Morning News Update. Stocks that are expected to trade actively in U.S. markets on Wednesday include: Dell Inc. (NASDAQ:DELL), Yahoo! Inc. (NASDAQ:YHOO), Electronic Arts Inc. (NASDAQ:EA), Hasbro, Inc. (NASDAQ:HAS), Apple Inc. (NASDAQ:AAPL), Mead Johnson Nutrition CO (NYSE:MJN), Abbott Laboratories (NYSE:ABT), Chesapeake Energy Corporation (NYSE:CHK), EXCO Resources Inc (NYSE:XCO), Lululemon Athletica inc. (NASDAQ:LULU), Entropic Communications, Inc. (NASDAQ:ENTR) and Cliffs Natural Resources Inc (NYSE:CLF).
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
Morning News Update Market Levels:
US: Dow Futures: 14842.00 (-0.13%), S&P 500 Futures: 1602.30 (-0.30%), NASDAQ Futures: 2916.50 (-0.23%)
Europe: CAC: 3690.62 (-1.41%), DAX: 7796.27 (-1.47%), FTSE: 6213.84 (-1.45%)
Asia-Pacific: Australia: 4744.10 (-1.86%), China: 1994.27 (-0.62%), Hong Kong: 20147.31 (-2.54%), Japan: 14055.56 (-0.31%).
Metals: Gold: 1248.00 (0.37%), Silver: 19.76 (2.36%), Copper: 3.16 (0.48%)
Energy: Crude Oil: 101.89 (1.71%), Natural Gas: 3.62 (-1.01%)
Commodities: Corn: 5.07 (0.10%), Soya Bean: 12.54 (0.04%), Wheat: 6.68 (-1.50%)
Currency: EUR/USD: 1.2977 (-0.02%), GBP/USD: 1.5276 (0.79%), USD/JPY: 99.6100 (-1.01%)
10-year US Treasury: 2.464% (-0.005)
Morning News Update: Market and Economic News Update:
U.S. stock-index futures decline: U.S. stock-index futures are pointing to a lower open on Wednesday, but pared early losses, after data showed strong private-sector jobs growth in June, and a drop in weekly jobless claims. ADP reported that private-sector employment increased by 188,000 jobs in June, up from a 134,000 increase in May. Analysts were expecting an increase of 160,000 private jobs. In other economic news, weekly jobless claims dropped by 5,000 to a seasonally adjusted 343,000, the Labor Department said today. Meanwhile, U.S. trade deficit widened by 12.1 percent to $45.03 billion in May from $40.15 billion in April. The stock market will close at 1 P.M. Eastern Time ahead of the Fourth of July holiday.
European markets deep in the red: European markets fell in trade amid growing political unrest in Portugal. Following Finance Minister Vitor Gaspar’s resignation on Monday, Foreign Minister Paulo Portas stepped down from the Portuguese government, putting the country in further jeopardy. On the economic front, Markit’s composite euro zone Purchasing Managers’ Index climbed to 48.7 in June from 47.7 in May. Separately, retail sales in the currency bloc unexpectedly jumped 1.0 percent in May from the previous month. The CAC 40 (INDEXEURO:PX1) lost 1.4 percent to 3690.62, while the DAX (INDEXDB:DAX) shed 1.5 percent to 7796.27. The FTSE 100 (INDEXFTSE:UKX) tumbled 1.5 percent to 6213.84 points. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) was down 1.7 percent in recent trading.
Asian markets end lower: Asian stocks closed lower on Wednesday after weak services sector data from China revived fears of a slowdown in the world’s second-largest economy. Activity in China’s service sector dropped to its lowest level in nine months, the official Purchasing Managers’ Index showed. The index eased to 53.9 in June from 54.3 in May. The SSE Composite Index (SHA:000001) (Shanghai Composite Index) lost 0.6 percent to close below the 2,000 mark. The S&P/ASX 200 (INDEXASX:XJO) index slumped close to 2 percent following disappointing retail sales data. Retail sales rose by 0.1 percent in May, compared to forecasts for a 0.3 percent gain. The NIKKEI 225 (INDEXNIKKEI:NI225) gave up gains made earlier in the session to end 0.3 percent lower.
