Morning Market Update
Stocks that are expected to trade actively in U.S. markets on Wednesday include: FedEx Corporation (NYSE:FDX), SPX Corporation (NYSE:SPW), Gardner Denver, Inc. (NYSE:GDI), McDonald’s Corporation (NYSE:MCD), Yum! Brands, Inc. (NYSE:YUM), General Mills, Inc. (NYSE:GIS), Health Net, Inc. (NYSE:HNT), Carlyle Group LP (NASDAQ:CG), Pfizer Inc. (NYSE:PFE), Navistar International Corp (NYSE:NAV), KBR, Inc. (NYSE:KBR), Delphi Automotive PLC (NYSE:DLPH), Titanium Metals Corp (NYSE:TIE), Sirius XM Radio Inc (NASDAQ:SIRI), Annaly Capital Management, Inc. (NYSE:NLY) and Zumiez Inc. (NASDAQ:ZUMZ).
Market Levels
• US: Dow Futures: 13313.00 (0.28%), S&P 500 Futures: 1445.30 (0.29%), NASDAQ Futures: 2710.50 (0.33%)
• Europe: CAC: 3665.51 (0.47%), DAX: 7675.23 (0.29%), FTSE: 5974.85 (0.65%)
• Asia-Pacific: Australia: 4617.80 (0.49%), China: 2162.24 (-0.01%), Hong Kong: 22623.37 (0.57%), India: 5929.60 (0.56%), Japan: 10160.40 (2.34%).
• Metals: Gold: 1670.00 (-0.04%), Silver: 31.52 (-0.49%), Copper: 3.64 (-0.49%)
• Energy: Crude Oil: 88.50 (0.65%), Natural Gas: 3.32 (-2.72%)
• Commodities: Corn: 7.19 (-0.55%), Soya Bean: 14.63 (-1.93%), Wheat: 8.18 (0.46%)
• Currency: EUR/USD: 1.3291 (0.47%), GBP/USD: 1.6289 (0.23%), USD/JPY: 84.5800 (0.44%)
• 10 year US Treasury: 1.812% (-0.005)
Market and Economic News Update
U.S. stock-index futures rise: U.S. stock-index futures are pointing to a higher open on Wednesday amid hopes of a breakthrough in the fiscal cliff negotiations in Washington before the end of the year. On the economic front, housing starts dropped to a seasonally adjusted annual rate of 861,000 in November, the Commerce Department said today. Economists were expecting permits to rise to an 875,000-unit pace last month.
European markets gain: European markets are up in trade following strong German business confidence data. The Ifo business sentiment data for Europe’s largest economy increased to 102.4 in December from 101.4 in November. The German DAX (INDEXDB:DAX) was trading 0.3 percent higher at 7675.23, the FTSE 100 (INDEXFTSE:UKX) added 0.7 percent to5974.85 and the CAC 40 (INDEXEURO:PX1) gained 0.5 percent to3665.51 points. The euro zone blue-chip ESTX 50 PR.EUR (INDEXSTOXX:SX5E) (Euro Stoxx 50) was up 0.6 percent
Asian markets end mostly higher: Asian markets closed higher on Wednesday amid expectations that Japan’s central bank will adopt more aggressive monetary stimulus measures. The NIKKEI 225 (INDEXNIKKEI:NI225) soared 2.4 percent to end above 10,000 for the first time in more than eight months. The HANG SENG INDEX (INDEXHANGSENG:HIS) closed 0.6 percent higher at 22,623.4, while the SSE Composite Index (SHA:000001) (Shanghai Composite Index) was flat for the day. The S&P/ASX 200 (INDEXASX:XJO) index ended up 22.6 points to 4,617.8, the highest close since July 8, 2011. The benchmark Indian 30-share BSE SENSITIVE (INDEXBOM:SENSEX) index closed 0.5 percent higher.
Stocks to Watch
FedEx Corporation (NYSE:FDX)
FedEx Corporation (NYSE:FDX) posted quarterly earnings that missed Street expectations. FedEx Corporation (NYSE:FDX) reported second-quarter earnings excluding certain items of $1.39 per share, down from $1.57 a share in the same period last year. Revenue for the period came in at $11.1 billion, up from $10.59 billion a year earlier. Analysts were expecting the company to report earnings excluding items of $1.41 a share on revenue of $10.84 billion. FedEx Corporation (NYSE:FDX) shares jumped 1.5 percent in early morning trade.
