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Mid-Day Update: Stocks Erase Early Gains Following Weak July Manufacturing Data

Posted
8/1/2011 12:17:00 PM
By: MT Newswires
Referenced Stocks:AMZN;ARIA;COV;GE;MRK

Here's where markets stand at mid-day:

-NYSE down 89.55 (-1.11%) to 7,989.89

-DJIA down 122.53 (-1.01%) to 12,020.71

-S&P 500 down 14.85 (-1.15%) to 1,277.43

-Nasdaq down 30.25 (-1.1%) to 2,726.18

GLOBAL SENTIMENT

Nikkei up 1.3%.

Hang Seng up 1%.

Shanghai Composite up 0.1%.

FTSE-100 up 1.6%.

MID-DAY NYSE INDEX WATCH

NYSE Energy down 1.01% at 13,394.19

NYSE Financial up 0.69% at 4,702.20

NYSE Health Care down 2.29% at 6,922.31

NYSE Arca Tech 100 down 1.31% at 1,119.46

UPSIDE MOVERS

(+) HBC (+1.3%) cutting jobs; flat revenue does beat Street view.

(+) SRLS (+5.5%) to explore strategic options including possible sale.

DOWNSIDE MOVERS

(-) AMRN (-0.9%) says completed remaining studies for planned new NDA for triglycerides drug.

(-) CYOU (-14.2%) beats with Q2 results, issues mixed Q3.

(-) CYTR (-3.6%) gains on ovarian cancer study progress.

(-) APOL (-1.5%) upgraded.

(-) EMC (-0.9%) upgraded.

(-) UAL (-1.1%) upgraded.

(-) JBLU (-1.9%) upgraded.

(-) RSH (-0.1%) upgraded.

(-) TEVA (-6.7) says MS treatment does not meet primary endpoint.

(-) AUXL (-3.9%) loss narrows, revenue beats year-ago quarter.

(-) SUNH (-56.7%) downgraded.

MARKET DIRECTION

Stocks are in retreat, with all three major indexes down 1% or more in a stunning reversal after a strong move higher out of the gate in step with global gains following a debt deal in Washington. A larger-than-expected drop in July manufacturing activity torpedoed investor enthusiasm, causing more than a 200 point drop in the Dow Jones Industrial Average between the opening bell and mid-day.

Stocks turned lower after the July Institute of Supply Management's index fell 4.4 points to 50.9, below the Marketwatch.com mean estimate by economists of 54.3. New orders index fell into contractionary territory, and indexes for prices and employment in particular saw big drops.

In a separate report, a 0.2% gain in outlays for U.S. construction projects in June, failed to offset the surprisingly large July ISM index decline.

President Barack Obama and congressional leaders announced a debt-ceiling extension and spending-cut package agreement Sunday night. Both chambers must now vote on the measure. Mixed analyst notes are hitting this morning over whether the U.S. remains at risk for a credit downgrade, with some saying spending cuts may not go far enough.

The still-unreleased legislation would slice more than $2 trillion from federal spending over a decade and permit the nation's $14.3 trillion borrowing cap to rise by up to $2.4 trillion, enough to keep the government afloat through the 2012 elections.

In company news:

Shares of General Electric ( GE ) are down after Bloomberg reported the company is set to sell its SeaCo venture for $1.05 Billion. General Electric and a partner agreed to sell shipping-container lessor GE SeaCo for $1.05 billion to China-based HNA Group Co. and Bravia Capital, the company said.

Shares of Merck & Co. ( MRK ) are down while Reuters reports that it filed for approval of the cancer drug Ridaforolimus, which it developed alongside Ariad Pharmaceuticals ( ARIA ), with the European Medicines Agency. Merck is expected to submit a new drug application in the U.S. shortly, the report said.

Covidien ( COV ) said that the U.S. Food and Drug Administration recently approved its Mallinckrodt business for morphine sulfate oral solution, indicated for the relief of moderate to severe acute and chronic pain in opioid-tolerant patients.

Amazon.com ( AMZN ) firms after Barron's says shares may rise as much as 25% if the company continues revenue growth through investments in its distribution system and cloud-computing business. Shares hit a 52-week high of $227.45 earlier

Shares of Apple (AAPL) are higher after All Things Digital said the computer maker will launch the next generation of the popular iPhone smartphone - the iPhone 5 - in October rather than September. The report cited sources with knowledge of the situation.

ADRs of HSBC Holdings (HBC) are higher after the European bank said it is slashing around 30,000 jobs to cut costs and revamp its business, as it follows through on a May plan to withdraw from some countries and refocus its operations on high-growth markets, MarketWatch and other news outlets report.

Talbots Inc. (TLB) is up sharply after an investor group led by Sycamore Partners reported a 9.9% stake in the retailer, according to news reports this morning. The investors reportedly said that the stock is "undervalued and is an attractive investment." The group plans to engage in discussions with Talbots' management, the board, other shareholders and relevant parties.

In the latest earnings news:

--Loews Corp. (L) reports Q2 EPS of $0.62 compared to $0.87 a year earlier and below the Street view for $0.74. Total revenues rose to $3.54 billion from $3.49 billion.

--Allstate Corp. (ALL) swung to a Q2 loss of $1.19 per share compared to income of $0.27 a year ago. Wall Street expected a loss at $1.46. A rash of tornadoes accounted for a jump in catastrophe losses, to $2.34 billion against $96.8 billion in the year-ago period.

--Shares of Humana (HUM) reports Q2 adjusted EPS of $2.50, topping the year-ago period and the Thomson Reuters mean analyst estimate for $2.05. Revenue rose 8% to $9.28 billion from $8.59 billion a year ago.

Commodities are mixed. December gold contracts are up 0.08% to $1,632 an ounce while September crude oil contacts are down 1.58% to $94.21 a barrel.

In energy ETFs, the United States Oil Fund (USO) is down 2.32% to $36.57 and the United States Natural Gas fund (UNG) is up 0.57%, to $10.56.

In precious metal ETFs, the SPDR Gold Trust (GLD) is up 0.3% at $158.76. Market Vectors Gold Miners (GDX) is up 1.28% to $57.62. iShares Silver Trust (SLV) is up 0.23% to $38.95.