Morning News Update Stocks in News:
Dell Inc. (NASDAQ:DELL)
The PC maker’s special committee has asked founder and chief executive Michael Dell to raise his $24.4 billion offer to take the company private. The special committee’s move follows news that Carl Icahn and his affiliates have obtained close to $3.42 billion in financing commitments for their alternative proposal.
Yahoo! Inc. (NASDAQ:YHOO)
The Internet company has acquired Qwiki, an app for creating videos on iPhones, as it tries to increase its presence in the mobile market. Yahoo paid about $50 million for the deal, tech blog AllThingsD reported, citing people with knowledge of the situation. Yahoo shares closed Tuesday at $24.99, and were down close to a percent in early morning trade.
Electronic Arts Inc. (NASDAQ:EA), Hasbro, Inc. (NASDAQ:HAS)
Electronic Arts Inc. (NASDAQ:EA) entered into a new four-year agreement with Hasbro, Inc. (NASDAQ:HAS) under which the video-game maker will develop several of Hasbro’s popular gaming brands including Monopoly, Scrabble and Clue, for mobile platforms globally. Shares of both the companies were largely unchanged in pre-market trading.
Apple Inc. (NASDAQ:AAPL)
The tech giant has hired the former chief executive officer of luxury fashion house Yves Saint Laurent for “special projects”. Paul Deneve will report directly to CEO Tim Cook. It was however unclear what special projects Deneve will oversee at Apple. Deneve worked for Apple in Europe during the 1990s.
Mead Johnson Nutrition CO (NYSE:MJN), Abbott Laboratories (NYSE:ABT)
Shares of Mead Johnson Nutrition CO (NYSE:MJN) and Abbott Laboratories (NYSE:ABT) will likely be in focus following reports that China launched an investigation targeting foreign infant-formula companies for possible price fixing. Mead Johnson, Abbott Laboratories, Nestle SA and Danone SA (EPA:BN) are under investigation by China’s National Development and Reform Commission for alleged antitrust violations, the Beijing Times reported late Tuesday.
Chesapeake Energy Corporation (NYSE:CHK), EXCO Resources Inc (NYSE:XCO)
Chesapeake Energy Corporation (NYSE:CHK) has agreed to sell oil and gas assets in the Eagle Ford and Haynesville shales to a unit of EXCO Resources Inc (NYSE:XCO) for about $1 billion. The deal, expected to close in the current quarter, will bring Chesapeake’s year-to-date asset sales to about $3.6 billion.
Lululemon Athletica inc. (NASDAQ:LULU)
The athletic clothing retailer has been sued for allegedly defrauding shareholders. A shareholder filed a class-action lawsuit in the U.S. district court in Manhattan accusing the company of “defrauding shareholders by hiding defects in yoga pants whose sheerness led to a costly recall, and concealing talks that led to the sudden departure of its chief executive,” according to a Reuters report. Shares were inactive in pre-market trading.
Entropic Communications, Inc. (NASDAQ:ENTR)
Entropic Communications, Inc. (NASDAQ:ENTR) announced plans to cut 10 percent of its global workforce as part of a restructuring plan, and said it expects second-quarter revenue at the lower end of its original guidance. The chipmaker expects the restructuring to generate about $9 million in annual savings. Shares are down in pre-open session.
Cliffs Natural Resources Inc (NYSE:CLF)
The mining company has restarted its Wabush Scully iron ore mine in Eastern Canada that was temporarily idled last week due to forest fires in the region. Cliffs Natural Resources employs close to 4,000 people and has a 28 percent share of the U.S. iron-ore pellet market. Shares fell in early-hours trading.
Morning News Update: Economic Calendar for Wednesday, July 03, 2013:
07:00 A.M. ET: MBA Mortgage Applications (June 28)
07:30 A.M. ET: Challenger Job Cuts (YoY) (June)
08:15 A.M. ET: ADP Employment Change (June)
08:30 A.M. ET: Trade Balance (May)
08:30 A.M. ET: Initial Jobless Claims (June 29)
08:30 A.M. ET: Continuing Jobless Claims (June 22)
10:00 A.M. ET: ISM Non-Manufacturing PMI (June)
10:30 A.M. ET: EIA Petroleum Status Report (June 28)
12:00 P.M. ET: EIA Natural Gas Storage change (June 28)