SPX Corporation (NYSE:SPW)
Shares of SPX Corporation (NYSE:SPW) are likely to be in focus today after Reuters reported that the industrial machinery maker is close to acquiring Pennsylvania-based rival Gardner Denver, Inc. (NYSE:GDI) for about $4.2 billion. A deal that values Gardner Denver, Inc. (NYSE:GDI) at $85 per share, compared to its Tuesday close of $73.68, could be announced as early as this week. SPX Corporation (NYSE:SPW) and Gardner Denver, Inc. (NYSE:GDI), both declined to comment on the news.
McDonald’s Corporation (NYSE:MCD), Yum! Brands, Inc. (NYSE:YUM)
McDonald’s Corporation (NYSE:MCD) and Yum! Brands, Inc. (NYSE:YUM) said they are making efforts to ensure food safety after China Central Television reported the companies may have sold chicken that had been indiscriminately injected with anti-viral drugs and growth hormones. The state television said commercial chicken producer Liu He Zhi Tuan had given unapproved drugs and growth hormones to its chickens that were then supplied to KFC and McDonald’s Corporation (NYSE:MCD) . Yum! Brands, Inc. (NYSE:YUM) said it would take strict action against its chicken suppliers if they are found to have violated the law, while McDonald’s Corporation (NYSE:MCD) said that its chicken and raw materials comply with stringent food quality standards and have to pass through independent, third-party laboratory tests. Shares of McDonald’s Corporation (NYSE:MCD) and Yum! Brands, Inc. (NYSE:YUM) were inactive in early trade.
General Mills, Inc. (NYSE:GIS)
General Mills, Inc. (NYSE:GIS) reported second-quarter earnings excluding one-time items of 86 cents per share, seven cents above estimates. Sales increased to $4.88 billion from $4.62 billion a year earlier, helped by new items, such as Yoplait Greek Yogurt, Nature Valley protein bars, and Peanut Butter Multigrain Cheerios. Sales were in line with estimates. For full year 2013, General Mills, Inc. (NYSE:GIS) said it expects to report adjusted earnings of $2.65 per share to $2.67 per share, compared to an earlier forecast of about $2.65 per share. General Mills, Inc. (NYSE:GIS) shares added 1.5 percent in early trade.
Health Net, Inc. (NYSE:HNT)
Health Net, Inc. (NYSE:HNT) has updated its 2013 full-year earnings to between $2 a share and $2.10 a share and revenue to between $10.7 billion and $11.2 billion. Analysts on an average had projected $2.14 a share in profit and $12.12 billion in revenue for 2013. Health Net, Inc. (NYSE:HNT) expects enrolment in 2013 to decline 1 to 2 percent, compared with last year. Health Net, Inc. (NYSE:HNT) shares have lost 16 percent this year, and the medical insurer has missed analysts’ estimates in two of the past three quarters.
Carlyle Group LP (NASDAQ:CG)
Private equity firm Carlyle Group LP (NASDAQ:CG) has completed the sale of Michigan-based auto-parts supplier Metaldyne LLC to American Securities LLC for about $820 million, Reuters reported on Wednesday. Metaldyne LLC had filed for Chapter 11 bankruptcy protection three years ago, after which it was taken over by Carlyle Group LP (NASDAQ:CG). Metaldyne LLC employs 4,000 people in 13 countries and clocked more than $1 billion in annual revenue. Carlyle Group LP (NASDAQ:CG), last December, sold Diversified Machine Inc., another auto parts supplier it had picked up from bankruptcy.
Pfizer Inc. (NYSE:PFE)
Pfizer Inc. (NYSE:PFE) will cut about 20 percent of its 3,000-member sales force for primary-care pharmaceuticals, as part of continuing efforts to reduce costs, according to a report in Bloomberg News. Pfizer Inc. (NYSE:PFE) has been cutting expenses after it lost the patent for top-selling cholesterol drug Lipitor that generated $9.6 billion in revenue in 2011. The staff cuts will begin this month. Pfizer Inc. (NYSE:PFE)’s primary-care drugs include top-selling products like erectile dysfunction pill Viagra, arthritis treatment Celebrex and pain therapy Lyrica. Pfizer Inc. (NYSE:PFE) fell in early trade.
