Morning Market News
Stocks that are expected to trade actively in U.S. markets on Friday include: Amazon.com, Inc. (NASDAQ:AMZN), Starbucks Corporation (NASDAQ:SBUX), Yahoo! Inc. (NASDAQ:YHOO), Expedia Inc (NASDAQ:EXPE), J. C. Penney Company, Inc. (NYSE:JCP), VF Corp (NYSE:VFC), Humana Inc (NYSE:HUM), D.R. Horton, Inc. (NYSE:DHI), Pfizer Inc. (NYSE:PFE), Tyco International Ltd. (NYSE:TYC) and Celanese Corporation (NYSE:CE).
Seth Klarman: Investors Can No Longer Rely On Mean Reversion
"For most of the last century," Seth Klarman noted in his second-quarter letter to Baupost's investors, "a reasonable approach to assessing a company's future prospects was to expect mean reversion." He went on to explain that fluctuations in business performance were largely cyclical, and investors could profit from this buying low and selling high. Also Read More
• US: Dow Futures: 14610.00 (-0.29%), S&P 500 Futures: 1577.30 (-0.28%), NASDAQ Futures: 2835.50 (-0.30%)
• Europe: CAC: 3808.04 (-0.85%), DAX: 7801.51 (-0.40%), FTSE: 6410.61 (-0.50%)
• Asia-Pacific: Australia: 5097.50 (-0.10%), China: 2177.91 (-0.98%), Hong Kong: 22547.71 (0.65%), India: 5871.45 (-0.76%), Japan: 13884.13 (-0.30%).
• Metals: Gold: 1465.10 (0.21%), Silver: 23.94 (-0.83%), Copper: 3.21 (-0.96%)
• Energy: Crude Oil: 93.08 (-0.60%), Natural Gas: 4.16 (-0.24%)
• Commodities: Corn: 6.18 (0.97%), Soya Bean: 13.67 (2.10%), Wheat: 6.96 (1.74%)
• Currency: EUR/USD: 1.3023 (0.09%), GBP/USD: 1.5484 (0.32%), USD/JPY: 98.2600 (-1.01%)
• 10 year US Treasury: 1.674% (-0.035)
Market and Economic News Update
U.S. stock-index futures decline: U.S. stock-index futures are pointing to a lower open on Friday after data showed the U.S. economy grew slower than expected during the first quarter. The Department of Commerce said gross domestic product grew at a 2.5 percent rate in the first three months of the year, lower than expectations for a growth of 3.2 percent. In other economic news, the University of Michigan Consumer Sentiment survey for April will be out at 9.55 a.m. Analysts expect the index to rise to 73.2 in April, from 72.3 last month.
European markets fall: European markets slid deeper into negative territory after U.S. growth numbers missed forecasts. Elsewhere, in Spain, growth forecasts for the year were revised down from -0.5 percent to -1.3 percent, and budget deficit forecasts were lowered to 6.3 percent of GDP in 2013 The German DAX (INDEXDB:DAX) is down 0.4 percent at 7801.51 points. The FTSE 100 (INDEXFTSE:UKX) fell 0.5 percent to 6410.61 and the CAC 40 (INDEXEURO:PX1) slumped 0.9 percent to 3808.04 points. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) was down 0.9 percent.
Asian markets end mostly lower: Asian markets closed lower on Friday, as investors digested a mixed bag of regional corporate earnings. The Bank of Japan left its monetary policy unchanged at its latest meeting, in-line with what traders were expectations. The NIKKEI 225 (INDEXNIKKEI:NI225) lost 0.3 percent to 13884.13 points, while the HANG SENG INDEX (INDEXHANGSENG:HIS) outperformed for the second straight session to hit a new one-month high. The SSE Composite Index (SHA:000001) (Shanghai Composite Index) slid 1 percent to close below the 2,200 mark. The S&P/ASX 200 (INDEXASX:XJO) index gave up gains made earlier in the day to end marginally lower.
Stocks to Watch
Amazon.com, Inc. (NASDAQ:AMZN)
Amazon.com, Inc. (NASDAQ:AMZN) reported first quarter earnings of 18 cents a share, compared to analysts’ expectations for 7 cents a share, while revenue was slightly below the consensus estimate at $16.07 billion. Meanwhile, the company handed in current-quarter revenue guidance that was at the lower end of what analysts are projecting. Shares fell in before-hours trading.
