U.S. stocks are set to open the holiday-shortened week
significantly lower today, thanks to escalating debt concerns on
both sides of the Atlantic. At home, traders are jeering reports
has failed to come up with a bipartisan plan to lower the U.S.
deficit ahead of Wednesday's deadline. Overseas, meanwhile, Moody's
threatened to revoke France's triple-A credit rating, while
political leaders in China warned of an extended global recession.
Against this gloomy backdrop, the Dow Jones Industrial Average
(DJIA) is bracing for a 159-point drop, while the broader S&P
500 Index (SPX) is set to kick off
an historically positive week
by testing its footing in the 1,200 region.
In equities news, Pharmasset (VRUS - 72.67) agreed to be
acquired by Gilead Sciences (GILD - 39.88) for about $10.4 billion,
or $137 per share -- a premium of 89% to VRUS' closing price of
$72.67 on Friday. Including options, the deal -- expected to close
in the first quarter of 2012 -- is valued at roughly $11 billion.
GILD expects the acquisition will be dilutive to earnings through
2014, and will begin to add to its profit in 2015. At last check,
GILD is headed for a 4.7% drop out of the gate, while VRUS is set
to open about 86% higher.
Elsewhere, Alleghany Corp. (Y - 314.26) said it will buy
insurance issue Transatlantic Holdings (TRH - 54.43) for $3.4
billion in cash and stock. Under the terms of the deal, TRH
shareholders will receive $14.22 in cash and 0.145 Y share, for a
total value of about $59.79 per share -- a premium of 9.8% to TRH's
closing price of $54.43 on Friday. The deal is expected to close
sometime in the first quarter of next year. Earlier this month,
Validus Holdings (
) offered $57.34 per share for Transatlantic. Ahead of the bell,
TRH is pointed 4.7% higher.
In earnings news, Tyson Foods (TSN - 19.45) banked a fiscal
fourth-quarter profit of $97 million, or 26 cents per share, down
from its year-ago earnings of $213 million, or 57 cents per share.
Sales for the quarter climbed 13% to $8.4 billion, but TSN's bottom
line was pressured by increased grain and feed costs. The results
were mixed, as analysts were looking for a profit of 32 cents per
share on $8.2 billion in revenue. At last look, TSN is lingering
just south of breakeven.
Today's earnings docket will also feature reports from
), Tech Data (
), and Jack in the Box (
). Keep your browser at
for more news as it breaks.
The monthly report on existing home sales is the lone item on
today's economic agenda. On Tuesday, the government's latest gross
domestic product (
) estimates will hit the Street, as well as a report on business
activity in the Richmond Fed district. Most notably, though, the
Federal Open Market Committee's (FOMC) meeting minutes are slated
for release at 2 p.m. EST. On Wednesday, Uncle Sam will release its
weekly jobless figures a day early, thanks to the Thanksgiving
holiday on Thursday. In addition, Wall Street will digest the
regularly scheduled crude inventories report, the final Thomson
Reuters/University of Michigan consumer sentiment index for
November, and monthly data on durable goods orders and personal
incomes and spending. The post-holiday economic calendar is bare on
Friday, when U.S. markets will shut down at 1 p.m. EST.
Equity option activity on the Chicago Board Options Exchange
(CBOE) saw 993,831 call contracts traded on Friday, compared to
909,293 put contracts. The resultant single-session put/call ratio
arrived at 0.91, while the 21-day moving average was 0.71.
Stocks in Asia ended lower today, thanks in part to data
revealing an unexpected trade deficit for Japan in October. Fiscal
anxiety out of the U.S. also weighed on investor sentiment, as the
congressional supercommittee remained gridlocked just days ahead of
the deadline to reach a budget agreement. With Europe's debt woes
also lingering in the background, exporters and energy issues were
among the hardest-hit. By the close, Hong Kong's Hang Seng fell
1.4%, South Korea's Kospi declined 1%, Japan's Nikkei gave up 0.3%,
and China's Shanghai Composite lost 0.06%.
European equities are also in the red at midday, with French
bond yields rising after Moody's warned that the country could be
at risk of losing its top-notch triple-A credit rating. The ratings
agency also cautioned of "significantly" increased risks to the
German financial system, applying pressure to banking issues. At
last check, the French CAC 40 and the German DAX have each shed
2.6%, and London's FTSE 100 is down about 1.9%.
Currencies and Commodities
The greenback has gained ground this morning, with the U.S.
dollar up 0.5%. On the other hand, crude futures have extended
their pullback beneath the century mark, with the newly front-month
contract down 1.5% to linger near $96.21 per barrel. Likewise, gold
futures are also on the decline, with the precious metal last seen
1.3% lower at $1,703 an ounce.
Unusual Put and Call Activity:
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