Stocks Head South Following Strong Start; Commodities Moving Higher
Major U.S. indexes have turned negative after spending most of the morning in the green with a disappointing outlook from 3M ( MMM ) raising questions about the strength of manufacturing and the economy overall, leading to the sell-off.
3M ( MMM ) reported Q3 EPS of $1.53 per share, better than the analyst consensus of $1.51 per share on Thomson Reuters. Sales were $6.9 billion, vs. expectations of $6.83 billion.
However, the diversified maker of industrial and consumer goods trimmed its profit forecast for the year because of the cost of its recent acquisitions. 3M said dilution of earnings from issuing shares prompted it to cut its 2010 earnings forecast to $5.70 to $5.74 a share from the $5.65 to $5.80 a share forecast, The Wall Street Journal reported.
That served to offset a generally positive jobs report issued before the bell. The weekly report showed an unexpected 21,000 drop in jobless claims, to 434,000. It's the third straight weekly decline and marks the lowest level since early July, though the level remains historically high. Mostly upbeat earnings provided early support, though caution persists with stock averages already at multi-month highs ahead of next week's much-anticipated Fed meeting.
Investors are also looking ahead to Friday's report on Gross Domestic Product, a measure of economic growth. Economists expect that the Commerce Department to report slightly better growth rate of 2% for the July-September quarter. That's still sluggish by most economists' measure.
In other company news, Sanofi-Aventis ( SNY ) said that its "not obvious at all" that it will need to improve its $18.5 billion acquisition offer for Genzyme Corp. ( GENZ ), Bloomberg reported. The Paris-based drug company took its $69-a-share offer for Genzyme into a hostile direction on Oct. 4 after the U.S. biotechnology company rejected the bid as too low.
Syniverse Technologies ( SVR ) says it will be bought by Carlyle Group for $31 per share in cash, or approximately $2.6 billion. The deal is seen closing in Q1. Shares were last up 0.92% before being halted. Shares are now up by double digit percentage points.
Google Inc. ( GOOG ) said it would clarify its keyword advertising policy in a move to settle an investigation by France that was caused by a complaint that could have resulted in a fine, Reuters reported. The AdWords service, where Google sells keywords that trigger advertisements, is the core for the company's $23 billion online advertising business.
Stryker Corp. ( SYK ) agreed to purchase Boston Scientific's ( BSX ) neurovascular business for $1.5 billion in cash in an effort to diversify its product offerings in the face of a slowing orthopedics business, Reuters reported. The purchase price includes $100 million in milestone payments, the report said.
Apple Inc. ( AAPL ) said it raised its employee headcount by more than a third from a year ago and said that it sees gross margins to fall in the coming quarters, reports Reuters. Apple said it now has 46,600 employees, up from 34,300 a year ago. Most of the increase came from the company's retail division the report said. The company released its iPad tablet last April and has priced it aggressively in an effort to gain a user base and benefit from its fist-mover advantage.
Oracle ( ORCL ) has acquired 10.2% of Mellanox's ( MLNX ) ordinary shares in the open market. This stake is for investment purposes only, to solidify common interest in the future of InfiniBand, Oracle said in a statement. Oracle has no plan or intention to make an unsolicited and unfriendly offer to take over Mellanox, the company stated.
In the latest earnings news:
--Oshkosh ( OSK ) says Q4 sales were $2.11 billion and income from continuing operations was $1.28 per share, including items. Analysts expected EPS of $1.38 on sales of $2.03 billion, according to ThomsonReuters.
--Exxon Mobil ( XOM ) says it expects Q3 EPS less items of $1.44, matching estimates. Sales were $95.3 billion, versus the Thomson Reuters mean for $98.57588 billion.
--Blackstone Group LP ( BX ) is up slightly after the private equity firm reported its third quarter loss narrowing from a year ago. The company reported a loss of $44.4 million, or an economic net income of 30 cents. Analysts polled by Thomson Reuters had expected economic earnings of 25 cents a share on revenue of $701 million.
--Shares of Thomson Reuters ( TRI ) are higher after the provider of financial news and information reported third-quarter profit that increased by 66% and was helped by increased sales of tax and accounting products, Bloomberg reported.
--Las Vegas Sands Corp. ( LVS ) is surging near 10%, after its third quarter performance beat expectations on the back of strong performance at its Singapore and Macau sites.
--Coca-Cola Enterprises ( CCE ) is higher after the soft drink bottler reported third-quarter 2010 net income of $208 million. On a pro forma basis including results from Norway and Sweden, third-quarter 2010 earnings per diluted common share were 58 cents. The Street is at 53 cents a share, according to Thomson Reuters.
--Motorola ( MOT ) gains after it reported Q3 sales of $5.8 billion, better than the analyst consensus of $5.66 billion on Thomson Reuters. Non-GAAP EPS were $0.16, vs. expectations of $0.11 per share. For Q4, the company sees EPS of $0.14 to $0.16 per share, vs. expectations of $0.15 per share.
Commodities are higher; December gold contracts are up $20, or 1.48%, to $1,342 an ounce while December crude contacts are up 0.37%, or $0.29, at $82.24 a barrel.