASDAQ:BRCD): Shares of Brocade Communications Systems, Inc. are trading higher 10% today. Brocade Communications Systems, Inc. provides switching solutions for storage area networks (NYSE:SAN). The Company’s switching solutions utilize the fiber channel interconnect protocol. Brocade’s family of SilkWorm switches enables a company to manage growth of its data storage requirements, improve the data transfer performance, and increase the size of its SAN.
Markets closed down on Wall Street today: Dow -0.40%, S&P -0.41%, Nasdaq -0.07%, Oil +0.92%, Gold +1.26%.
On the commodities front, Oil (NYSE:USO) climbed to $97.81 a barrel. Precious metals were also up, with Gold (NYSE:GLD) rising to $1,699.70 an ounce while Silver (NYSE:SLV) climbed 5.19% to settle at $32.81.
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Today’s markets were down because:
1) Spain. Yields on short-term Spanish bonds surged to a fourteen-year high on Tuesday, signaling that an election victory on Sunday for the conservative People’s Party has done little to instill faith in the government’s ability to see Spain through the financial crisis. However, Spain’s skyrocketing bond prices became less of a reason for concern when the International Monetary Fund announced that it had enhanced its lending facility and introduced a new six-month liquidity line, creating a safety net for Europe.
2) FOMC. Minutes from the Federal Open Market Committee’s last meeting show that the Federal Reserve might be considering further easing. The news helped equities recover this afternoon from a drop spurred by a Commerce Department report that downwardly revised earlier estimates of third-quarter gross domestic product.
3) Banks. In October, the 10 largest U.S. prime money market funds had a 9% M/M drop in their exposure to EU banks and enlarged their Treasury holdings to almost 30%, according to Fitch. The news hit European banks hard, including Deutsche Bank (NYSE:DB), Credit Suisse (NYSE:CS), Barclays (NYSE:BCS), Lloyds (NYSE:LYG), RBS (NYSE:RBS), UBS (NYSE:UBS), HSBC (NYSE:HBC).
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Shares of TiVo Inc. (NASDAQ:TIVO) are up 4% in late trading, despite reporting a loss for the third quarter. The company’s loss widened to $24.5 million (21 cents per diluted share) from $20.6 million (loss of 18 cents per share) in the same quarter a year earlier. However, revenue increased 27.4% to $64.8 million.
Shares of Hewlett-Packard (NYSE:HPQ) continue to decline .40% after the closing bell. CEO Meg Whitman is calling 2012 a “reset and rebuilding year” after earnings. Though the company won’t put a number on it, they plan to make a substantial investment into research and development, and growing personnel and internal systems. Whitman also believes 2012 could be a challenging year due to decreased European demand and flooding in Thailand that has slashed hard drive availability. Stocks moving on the news include: Microsoft (NASDAQ:MSFT) and Dell (NASDAQ:DELL).
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Although Pandora (NYSE:P) beat estimates, shares are down nearly 4% in extended trading. The online radio company reported a third quarter profit of $638,000, compared to a $1.77 million loss last year. Excluding one-time items, Pandora earned 2 cents per share, compared to estimates of a 1 cent loss.
Dollar Tree (NASDAQ:DLTR) is attracting attention after agreeing to repurchase $300 million of its own stock from Wells Fargo (NYSE:WFC) in order to speed up a $1.5 billion repurchase program announced in October. Shares closed 1.85% higher on Tuesday.
Yum! Brands (NYSE:YUM) continues to edge higher late Tuesday. The company is splitting its India business into its own business segment. “The decision to report it separately reflects Yum’s expectation that the country will be an increasingly important growth driver,” said Sara Senatore, analyst at Sanford C. Bernstein. Competitors to watch include: McDonald’s (NYSE:MCD), Chipotle Mexican Grill (NYSE:CMG), and Starbucks (NASDAQ:SBUX).
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