Navistar International Corp (NYSE:NAV)
Navistar International Corp (NYSE:NAV) reported a fourth quarter loss of $2.77 billion, or $40.13 a share, compared with a year-ago profit of $255 million, or $3.48 a share. The loss included a non-cash tax expense of $2 billion, or $28.59 per share, Navistar International Corp (NYSE:NAV) said. Revenue fell 24 percent to $3.28 billion. Analysts had projected the commercial-truck maker to post a loss of $1.12 a share on revenue of $3.18 billion. The company’s truck segment reported a $160 million loss, while its engine business posted a $287 million loss. Shares of Navistar International Corp (NYSE:NAV) plunged 5 percent.
KBR, Inc. (NYSE:KBR)
Defense contractor KBR, Inc. (NYSE:KBR) raised its quarterly dividend by 60 percent to 8 cents a share from 5 cents a share. KBR, Inc. (NYSE:KBR) said the dividend is payable on April 15 to shareholders of record March 15. “KBR’s 60% dividend increase reflects our continued confidence in the company’s ability to generate strong cash flow in the future and the company’s commitment to efficiently return cash to shareholders,” CEO Bill Utt said in a statement. KBR, Inc. (NYSE:KBR) shares were inactive in pre-market.
Delphi Automotive PLC (NYSE:DLPH)
Auto parts supplier Delphi Automotive PLC (NYSE:DLPH) will replace Titanium Metals Corp (NYSE:TIE) in the S&P 500 index after the close of trading Friday, Standard and Poor’s said on Tuesday. Precision Castparts Corp. (NYSE:PCP) is close to completing the acquisition of Titanium Metals Corp (NYSE:TIE) for about $2.9 billion. U.K.-based Delphi Automotive PLC (NYSE:DLPH) was spun off from General Motors in 1999 and went public over a year ago at $22 a share. Delphi Automotive PLC (NYSE:DLPH) shares rose 4.5 percent to $34.45 in after-hours trading.
Sirius XM Radio Inc (NASDAQ:SIRI)
Satellite radio operator Sirius XM Radio Inc (NASDAQ:SIRI) has named president of sales James Meyer as interim chief executive officer. Meyer will replace Mel Karmazin effective immediately. Sirius XM Radio Inc (NASDAQ:SIRI) also said that Meyer will join its board of directors. Karmazin had said in October that he would leave on February 1 after differences emerged with John Malone, the billionaire who plans to take control of the company. Shares of Sirius XM Radio Inc (NASDAQ:SIRI) gained 0.5 percent in early morning trade.
Annaly Capital Management, Inc. (NYSE:NLY)
Real estate investment trust Annaly Capital Management, Inc. (NYSE:NLY) cut its quarterly dividend by 10 percent to 45 cents a share. The dividend is payable on January 29, 2013, to shareholders of record on December 28, 2012. The ex-dividend date is December 26. Annaly Capital Management, Inc. (NYSE:NLY) was last week downgraded to “hold” from “buy” by analysts at Deutsche Bank. Shares of Annaly Capital Management, Inc. (NYSE:NLY) were up 0.5 percent during pre-market trading.
Zumiez Inc. (NASDAQ:ZUMZ)
Specialty-apparel retailer Zumiez Inc. (NASDAQ:ZUMZ) said its board has approved a new $20 million share repurchase program. The new stock buyback plan was announced after the close of trading on Tuesday. Zumiez Inc. (NASDAQ:ZUMZ), last month, had announced a $20 million buyback program that ended on December 17. Zumiez Inc. (NASDAQ:ZUMZ) shares were inactive in morning trade.
Economic Calendar for Wednesday, December 19, 2012:
07:00 A.M. ET: MBA Purchase Applications (Week ending Friday, December 14)
08:30 A.M. ET: Housing Starts (MoM) (November)
08:30 A.M. ET: Building Permits (MoM) (November)
10:30 A.M. ET: EIA Petroleum Status Report (Week ending Friday, December 14)
01:00 P.M. ET: 7-Year Note Auction
