Morning News Update:
Stocks that are expected to trade actively in U.S. markets on Wednesday include: The Wet Seal, Inc. (NASDAQ:WTSL), Wal-Mart Stores, Inc. (NYSE:WMT), Smithfield Foods, Inc. (NYSE:SFD), Apache Corporation (NYSE:APA), Michael Kors Holdings Ltd (NYSE:KORS), Service Corporation International (NYSE:SCI), Stewart Enterprises, Inc. (NASDAQ:STEI), Guidewire Software Inc (NYSE:GWRE), Cerner Corporation (NASDAQ:CERN), KKR & Co. L.P. (NYSE:KKR), Carlyle Group LP (NASDAQ:CG), Amgen, Inc. (NASDAQ:AMGN) and IAC/InterActiveCorp (NASDAQ:IACI).
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
• US: Dow Futures: 15283.00 (-0.59%), S&P 500 Futures: 1646.40 (-0.50%), NASDAQ Futures: 2990.00 (-0.45%)
• Europe: CAC: 3994.98 (-1.39%), DAX: 8341.52 (-1.67%), FTSE: 6656.74 (-1.58%)
• Asia-Pacific: Australia: 4974.70 (0.08%), China: 2324.02 (0.12%), Hong Kong: 22554.93 (-1.64%), Japan: 14326.46 (0.10%).
• Metals: Gold: 1391.80 (0.94%), Silver: 22.36 (0.75%), Copper: 3.28 (-1.07%)
• Energy: Crude Oil: 94.32 (-0.73%), Natural Gas: 4.16 (-0.26%)
• Commodities: Corn: 5.56 (2.80%), Soya Bean: 15.10 (2.38%), Wheat: 6.93 (-0.50%)
• Currency: EUR/USD: 1.2944 (0.68%), GBP/USD: 1.5118 (0.52%), USD/JPY: 101.2100 (-1.13%)
• 10 year US Treasury: 2.156% (-0.009)
Market and Economic News Update
U.S. stock-index futures decline: U.S. stock-index futures are pointing to a lower open on Wednesday amid investor concerns that strong home prices and consumer confidence data will prompt the Fed to scale back its bond-buying program. In other economic news, the OECD projected the U.S. GDP to expand 1.9 percent this year, but cut its global growth forecasts.
European markets tumble: European markets are significantly lower following weak German unemployment data. The country’s Labour Office said the number of people out of work climbed a seasonally adjusted 21,000 to 2.963 million, well above analysts’ expectations. The DAX (INDEXDB:DAX) fell 1.7 percent to 8341.52. The FTSE 100 (INDEXFTSE:UKX) slumped 1.6 percent, while the CAC 40 (INDEXEURO:PX1) erased 1.4 percent to 3994.98 points. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) lost 1.3 percent.
Asian markets end mixed: Asian stocks gave up gains made earlier in the session amid renewed fears that the U.S. Federal Reserve will scale back its bond buying program. The NIKKEI 225 (INDEXNIKKEI:NI225) rallied as much as 1 percent in early morning trade, but lost momentum to close largely unchanged. The HANG SENG INDEX (INDEXHANGSENG:HSI) fell after two-straight days of gains, hurt by weakness in consumer and property stocks, while the SSE Composite Index (SHA:000001) (Shanghai Composite Index) closed 0.2 percent higher, after hitting a fresh two-month high earlier in the session. The S&P/ASX 200 (INDEXASX:XJO) index closed flat a rally in mining stocks offset losses in banking stocks.
Stocks in News
The Wet Seal, Inc. (NASDAQ:WTSL)
The Wet Seal, Inc. (NASDAQ:WTSL) reported strong first quarter results, helped by improved margins and lower expenses. The teen apparel retailer earned 3 cents a share on sales of $140 million, beating expectations for a penny a share on sales of $139 million. In addition, the company provided current-quarter outlook that beat Wall Street estimates, sending shares higher in pre-market trading.
Wal-Mart Stores, Inc. (NYSE:WMT)
Wal-Mart Stores, Inc. (NYSE:WMT) pleaded guilty to improperly dumping pesticides, fertilizer and other hazardous products in California and Missouri, and agreed to pay $82 million in fines. The plea agreements bring to an end years of investigations and legal wrangling that cost Wal-Mart a total of $110 million. Shares were largely unchanged in early-hours trading.
