MARKET UPDATE
This morning we are seeing a relief rally in DJIA futures with more than a 100 point gain after more nations joined in on the global interest rate cuts. IBM’s surprise earnings announcement has also led some stability in shares of technology stocks. Today is also the official end of the short sale ban on financial stocks that has been in place.
A report out of the New York Times said that the Treasury Department is considering taking ownership stakes in many healthy and unhealthy banking institutions to restore some confidence and to increase lending to the public and to restart the inter-dealer lending which has been all but frozen.
Treasury prices are also trading marginally lower after yesterday was the start of an exit in the flight to quality trading. Some feel the ban on short sale ending will also begin at least some return to liquidity in the corporate and government agency bond markets.
ECONOMIC & MACRO EVENTS
These are today’s top economic data:
Weekly Jobless Claims at 8:30 AM EST;
Wholesale Trade at 10:00 AM EST;
Weekly Natural Gas Inventories at 10:35 AM EST;
Money Supply at 4:30 PM EST.
Minneapolis Fed President Stern speaks on the repercussions from the financial crisis today at 12:30 PM EST.; Boston Fed president Rosengren speaks in Madison at 6:00 PM EST. Today’s earnings are coming from International Speedway Corp. (ISCA), RPM International Inc. (RPM) and Chevron Corp. (CVX). Watch for the key earnings report out of GE tomorrow morning.
BULLISH EVENTS
International Business Machines (IBM)
IBM is indicated up about 5% around $95.00 in pre-market trading. The company issued its earnings earlier than expected and it showed it was not an earnings miss. Its growth is slowing but it still managed earnings at $2.05 EPS and it reiterated a target of $8.75 EPS for the year.
American International Group Inc. (AIG)
AIG is trading up on reports that the government gave the troubled insurance giant another $37.8 billion in loans. Some are taking this as evidence that the $85 billion bailout may fall short, and some are taking this as a vote of confidence. Shares are up about 3% in early indications.
Mylan Inc. (MYL)
Mylan Inc. is indicated slightly higher after the generic and brand drug maker reconfirmed guidance of a fiscal weighted average cost of financing of approximately 6.5%. The drug maker also said it believes recent disproportionate decline in stock is unrelated to its actual business operations or fundamentals as its shares have fallen from over $11 to under $8 in the last 5 trading days.
Arcelor Mittal (MT)
ADR’s of Arcelor Mittal (MT) are up after the company is reaffirming targets at an investor presentation today. The steel giant expects higher EBITDA in the second half of 2008 and it is reaffirming third quarter EBITDA guidance in excess of $8.5 billion. Shares are indicated up 5% after losing roughly two-thirds of its value this year.
Local.com Corp. (LOCM)
Local.com is indicated higher on what would be a worthless announcement from most other companies. It is repurchasing up to $2 million of its own common stock in a new buyback plan. While this is a tiny amount, its $24 million market cap means that it will repurchase almost 8% of its own float now that shares have fallen 80% from highs over the last year. </Summary>
Quantum Fuel Systems Technologies Worldwide Inc. (QTWW)
Quantum Fuel Systems Technologies Worldwide Inc. (QTWW) has announced an exclusive agreement to establish a joint venture in Morocco via its German solar photovoltaic partner Asola. The venture is meant to ensure availability of solar photovoltaic modules to meet the growing demand for renewable energy in Northern African countries.
Bank of America Corp. (BAC)
Bank of America is seeing a bit of a bid this morning as the market rallies. It caught two upgrades from analysts this morning. Sandler O’Neill has raised its rating to Buy from Hold and Baird has raised its rating to Outperform from Neutral. Shares are up about 1%, but that is after nearly one-third of its value being taken out in recent days.
BEARISH EVENTS
Stage Stores Inc. (SSI)
Stage Stores Inc. issued an earnings warning after announcing that same store sales fell by 13.6% in September. That now means that a loss will be heading its way rather than a small positive earnings.
Steel Dynamics Inc. (STLD)
Steel Dynamics is trading lower after Goldman Sachs issued a downgrade on it and two other steel players. Its Buy rating was stripped and it was downgraded to a Neutral rating by the brokerage firm. Keep in mind that shares have already sold off 75% from their 52-week highs.
Pier 1 Imports Inc. (PIR)
The troubles are continuing at Pier 1 Imports. The ailing retailer said September same store sales fell by 11.7% and that if recent sales trends continue it will miss earnings estimates for the quarter and second half of its fiscal year.
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