U.S. Indexes Higher at Mid-Day as Investors Focus on Retail Sales, M&A Activity
Stocks are trading higher at mid-session as investors focus on positive retail sales buoyed by strong automobile sales in October. The major U.S. indexes are all in positive territory even as the New York Federal Reserve Bank's Empire State manufacturing survey plunged due to a drop in new orders.
Taken together, the data shows a mixed picture for the U.S. economy as the year draws to a close and the ever-important holiday shopping season--the most important time of the year for retailers--gets underway.
In economic data released before the market opened, the New York Fed's Empire State manufacturing survey plummeted 27 points to -11.1, driven by a sharp drop in new orders. The release was far worse than economist expectations for a +15 reading and marks the first negative reading since July 2009. The shipments index also fell below zero.
Still, the U.S. Commerce Department reported retail sales jumped 1.2% in October, the largest increase since March. Excluding motor vehicles, retail sales rose 0.4% in October. Economists surveyed by MarketWatch had forecast total sales to rise by 0.7%, or 0.4% excluding the volatile automotive segment. Auto sales often swing sharply from month to month and can mask underlying trends.
Elsewhere, shares of data storage equipment maker EMC Corp. ( EMC ) are down following news that it will buy smaller rival Isilon Systems ( ISLN ) for about $2.25 billion. The purchase adds to the continuing series of M&A deals in the technology sector that has driven stock valuations up.
In other company news, Thoratec Corp. ( THOR ) is down after rival Heartware International Inc. ( HTWR ) this weekend debuted its new Ventricular Assist System, designed to carry patients with severe heart damage until they can receive a heart transplant. At 5 oz., the Heartware device is about half the size and weight of Thoratec's implant
BHP Billiton ( BHP ) scrapped its $39 billion bid for Canada's Potash Corp ( POT ), the world's biggest deal this year, after rejection by regulators. BHP instead will answer calls from investors to return cash, reviving a $4.2 billion share buyback.
Blood thinner Xarelto, made by Johnson & Johnson ( JNJ ) and Bayer ( BAYRY ), prevented strokes in patients with an erratic heartbeat better than the standard drug therapy warfarin, without raising the risk of bleeding, according to a Bloomberg report. Researchers said that patients taking Xarelto once a day were 21% less likely to suffer a stroke or embolism than those patients taking warfarin, the report said.
Barclays Capital ( BCS ) said it sees the fourth quarter bouncing back from a slower third quarter, according to a Reuters report. "It's going to be pretty busy for us through to the end of the year," Jerry del Missier, co-chief executive of Barclays Capital IFR, told The International Financing Review.
Shares of Medtronic Inc. ( MDT ) are down even after the medical device company said that testing of its cardiac resynchronization therapy-defibrillators reduced the risk of death by 29% in patients with mildly symptomatic heart failure compared with patients treated with older-style implantable cardioverter-defibrillators (ICDs) and medical therapy. Findings from the recent trial were released yesterday at the annual congress of the American Heart Association in Chicago and published online in the New England Journal of Medicine.
BP ( BP ) said it would sell its fuels marketing businesses in Namibia, Botswana and Zambia to Puma Energy for $296 million as apart of its effort to cover costs associated with the Gulf of Mexico oil spill, Bloomberg reported.
Google ( GOOG ) pushed Western countries to challenge an expanding list of Internet restrictions in China--and other countries--as a violation of global trade rules, Reuters reported, citing a policy brief from the Internet firm. "More than 40 governments now engage in broad-scale restriction of online information, a tenfold increase from just a decade ago," Google said, as quoted by Reuters. "These actions unnecessarily restrict trade, and left unchecked, they will almost certainly get worse."
Citigroup ( C ) shares are higher as the bank says it plans to target companies with less than $20 million in annual revenue and is looking to bring about 200 bankers on board to service that type of client, according to a Bloomberg report. The move marks a shift for the bank, which counts 2,500 of the world 3,000 largest corporations as clients, reports Bloomberg.
Exxon Mobil ( XOM ) said an offshore platform off Nigeria's southeast coast was attacked, according to a Bloomberg report on the incident. Exxon didn't say whether anyone was hurt or what damage had been done, according to the report, which characterized the region as seeing increasing violence since a 2009 amnesty led to the disarming of thousands of fighters.
Massey Energy Co ( MEE ) is on the rise after the Wall Street Journal reported that Luxembourg-based steel giant ArcelorMittal ( MT ) may be interested in buying the company. The report also said Coal India Ltd may be interested in Massey as well.
In other earnings news:
--Gymboree ( GYMB ) said Q3 EPS were $1.33, less items, above the Thomson Reuters mean for $1.28. Sales were $280.9 million, below forecasts for $285.3 milllion.
--La-Z-Boy Inc. ( LZB ) shares are just lower after saying that net sales for fiscal Q2 were $293 million, down 2.6% from year-ago levels. The firm also said it was delaying release of its full Q2 operating results in order to finalize accounting issues primarily involving the company's dealer entities that are consolidated as Variable Interest Entities.
--Lowe's ( LOW ) reported Q3 EPS of $0.29, or $0.31 without a $0.02 charge for store closings, compared to $0.23 a year earlier and the Thomson Reuters mean analyst estimate for $0.30. Sales of $11.6 billion are up to $11.4 billion. The Street looked for $11.7 billion. 2010 EPS guidance is at $1.37 to $1.40. The Street is at $1.41.
Commodities are higher as December gold contracts are up $10, or 0.76%, to $1,376 an ounce while January crude contacts are up 0.44%, or $0.37, at $85.20 a barrel.