Stocks Skid at Mid-Day; Investors Seek Direction Ahead of Fed, GDP Numbers
Stocks are trading broadly lower as bearish sentiment--stoked by uncertainty about further moves by the U.S. Federal Reserve to provide assistance to the economy--caused investors to consolidate positions ahead of the all-important report on GDP on Friday.
Looking at declines across all the major indexes, there is some sentiment that investors have already priced in the improved earnings environment ahead of the actual reports, and responded favorably to the Fed's apparent readiness to act. Still, next week's election also serves as an overhang to stocks, though there is a broad sense that stocks have priced in at least moderate Republican gains in both houses of Congress.
In economic data, new home sales in the United States rose 6.6% in September to a seasonally-adjusted annualized rate of 307,000. It was the second straight gain and topped Marketwatch.com's mean forecast for a 300,000 annual rate.
Also, the Commerce Department said this morning durable goods rose faster than economists had forecast in September. But outside the volatile transportation sector, orders fell, disappointing economists who were looking for an increase, according to a Thomson Reuters poll.
In company news, shares of GlaxoSmithKline ( GSK ) are lower following news that a whistleblower who exposed problems at GlaxoSmithKline's ( GSK ) manufacturing operations has been awarded $96 million, ending an eight year fight as Glaxo agreed to pay the U.S. government $750 million to settle civil and criminal charges that it manufactured adulterated drug products.
The spat between Oracle ( ORCL ) and Hewlett-Packard ( HPQ ), which began after HP's former chief executive Mark Hurd was ousted and subsequently joined the software maker, took another turn Wednesday. Oracle said it will produce evidence that HP's incoming CEO, Leo Apotheker, was involved in an effort to steal Oracle software while at SAP, Bloomberg reported.
Shares of Amgen ( AMGN ) are lower following news that a U.K. health agency said that the drug maker's bone-strengthening drug Prolia should be provided to women at risk of fractures who won't take other drugs, Bloomberg reported. The agency, the National Institute for Health and Clinical Excellence, issued final guidance on Prolia today.
Yahoo! Inc. ( YHOO ) shares are lower following news the Internet portal company will introduce a version of e-mail today that integrates posts from Twitter and delivers information at faster speeds. The new service, still in a test phase, also improves searches, spam protection and the viewing of photos. Yahoo! has seen increasing defections to Google Inc.'s ( GOOG ) Gmail and social-networking sites like Facebook. Yahoo needs e-mail to lure users to its Web portal and sustain advertising, its biggest source of revenue, Bloomberg notes.
Petroleo Brasileiro ( PBR ) said it opened a "new exploration frontier" off Brazil's northern coast after finding signs there could be light oil at a deepwater well, Bloomberg reported. The company, based in Rio de Janeiro, said it found "large accumulations" of oil in a certain well at 7,680 feet.
NRG Energy ( NRG ) shares are lower after the company said it will invest up to $300 million in the 392-megawatt Ivanpah Solar Electric Generating System in California's Mojave Desert being built by BrightSource Energy.
CommScope ( CTV ) entered into a definitive merger agreement with global alternative asset manager The Carlyle Group in a transaction valued at approximately $3.9 billion that will result in CommScope becoming a private company. The transaction is expected to close in the first quarter of 2011. Under the terms of the merger agreement, Carlyle will acquire all of the outstanding shares of CommScope common stock for $31.50 per share in cash.
In the latest earnings news:
--Dr Pepper Snapple ( DPS ) says it earned $0.60, including $0.04 of strike-related costs, in Q3. The Thomson Reuters mean, usually less items, was $0.62 per share. Net sales were $1.457 billion, below estimates for $1.40942 billion.
--Comcast Corp ( CMCSA ) is down pre-market even though the cable company's third quarter earnings were slightly above expectations.
--Arrow Electronics ( ARW ) says it earned an adjusted $1.08 per share on sales of $4.66 billion in Q3. The Thomson Reuters mean was for $1.01 per share on sales of $4.57 billion.
--Buffalo Wild Wings ( BWLD ) said that for the third quarter, the company reported revenue rising 14% from a year ago to $151.3 million, while net earnings increased to $8.5 million from $6.9 million, while earnings per share rose to 47 cents from 38 cents. Analysts polled by Thomson Reuters had expected revenue of $150.6 million while earnings per share was pegged at 44 cents.
--Deutsche Bank ( DB ) reported stronger-than-expected third quarter results as the German group's investment banking unit's profit increased.
--Proctor & Gamble ( PG ) is just higher after the consumer products company reported Q1 EPS of $1.02 per share, ahead of the analyst consensus of $1.00 per share, according to Thomson Reuters. Sales were $20.1 billion, in line with estimates.
--ConocoPhillips ( COP ) is down 1.69%, as lower oil prices weigh on its third straight quarter of sharply higher profits.
--Broadcom Corp ( BRCM ) is higher as the chip maker which supplies Apple Inc ( AAPL ) amongst other tech companies reported better-than-expected third quarter results on the back of strong sales and an improved outlook for the fourth quarter.
Commodities are lower at mid-day; December gold contracts are down $15, or 1.13%, to $1,324 an ounce while December crude contacts are down 1.12%, or $1.26, at $81.29 a barrel.