IBM's Report Weighs On The Dow, Apple Helps Boost The Nasdaq, S&P 500 Extends Winning Streak
U.S. stocks started the week on a positive note as all three major indices ended the day in positive territory.
Dow component IBM reported a disappointing third quarter along with a cautious outlook weighing down the entire Dow index. The Nasdaq benefited from high expectations over Apple's results, which were reported after market close.
The CBOE Volatility Index fell more than 15 percent, as geopolitical and Ebola concerns may be making investors a little less anxious. However, China's GDP figures, set to be released on Tuesday, may impact Tuesday's trading session.
- The Dow gained 0.12 percent, closing at 16,399.67.
- The S&P 500 gained 0.91 percent, closing at 1,904.01.
- The Nasdaq gained 1.35 percent, closing at 4,316.07.
- Gold gained 0.62 percent, trading at $1,246.70 an ounce.
- Oil lost 0.01 percent, trading at $82.06 a barrel.
- Silver gained 0.17 percent, trading at $17.33 an ounce.
News Of Note
Analysts at Goldman Sachs lowered their year-ending forecast of the U.S. Treasury yield to 2.5 percent from a previous 3 percent, while analysts at JP Morgan lowered its forecast to 2.45 percent from 2.7 percent.
Russia and Ukraine have reached a preliminary agreement to settle price disputes over winter gas supplies.
Japan's Government Pension Investment Fund said that it will boost its allocation target for Japanese shares to 25 percent from 12 percent; raise its limit of foreign stocks and bonds to a combined 30 percent from 23 percent; and cut Japanese debt to 40 percent from 60 percent.
Analyst Upgrades And Downgrades Of Note
Analysts at Citigroup maintained a Buy rating on Allergan (NYSE: AGN) with a price target raised to $210 from a previous $190. Shares gained 1.71 percent, closing at $180.52.
Analysts at Sandler O'Neill upgraded American Express (NYSE: AXP) to Buy from Hold with a price target raised to $92 from a previous $88. Shares gained 1.73 percent, closing at $84.01.
Analysts at Morgan Stanley reinstated coverage of CF Industries (NYSE: CF) with an Overweight rating and $300 price target. Shares gained 1.36 percent, closing at $248.30.
Analysts at Deutsche Bank maintained a Buy rating on Caterpillar (NYSE: CAT) with a price target lowered to $112 from a previous $122. Shares lost 1.07 percent, closing at $94.03.
Analysts at Citigroup maintained a Sell rating on Cliffs Natural Resources (NYSE: CLF) with a price target lowered to $5 from a previous $16. Shares gained 2.29 percent, closing at $8.94.
Analysts at Morgan Stanley maintained an Equal-Weight rating on ConocoPhillips (NYSE: COP) with a price target lowered to $85 from a previous $90. Shares gained 1.10 percent, closing at $68.83.
Analysts at Morgan Stanley maintained an Overweight rating on EOG Resources (NYSE: EOG) with a price target lowered to $136 from a previous $140. Shares gained 1.69 percent, closing at $92.76.
Analysts at Citigroup upgraded Freeport-McMoRan (NYSE: FCX) to Neutral from Sell. Shares gained 1.38 percent, closing at $30.76.
Analysts at Pivotal Research initiated coverage of Herbalife (NYSE: HLF) with a Buy rating and $110 price target. Shares gained 3.70 percent, closing at $47.11.
Analysts at Keefe Bruyette & Woods maintained a Market Perform rating on Morgan Stanley (NYSE: MS) with a price target raised to $36 from a previous $35. Shares gained 0.30 percent, closing at $33.32.
Analysts at SunTrust Robinson Humphrey upgraded Shire (NASDAQ: SHPG) to Buy from Neutral with a price target lowered to $225 from a previous $269. Shares gained 3.03 percent, closing at $184.59.
Analysts at Morgan Stanley reinstated coverage of T Mobile U.S. (NYSE: TMUS).
IBM (NYSE: IBM) has struck a deal with GlobalFoundries to take over its semiconductor unit for $1.5 billion. Note: this news development was released separately from the company's quarterly results reported this morning. Shares hit new 52-week lows of $165.25 before closing the day at $169.10, down 7.11 percent.
Shire's interim chief financial officer, James Bowling, announced he will resign from the company at the end of the first quarter 2015. Shares gained 3.03 percent, closing at $184.59
eBay (NASDAQ: EBAY) announced that its board member Marc Andreessen will resign as a member of its board of directors after joining the company in 2008. Shares gained 2.61 percent, closing at $49.20.
Proxy firm ISS is advising Chiquita Brands (NYSE: CQB) shareholders to accept a merger agreement with Fyffes. Shares lost 4.19 percent, closing at $12.80.
Starbucks (NASDAQ: SBUX) plans to begin testing a mobile app allowing customers to pre-order drinks at 150 locations near Portland. Shares gained 1.58 percent, closing at $74.70.
