Morning News – Market Update
Stocks that are expected to trade actively in U.S. markets on Thursday include: Hewlett-Packard Company (NYSE:HPQ), J. C. Penney Company, Inc. (NYSE:JCP), The Blackstone Group L.P. (NYSE:BX), Prologis Inc (NYSE:PLD), Tesla Motors Inc (NASDAQ:TSLA), PetSmart, Inc. (NASDAQ:PETM), Fidelity National Financial Inc (NYSE:FNF), Lender Processing Services, Inc. (NYSE:LPS), Hormel Foods Corporation (NYSE:HRL), LyondellBasell Industries NV (NYSE:LYB), L Brands Inc (NYSE:LTD) and Dover Corp (NYSE:DOV).
Relying On Old-Fashioned Stock Picking, Lee Ainslie Reports His “Strongest Quarter” Ever
Lee Ainslie's Maverick Fund USA enjoyed its "strongest quarter in the fund's history" during the three months to the end of June. According to a copy of the firm's second-quarter letter to investors, which ValueWalk has been able to review, Maverick Fund USA gained 18% in the second quarter. Following this performance, the fund was Read More
• US: Dow Futures: 15201.00 (-0.78%), S&P 500 Futures: 1640.40 (-0.92%), NASDAQ Futures: 2973.00 (-0.93%)
• Europe: CAC: 3951.21 (-2.47%), DAX: 8312.96 (-2.55%), FTSE: 6720.02 (-1.76%)
• Asia-Pacific: Australia: 5062.40 (-1.99%), China: 2275.67 (-1.17%), Hong Kong: 22669.68 (-2.61%), Japan: 14483.98 (-7.89%).
• Metals: Gold: 1393.70 (1.92%), Silver: 22.52 (0.24%), Copper: 3.29 (-2.78%)
• Energy: Crude Oil: 92.95 (-1.41%), Natural Gas: 4.18 (-0.24%)
• Commodities: Corn: 5.27 (1.78%), Soya Bean: 14.92 (1.22%), Wheat: 6.92 (1.25%)
• Currency: EUR/USD: 1.2899 (0.32%), GBP/USD: 1.5065 (0.10%), USD/JPY: 101.7000 (-1.42%)
• 10 year US Treasury: 2.015% (-0.025)
Market and Economic News Update
U.S. stock-index futures decline: U.S. stock-index futures are pointing to a lower open on Thursday, despite better than expected jobless claims data. Initial jobless claims dropped to 340,000 for the week ended May 18 from 363,000 in the prior week. Analysts had projected first-time claims to fall to 345,000. In other economic news, U.S. manufacturing activity contracted to 51.9 in May, compared to forecasts of 51.8.
European markets lower: European markets are down in trade, amid investor concern that the U.S. Federal Reserve may end its asset-purchase program sooner than expected. On the economic front, the Eurozone Flash Composite PMI rose to a three-month high of 47.5 in May, from 47.0 in April. French PMI was unchanged for the month, while German PMI rose to 49.9 against 49.2 in April. The DAX (INDEXDB:DAX) dropped 2.6 percent to 8312.96. The FTSE 100 (INDEXFTSE:UKX) slid 1.8 percent, while the CAC 40 (INDEXEURO:PX1) lost 2.5 percent to 3951.21 points. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) dropped 2.4 percent.
Asian markets end deep in the red: Asian stocks finished significantly lower in a volatile session on Thursday, with the NIKKEI 225 (INDEXNIKKEI:NI225) suffering its worst one-day loss in more than two years. The SSE Composite Index (SHA:000001) (Shanghai Composite Index) and the HANG SENG INDEX (INDEXHANGSENG:HSI) also fell in trade after HSBC’s latest China’s flash PMI slipped below the 50-mark for the first time in seven months. The S&P/ASX 200 (INDEXASX:XJO) index slumped close to 2 percent, hurt by losses in financial stocks.
Stocks in News
Hewlett-Packard Company (NYSE:HPQ)
Hewlett-Packard Company (NYSE:HPQ) reported better than expected quarterly profit amid cost-cuts and strong performance at its enterprise services unit. Fiscal second-quarter earnings excluding items were 87 cents per share, 6 cents above the consensus estimate. Revenue came in at $27.58 billion, missing forecasts of $28.01 billion. For the third quarter, the company expects earnings of 84 to 87 cents a share, compared to Street expectations of 83 cents a share. The stock is up more than 10 percent in early morning trade.
J. C. Penney Company, Inc. (NYSE:JCP)
J. C. Penney Company, Inc. (NYSE:JCP) has secured a $2.25 billion loan, $500 million more than what it had initially sought, as the struggling retailer tries to arrest the collapse in sales. The loan is secured by hundreds of properties including its Texas headquarters, distribution centers and stores. Chief Financial Officer Ken Hannah said the new funding gives the company flexibility to implement plans to put it back on a path of profitable growth. Shares rose 5 cents to $18.77 in pre-market trading after falling 26 cents to $18.72 in regular session on Wednesday.