Starbucks Corporation (NASDAQ:SBUX)
Starbucks Corporation (NASDAQ:SBUX) posted second quarter adjusted earnings 48 cents a share, in line with estimates, while revenue fell slightly short of expectations at $3.56 billion against forecasts for $3.59 billion. In addition, the coffee chain provided a weaker-than-expected current-quarter and fourth-quarter earnings outlook, sending shares lower in pre-market trading.
Yahoo! Inc. (NASDAQ:YHOO)
Yahoo! Inc. (NASDAQ:YHOO) announced that Fred Amoroso has resigned as Chairman, and will not seek re-election to the board of directors at the upcoming 2013 annual meeting of shareholders. Maynard Webb, Jr. will serve as interim Chairman of the company until the annual shareholder meeting on June 25. Shares were flat in early morning trade.
Expedia Inc (NASDAQ:EXPE)
Travel website Expedia Inc (NASDAQ:EXPE) reported earnings of 25 cents a share on revenue of $1.01 billion, topping Street expectations for 23 cents a share on revenue of $968 million. Shares were down in pre-market trading after the company lowered its organic growth view due to pressure from discount travel website Hotwire. The company, however, reaffirmed its full-year earnings growth forecast.
J. C. Penney Company, Inc. (NYSE:JCP)
Billionaire investor George Soros reported a 7.9 percent passive stake in J. C. Penney Company, Inc. (NYSE:JCP), according to a SEC filing. At Thursday’s closing price of $15.24, his investment is worth nearly $265 million. Soros joins fellow hedge-fund manager Bill Ackman as one of the troubled retailer’s major shareholders. Shares jumped following the news.
VF Corp (NYSE:VFC)
VF Corp (NYSE:VFC) reported first-quarter profit excluding certain items of $2.43 per share, compared to analysts’ estimate of $2.19 per share. Revenue came in at $2.61 billion, trailing expectations for $2.63 billion. VF Corp (NYSE:VFC) posted record gross margins during the quarter. In addition, the company behind such brands as North Face, Wrangler, and Timberland, raised its full-year earnings outlook.
Humana Inc (NYSE:HUM)
Health insurance company Humana Inc (NYSE:HUM) raised its quarterly dividend to 27 cents a share from 26 cents a share, sending shares higher in pre-market trading. The dividend will be paid on July 26, to shareholders of record on June 28. The latest dividend hike represents a 1.08 dividend on an annualized basis and a yield of 1.48 percent,
D.R. Horton, Inc. (NYSE:DHI)
D.R. Horton, Inc. (NYSE:DHI) reported second-quarter profit of 32 cents per share, 13 cents above the average analysts’ estimate, on revenue of $1.39 billion, also ahead of consensus. Net sales orders jumped 34 percent year-on-year during the period, while order backlogs were up 54 percent. The cancellation rate for the quarter stood at 19 percent. Shares closed Thursday at $24.53 and were up in pre-market trading.
Pfizer Inc. (NYSE:PFE)
Shares of Pfizer Inc. (NYSE:PFE) slumped in early morning trade after European regulators adopted a “negative opinion” about its rheumatoid arthritis pill Xeljanz, saying that the drug didn’t exhibit a favorable risk-benefit profile. Xeljanz has already been approved in the United States, Japan and Russia for the treatment of adults with active rheumatoid arthritis.
Tyco International Ltd. (NYSE:TYC)
Security products maker Tyco International Ltd. (NYSE:TYC) reported fiscal second-quarter profit of 42 cents per share, excluding certain items, three cents above the average analysts’ estimate, on revenue of $2.61 billion that also beat consensus. Operating margin narrowed to 4.7 percent from 9 percent in the year-ago period.
Celanese Corporation (NYSE:CE)
Chemical and advanced materials maker Celanese Corporation (NYSE:CE) has raised its quarterly dividend by 20 cents to 9 cents a share. The dividend will paid on May 16, to shareholders of record on May 6. Shares of Celanese Corporation (NYSE:CE) closed Thursday at $48.33, and were inactive pre-market.
Economic Calendar for Friday, April 26, 2013:
08:30 A.M. ET: Gross Domestic Product Annualized (Q1)
08:30 A.M. ET: Gross Domestic Product Price Index (Q1)
08:30 A.M. ET: Personal Consumption Expenditures Prices (QoQ) (Q1)
08:30 A.M. ET: Core Personal Consumption Expenditures (QoQ) (Q1)
09:55 A.M. ET: Reuters/Michigan Consumer Sentiment Index (April)