CVS Health (NYSE: CVS) said that it will charge some customers $15 fee for a prescription that is filled up at a pharmacy that also sells tobacco products. Shares gained 2.25 percent, closing at $81.76.
According to The Wall Street Journal, Paulson & Co recently urged Allergan's CEO to pursue a merger with Shire. Paulson & Co is a shareholder of both companies. Shares of Allergan gained 1.71 percent, closing at $180.52, while shares of Shire gained 3.03 percent, closing at $184.59.
Vale (NYSE: VALE) said that a revised nickel mining contract with the Indonesian government will result in a higher royalty rate of 2 percent to 3 percent, effective immediately. From 2010 through 2013, Vale's royalty rate on nickel was on average 0.63 percent. Shares hit new 52-week lows of $10.59 before closing the day at $10.74, down 1.87 percent.
SAP (NYSE: SAP) lowered its full-year operating profit outlook given a shift in consumer demand toward cloud-based software. The company said that it expects its 2014 operating profit to be 5.6 billion euros to 5.8 billion euros ($7.1 billion to $7.4 billion), which is lower than its previous guidance of 5.8 billion euros to 6 billion euros. Shares hit new 52-week lows of $64.10 before closing the day at $65.68, down 4.80 percent.
Canadian Pacific Railway (NYSE: CP) confirmed that it talks with CSX (NYSE: CSX) are no longer ongoing and it will host a conference call on Tuesday to provide further commentary on M&A activity. Shares of Canadian Pacific lost 1.54 percent, closing at $196.43, while shares of CSX lost 1.03 percent, closing at $33.51.
Facing pressure from Starboard Value, Yahoo! (NASDAQ: YHOO) will present on Tuesday details of a cost-cutting effort and other turnaround topics. Shares gained 2.16 percent, closing at $39.28.
Winners Of Note
A source familiar with the matter told Benzinga that Chinese-based Lenovo Group could make an acquisition offer for BlackBerry (NASDAQ: BBRY) as soon as this week. The source said the offer may come in at $15 per share and end up as high as $18 a share. However, Benzinga later reported that a “reliable Sources Inside Lenovo Have Said Reports of Move for BlackBerry 'Not True.'” Shares of BlackBerry gained 8.54 percent, closing at $10.30.
Sears Holdings (NASDAQ: SHLD) announced it plans to raise $625 million in a debt offering. The company also announced it reached a deal with European fashion retailer Primark to lease real estate in seven of its stores. Through the initiatives (along with previously announced liquidity raises for Sears Canada) the company hopes to raise just over $2 billion. Shares of Sears gained 23.06 percent, closing at $34.96.
Jana Partners disclosed a 7-percent stake in Hertz (NYSE: HTZ) and plans to continue engaging with the company's management and shareholders over board members, a management succession plan and capital allocation initiatives. Shares gained 6.0 percent, closing at $21.39.
Cleco (NYSE: CNL) has agreed to be acquired by a group of investors led by Macquarie Infrastructure for $4.7 billion, or $55.37 a share. Cleco will continue operating as an independent company in Louisiana. Shares gained 10.30 percent, closing at $53.24.
Platform Specialty Products (NYSE: PAH) has agreed to acquire Arysta LifeSciences for $3.51 billion. The company said that the acquisition will not change its U.S. domicile status, and it expects a record third quarter with revenues estimated to be $195 million to $197 million and adjusted EBITDA to be $51 million to $52 million. Shares of Platform Specialty Products gained 6.63 percent, closing at $25.90.
Tesoro Logistics (NYSE: TSO) has acquired QEP Resources' (NYSE: QEP) natural gas pipeline and processing segment for $2.5 billion. Tesoro said that the deal will expand its reach to natural gas and oil in new geographies while QEP said that the sale improves its financial position and ability to pay down debt. Shares of Tesoro gained 8.36 percent, closing at $65.43, while shares of QEP Resources gained 4.27 percent, closing at $24.17.
Decliners Of Note
IBM reported its third quarter results this morning. The company earned $3.68 per share, missing the consensus estimate of $4.32. Revenue of $22.40 billion missed the consensus estimate of $23.37 billion. Net income for the quarter fell to $18 million from $4.041 billion in the same quarter a year ago, as the company booked a net loss from discontinued operations of $3.4 billion. The company's CEO Ginni Rometty said in the earnings report that it saw a marked slowdown in September in client-buying behavior and that it is “disappointed” in its results. Service backlogs fell 7 percent from a year ago after only declining 1 percent last quarter. Hardware revenue fell 15 percent from a year ago, Global Tech Services revenue fell 3 percent, as did Financing revenue, while Global Business Services revenue fell 2 percent. Gross margin fell 90 basis points to 49.2 percent. IBM guided its 2014 earnings per share from continuing operations to be down 2 percent to 4 percent, and that it plans on reducing its workforce in the near term. Shares hit new 52-week lows of $165.25 before closing the day at $169.10, down 7.11 percent.