Smithfield Foods, Inc. (NYSE:SFD)
China’s Shuanghui Group is close to acquiring Smithfield Foods, Inc. (NYSE:SFD) for around $5 billion in cash, according to the Wall Street Journal. A deal could be announced as early as Wednesday morning, the report said, citing people familiar with the talks. Smithfield has come under increasing pressure from largest shareholder, Continental Grain Company, to split itself up into three independent companies. Smithfield shares soared close to 25 percent in pre-market trade.
Apache Corporation (NYSE:APA)
Houston-based Apache Corporation (NYSE:APA) is exploring a sale of a minority stake in its shallow water Gulf of Mexico assets, and has hired Goldman Sachs to advice on the process, Reuters reported. Potential suitors include private equity firms like TPG Capital LP, Apollo Global Management LLC (NYSE:APO) and KKR & Co. L.P. (NYSE:KKR), the report said, citing people familiar with the matter. Apache shares closed Tuesday up 0.9 percent at $82.39, and edged higher in pre-market trading.
Michael Kors Holdings Ltd (NYSE:KORS)
Michael Kors Holdings Ltd (NYSE:KORS) posted better-than-expected fourth-quarter profit, helped by broad sales growth across all segments and geographies. The high-end clothing and accessories maker earned 50 cents per share, 11 cents above the consensus estimate, with revenues also topping analyst expectations. Sales in North America, which account for more than three-quarters of its total sales, rose 52 percent, while European sales jumped 97 percent.
Service Corporation International (NYSE:SCI), Stewart Enterprises, Inc. (NASDAQ:STEI)
Stewart Enterprises, Inc. (NASDAQ:STEI) will be acquired by rival funeral home and cemetery operator Service Corporation International (NYSE:SCI) for $1.1 billion in cash, or $13.25 per share. The price is a 36 percent premium over yesterday’s closing price. The deal, which has been approved by the boards of both the companies, has an enterprise value of about $1.4 billion.
Guidewire Software Inc (NYSE:GWRE)
Guidewire Software Inc (NYSE:GWRE) reported better than expected third quarter results amid a big jump in services revenue. Excluding items, the insurance software maker’s earnings came in at 4 cents a share, topping expectations for 3 cents a share. Revenue increased 20 percent to $68.3 million, also edging past estimates of $63.6 million. Shares rallied in pre-open session.
Cerner Corporation (NASDAQ:CERN)
Cerner Corporation (NASDAQ:CERN)’s board has approved a 2-for-1 stock split, sending shares higher in early morning trade. Shareholders of record on June 17 will receive one additional share of each common stock held. The split is expected to take effect on or about June 28. Cerner had about 172.3 million shares outstanding as of Friday, May 24.
KKR & Co. L.P. (NYSE:KKR), Carlyle Group LP (NASDAQ:CG)
Private equity firms KKR & Co. L.P. (NYSE:KKR) and Carlyle Group LP (NASDAQ:CG) are preparing bids for Singapore Telecommunications’ Australian unit, Optus Satellite, Reuters reported late Tuesday. Reuters said SingTel expects Optus to fetch more than 2 billion Australian dollars ($1.93 billion), and sent out financial information to interested bidders that also include France’s Eutelsat Communications SA (EPA:ETL).
Amgen, Inc. (NASDAQ:AMGN)
Amgen, Inc. (NASDAQ:AMGN) has formed a joint venture with Japanese drug maker, Astellas Pharma Inc (TYO:4503), to co-develop and sell five experimental drugs in the country. The medicines include heart therapy AMG 145, osteoporosis treatment romosozumab and the gastric cancer medicine rilotumumab. The financial terms of the deal were not disclosed. Shares of Amgen Inc gained in pre-market trading.
IAC/InterActiveCorp (NASDAQ:IACI) is seeking buyers for Newsweek, according to Hollywood trade publication Variety. A spokeswoman for IAC declined to comment on the report. IAC obtained a stake in the now online-only magazine in 2010, but things did not go according to plan. Chairman Barry Diller admitted in a recent interview that the purchase was a mistake.
Economic Calendar for Wednesday, May 29, 2013:
07:00 A.M. ET: MBA Purchase Applications (Week ending Friday, May 24)
07:45 A.M. ET: ICSC-Goldman Store Sales
08:55 A.M. ET: Redbook Index (YoY) (May 19)
08:55 A.M. ET: Redbook Index (MoM) (May 19)
10:30 A.M. ET: EIA Crude Oil Stocks change (Week ending Friday, May 24)
11:30 A.M. ET: 4-Week Bill Auction
11:30 A.M. ET: 52-Week Bill Auction
12:00 P.M. ET: Boston Federal Reserve Bank President Eric Rosengren speaks.
01:00 P.M. ET: 5-Year Note Auction