Stocks Lower at Mid-Day as European Debt Worries Trump Holiday Shopping Trends
Stocks are sharply lower Monday as news over the weekend that the European Union will bail out Ireland failed to inspire confidence among investors. Adding to the mix is President Barack Obama;s announcement that he will propose a two-year freeze on federal employee pay as he looks to show he is serious about reigning in the U.S. budget deficit.
Irish banks are up sharply in the regular session in reaction to the weekend announcement of financial aid. Bank of Ireland ( IRE ) and Allied Irish Banks ( AIB ) are both higher. In a regulatory statement, Bank of Ireland said it would seek to raise 2.2 billion euros in capital by Feb. 28, via "internal capital management initiatives, support from existing shareholders and other capital market sources."
The dour mood set off by worries over Europe was not enough to dent Amazon.com ( AMZN ), which has kept marginal gains by mid-session on what's become known as Cyber Monday--the Monday after Thanksgiving when online retailers see shopping activity similar to their brick-and-mortar counterparts on Black Friday.
In company news, the U.S. Food and Drug Administration raised concerns over two drugs made by GlaxoSmithKline ( GSK ) and Merck ( MRK ), Reuters reported. Shares of both drug makers are trading lower in the regular session. The FDA said in documents released ahead of a public advisory meeting Wednesday that there was an "unexpected finding of an increased incidence of high-risk prostate cancers among men receiving" the drugs in question, according to the report.
In unrelated news, Merck said it will end a Phase III study based on the initial results from an investigation of the efficacy and safety of a treatment regimen including ISENTRESS Tablets once daily in treatment of adult patients infected with HIV-1 and following the recommendation of an independent Data Monitoring Committee.
Meanwhile, Wal-Mart Stores Inc. (WMT) shares are down fractionally on plans to buy a controlling stake in South Africa's Massmart for about $2 billion. Wal-Mart will purchase a 51% stake in Massmart for $20.71 per share, the companies said in a statement. Wal-Mart backed off an earlier plan to buy the entire company for $4.25 billion.
Also, shares of UnitedHealth (UNH) are down after the company said it sees net 2010 EPS of $3.85 to $3.95 and FY11 revenues of $99 billion to $100 billion and net earnings of $3.50 to $3.70 per share. The Thomson Reuters mean for 2010 EPS is $3.97.
Shares of Exxon Mobil (XOM) are down after Canada's Husky Energy said it would buy oil and gas properties in Alberta and northeast British Columbia from the U.S. oil major for $860 million, Reuters reported. The move is set to boost near-term production for Husky, which is controlled by Hong Kong billionaire Li Ka-shing.
Microsoft (MSFT) shares are down amid word that the software giant is in talks with media companies to license TV networks for a new online pay-TV subscription service through devices such as its Xbox video game console, Reuters reports. The news comes as Google (GOOG), Apple (AAPL) and Netflix (NFLX) are all making inroads into TV-oriented services.
Amarin Corp plc (AMRN) are up 55% at mid-day, after the American/Irish biotech reported "statistically significant" reductions in triglycerides in patients treated with its AMR101 lead drug candidate. The prospective blood-cholesterol treatment also appears to be well tolerated, based on initial Phase III clinical results.
Shares of Netlist (NLST) are higher after the company said that Compellent Technologies has qualified and selected its NetVault NV for production shipments in the Compellent Storage Center solution.
Morgan Stanley (MS) shares are trending lower amid news that Mary Meeker, a technology analyst at the firm who gained notoriety for her prognostications on the Internet during the 1990s, is leaving to join venture capital firm Kleiner Perkins Caufield & Byers.
Shares of Kraft (KFT) and Starbux (SBUX) are down in the regular session after Kraft said it initiated an arbitration proceeding to challenge Starbucks Coffee's attempt to end the agreement under which Kraft has built Starbucks' retail grocery coffee business. The partnership between Kraft and Starbucks dates back to 1998 when Starbucks' retail grocery coffee business generated less than $50 million in annual revenues.
Commodities are mixed. February gold contracts are flat at $1,365 an ounce while January crude contacts are up 1.45%, or $1.21, at $84.97 a barrel.
In energy ETFs, the United States Oil Fund (USO) is up 1.39% to $36.47 and the United States Natural Gas fund (UNG) is down 4.46% to $5.79
In precious metal ETFs, the SPDR Gold Trust (GLD) is up 0.11% to $133.30. Market Vectors Gold Miners (GDX) is down 0.73% to $58.18. iShares Silver Trust (SLV) is up 0.84% to $26.35.