NCR (NYSE: NCR) issued preliminary third quarter results. The company expects non-pension operating income of $204 million, lower than previous guidance of $215 million to $224 million. Non-GAAP EPS is estimated to be $0.67, lower than previous guidance of $0.71. The company also lowered its full-year EPS and revenue guidance to $2.60 to $2.70 from $3 to $3.10 and $6.58 billion to $6.63 billion from $6.75 billion to $6.85 billion, respectively. Third quarter results will be released on October 28. Shares hit new 52-week lows of $22.83 before closing the day at $23.54, down 21.19 percent.
According to Bloomberg, (citing a lawyer' remarks to a jury) Trinity Industries (NYSE: TRN) deliberately withheld information from the U.S. government over cost-saving changes to a highway guardrail system, making it more dangerous. The company is currently undergoing a trial in Texas over a whistle-blower lawsuit that blames the company's product for injuries and deaths. Shares lost 12.33 percent, closing at $31.63.
Earnings Of Note
Hasbro (NASDAQ: HAS) reported its third quarter results this morning. The company earned $1.46 per share, beating the consensus estimate of $1.45. Revenue of $1.47 billion was in line with the consensus estimate. Net earnings for the quarter rose to $180.46 million from $126.57 million in the same quarter a year ago as revenue grew in all operating segments, which include the U.S., Canada and International. By category, sales of Boys rose 22 percent, Girls rose 5 percent and Games rose 2 percent, while Preschool sales fell 7 percent. The company saw its operating profit rise 490 basis points to 19.4 percent. Shares hit new 52-week highs of $57.16 before closing the day at $56.51, up 4.94 percent.
Halliburton (NYSE: HAL) reported its third quarter results this morning. The company earned $1.19 per share, beating the consensus estimate of $1.11. Revenue of $8.70 billion beat the consensus estimate of $8.52 billion. Net income for the quarter rose to $1.2 billion from $706 million in the same quarter a year ago, as the company saw revenue increases across all regions. North American revenue rose to $4.72 billion from $3.88 billion a year ago; Latin America revenue rose to $1.05 billion from $1.00 billion; Europe/Africa/CIS revenue rose to $1.46 billion from $1.34 billion and Middle East/Asia revenue rose to $1.47 billion from $1.25 billion. Shares gained 0.61 percent, closing at $52.92.
V.F. Corp (NYSE: VFC) reported its third quarter results this morning. The company earned $1.08 per share, missing the consensus estimate of $1.09. Revenue of $3.52 billion missed the consensus estimate of $3.57 billion. Net income for the quarter rose to $470.53 million from $433.76 million in the same quarter a year ago as the company saw a 12 percent rise in revenue from its North Face brand from a year ago, while Timberland revenue rose 15 percent over the same time period. The company saw its direct-to-consumer sales rise 16 percent from a year ago helping improve the company's gross margin rate rise by 70 basis points to 48.3 percent. The company issued guidance and expects its full-year 2014 revenue to be $12.3 billion and the company expects its earnings per share to be $3.08, higher than previous guidance of $3.06. Shares gained 0.31 percent, closing at $63.96.
Valeant Pharmaceuticals (NYSE: VRX) reported its third quarter results this morning. The company earned $2.11 per share, beating the consensus estimate of $1.99. Revenue of $2.06 billion beat the consensus estimate of $1.54 billion. Net income for the quarter rose to $275.4 million from a net loss of $973.2 million in the same quarter a year ago, as the company saw strong gains across its segments. Dermatology revenue rose 33 percent from a year ago to $272.8 million; consumer revenue rose 43 percent to $141.4 million; ophthalmology revenue rose 57 percent to $117.8 million; contact lenses revenue rose 24.6 million to $44.8 million; surgical revenue rose 74 percent to $54.0 million; neuro & other/generics revenue rose 40 percent to $391.7 million; dental revenue rose 20 percent to $32.4 million; and aesthetics revenue fell 57 percent to $32.3 million. Valeant's chief executive officer said that it would increase its offer to acquire Allergan during the post-earnings conference call. The company said that it will not shy away from its acquisition ambitious prior to the December 18 special shareholder meeting. Shares gained 3.80 percent, closing at $124.78.
Chipotle Mexican Grill (NYSE: CMG) reported its third quarter results after the market closed. The company earned $4.15 per share, beating the consensus estimate of $3.80. Revenue of $1.08 billion beat the consensus estimate of $1.06 billion. Shares were trading lower by 1.69 percent at $642.00 following the earnings release.
Apple (NASDAQ: AAPL) reported its fourth quarter results after market close. The company earned $1.42 per share, beating the consensus estimate of $1.31. Revenue of $42.12 billion beat the consensus estimate of $39.85 billion. Shares were trading higher by 0.74 percent at $100.50 following the earnings release.
Quote Of The Day
"Oh, well." - NFL legend Brett Favre commenting on Peyton Manning breaking his NFL passing TD record on Sunday.
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