Market Overview

Dow Jumps 129 & Hits a Record High; Twitter IPO Prices at $26

Twitter (NYSE: TWTR) priced its initial public offering at $26 a share after Wednesday's trading, a touch lighter than investment bankers had hoped.

It's not clear how the pricing, which values the company at roughly $14.2 billion, will affect markets on Thursday. Stocks mostly finished higher on Wednesday. The Dow Jones Industrials hit new intraday and closing highs. But Twitter's pricing and disappointing quarterly earnings from Whole Foods Market (NYSE: WFM) and Qualcomm (NASDAQ: QCOM) may pressure stocks.  

The Dow closed up 129 points, or 0.82 percent, to 15,747. That close broke the old record of 15,680, set on Oct. 29. The Dow hit an intraday high of 15,750 just before the close.

The Standard & Poor's 500 Index finished up 8 points, or 0.43 percent, to 1,770, just a new closing high. But the Nasdaq Composite Index slipped 8 points to 3,932 because of weakness in shares of Apple (NASDAQ: AAPL) and luxury auto-maker Tesla Motors (NASDAQ: TSLA).

The rally was built on speculation that the Federal Reserve won't be raising interest rates unless the U.S. unemployment rate falls below six percent. The rate was 7.2 percent in September. The Labor Department will report on payroll growth and unemployment on Friday. Most economists don't see the unemployment rate reaching six percent until mid-2014 at the earliest.

Top Headline

The rally came as underwriters and executives at social-media site Twitter (NYSE: TWTR) met to price 70 million shares for the IPO. They settled at $26 at about 6:40 p.m. ET. That was $1 higher than Twitter's projected range of $23 to $25, set on Monday. But Wednesday, the speculation was for pricing between $25 and $28. The Wall Street Journal said bankers led by Goldman Sachs, had hoped to get $27, which would have valued the company at around $15.2 billion. New York Stock Exchange trading will begin Thursday morning under the symbol TWTR.

The valuation of $14.16 billion is about 14 times estimated 2014 revenue of a bit more than $1 billion. That's a fairly rich multiple -- especially for a company that is not yet profitable.

A big fuel for the rally was Microsoft (NASDAQ: MSFT), whose $38.18 close, up 4.23 percent, was its best since July 2000. The gain was the biggest among the 30 Dow stocks and contributed nearly 10 points to the index's performance. The shares are up nearly 43 percent in 2013, third-best among the 30 Dow stocks.

Also showing big gains were Ralph Lauren (NYSE: RL), up 5.45 percent; Frontier Communications (NASDAQ: FTR) up 5.36 percent; and International Game Technology (NYSE: IGT), up 4.42 percent.

Among the losers were Abercrombie & Fitch (NYSE: ANF), which cut guidance; J.C. Penney (NYSE: JCP) and Chesapeake Energy (NYSE: CHK).

After hours, Whole Foods Market and Qualcomm were trading down 8.9 percent to $58.80 and 4 percent to $66.94, respectively, after earnings and guidance disappointed.

In addition to Twitter's trading start, Thursday features earnings from Dow component Walt Disney (NYSE: DIS), and oil-and-gas producer Apache (NYSE: APA). The Labor Department will issue its weekly report on jobless claims.

Time Warner Earnings

Time Warner (NYSE: TWX [FREE Stock Trend Analysis]) reported a rise in its third-quarter profit, but investors weren't impressed because revenue was little changed from a year ago and missed the Street estimate. Shares fell 0.8 percent to $67.69. 

Time Warner earned $1.18 billion, or $1.26 a share, up 44 percent from a year ago's profit of $822 million, or $0.84 a share. Its adjusted earnings from continuing operations climbed to $1.01 per share from $0.84 per share. Analysts had expected 89 cents a share.

Revenue came in at $6.86 billion, up slightly from a year ago but versus $6.84 billion. The Street was looking for $6.94 billion.

Equities Trading UP

Blucora (NASDAQ: BCOR) shot up more than 20 percent to $29.20, after the internet tool-developer reported upbeat Q3 revenue.

Shares of AngloGold Ashanti (NYSE: AU) got a boost, shooting up 6.36 percent to $15.76 on Q3 results.

Ralph Lauren shares jumped to $180.52 after the company reported better-than-expected fiscal-second-quarter earnings.

Equities Trading DOWN

Tesla shares were down 14.5 percent to $151.16 after the company reported a better-than-expected Q3 profit. But investors were disappointed that deliveries of new vehicles weren't as large as expected.

Shares of oil-and-gas producer Halcon Resources (NYSE: HK) tumbled 8 eight percent to $4.70 after Global Hunter downgraded the stock from Neutral to Sell and lowered the price target from $6 to $3.50.

Abercrombie & Fitch shares slumped 13.5 percent to $33.15. The teen retailer reported a 14 percent drop in its third-quarter comparable sales and cut its adjusted profit view for the full year.

Commodities

Crude oil traded up 1.53 percent to $94.80. Brent crude was off 0.27 percent to $105.05. The national average price of gasoline fell to $3.232 a gallon, according to AAA's Daily Fuel Gauge Report.

Gold settled up 0.74 percent to $1,317.80 an ounce. Silver traded up 0.61 percent Wednesday to $21.768 an ounce. Copper slipped 0.66 percent to $3.237 a pound.

Eurozone

European shares were higher Wednesday. The Spanish Ibex Index rose 0.42 percent. Italy's FTSE MIB Index climbed 0.89 percent. Germany's German DAX gained 0.35 percent and the French CAC-40 surged 0.79 percent. The British FTSE-100 Index was off 0.08 percent.

Economics

The Mortgage Bankers Association reported that its index of mortgage application activity declined seven percent for the week ending Nov. 1.

Planned layoffs rose 13.5 percent to 45,730 in October from September, but fell 4.2 percent from a year ago, according to Challenger, Gray & Christmas.

The Conference Board's leading economic index rose 0.7 percent in September. Economists had expected 0.6 percent growth.

Crude oil stockpiles rose 1.6 million barrels for the week ending November 1, the U.S. Energy Information Administration reported. Analysts had expected a gain of 2.5 million barrels.

Posted-In: Earnings News Bonds Eurozone Commodities Economics Federal Reserve After-Hours Center Best of Benzinga

 

Related Articles (AAPL + ANF)

Around the Web, We're Loving...

Partner Network

Get Benzinga's Newsletters