The Blackstone Group L.P. (NYSE:BX), Prologis Inc (NYSE:PLD)
Private-equity firm The Blackstone Group L.P. (NYSE:BX) and industrial real estate company Prologis Inc (NYSE:PLD) have agreed to buy a portfolio of 17 million square feet of warehouse and distribution centers for about $960 million. The acquisition is expected to be completed in the third quarter of the year. The portfolio is 80 percent owned by Lehman Brothers, and the rest is owned by Prologis.
Tesla Motors Inc (NASDAQ:TSLA)
Tesla Motors Inc (NASDAQ:TSLA) has paid off the entire loan awarded to the company by the U.S. Department of Energy in 2010. The electric carmaker paid off $465 million of the remaining loan, nine years before it was due, using money raised last week in a stock and debt offering. The company further said it would finance the development of its next two vehicles without selling any new shares.
PetSmart, Inc. (NASDAQ:PETM)
PetSmart, Inc. (NASDAQ:PETM) reported better than expected quarterly profit and raised its outlook for the year, sending the pet retailer’s shares higher in pre-open session. First quarter earnings came in at 98 cents per share, 2 cents above the average analysts’ estimate. Revenue increased 5 percent to $1.71 billion, trailing expectations for $1.72 billion. In addition, PetSmart forecast full-year earnings of between $3.82 and $3.94 per share, up from earlier projections of $3.76 to $3.92 per share.
Fidelity National Financial Inc (NYSE:FNF), Lender Processing Services, Inc. (NYSE:LPS)
Fidelity National Financial Inc (NYSE:FNF) and buyout firm THL Partners are in advanced talks to acquire Lender Processing Services, Inc. (NYSE:LPS) for about $2.9 billion, the Wall Street Journal reported late Wednesday. Under the terms of the proposed transaction, the buyers would pay about $33 a share, 13 percent higher than the closing price of Lender Processing Services, Inc. (NYSE:LPS) on Wednesday. The two firms would pay with a mix of cash and Fidelity National Financial stock, the report said, citing people familiar with the matter.
Hormel Foods Corporation (NYSE:HRL)
Hormel Foods Corporation (NYSE:HRL) posted second quarter earnings of 46 cents per share, three cents below estimates, on revenues of $2.15 billion that also fell short of consensus. The packaged-foods producer was hurt by lower profit margins and higher overhead costs. Gross margin during the period narrowed to 16.4 percent, while input costs increased 7.3 percent, and general and administrative costs rose 16 percent. Shares were inactive pre-market.
LyondellBasell Industries NV (NYSE:LYB)
LyondellBasell Industries NV (NYSE:LYB) has increased its quarterly dividend by 25 percent to 50 cents per share, and has also approved the buyback of up to 10 percent of its stock over the next year. The dividend hike will cost the company about $57.5 million a quarter, while the repurchase of 10 percent of company stock would cost $3.74 billion at yesterday’s closing price of $65.07. Chairman and Chief Executive Officer Jim Gallogly also cited an improved outlook for the world’s largest producer of polypropylene.
L Brands Inc (NYSE:LTD)
Victoria’s Secret parent L Brands Inc (NYSE:LTD) posted first quarter earnings of 48 cents per share on sales of $2.27 billion, edging past estimates of 46 cents per share on revenue of $2.26 billion. For the second quarter, the company, formerly called Limited Brands Inc., forecast earnings of 50 to 55 cents per share, compared to expectations for 53 cents per share. Shares gained in pre-market trading.
Dover Corp (NYSE:DOV)
Diversified manufacturer Dover Corp (NYSE:DOV) will spin-off some of its communication technologies unit into a standalone, publicly traded company named Knowles Corp. Jeffrey Niew will serve as president and CEO of the new company. Dover shares gained in pre-market trading post the announcement.
Economic Calendar for Thursday, May 23, 2013:
06:05 A.M. ET: St. Louis Federal Reserve Bank President James Bullard speaks.
08:30 A.M. ET: Initial Jobless Claims (Week ending Saturday, May 18)
08:30 A.M. ET: Continuing Jobless Claims (Week ending Saturday, May 11)
08:58 A.M. ET: Markit Manufacturing PMI (May)
09:00 A.M. ET: FHFA Housing Price Index (MoM) (April)
10:00 A.M. ET: New Home Sales (MoM) (April)
10:00 A.M. ET: New Home Sales Change (MoM) (April)
10:30 A.M. ET: EIA Natural Gas Report (Week ending Friday, May 17)
11:00 A.M. ET: Kansas Fed manufacturing activity (May)
04:30 P.M. ET: Fed Balance Sheet
04:30 P.M. ET: Money Supply