Afternoon Slide Erases Gains for S&P 500, Nasdaq (LOW, DSX, CAT, BUCY, ISLN, EMC)

Stocks traded mixed in what has to be viewed as a disappointing day. The market looked poised for a good session after a solid October retail sales number and a couple of big mergers. However, the market topped out late in the day and stocks started to gradually slip, with the Nasdaq and S&P falling into negative territory by day’s end. We think we’re in the middle of a bit of a pullback/rest that could take the markets a little lower before a Santa Claus rally to close out the year.

The Data Storage Stocks Index was the top performing tickerspy Index on the day, led by Isilon Systems (ISLN) with a 28% gain.

Stocks ended the day mixed, with the Dow gaining 9 points to 11,202. The S&P slipped -1 point to 1,198, while the Nasdaq dipped -4 points to close at 2,514. Oil was flat at $84.88 a barrel, while gold added $3.00 to $1,368.50 an ounce.

On the economic front, the Commerce Department said that retail sales grew 1.2% last month, rising for the fourth month in a row. Economists were looking for an increase of 0.7%. The government also declared that business inventories rose 0.9% in September, matching expectations. The inventory-to-sales ratio, which indicates demand, held at 1.27. Elsewhere, according to the Empire State Manufacturing Survey, its general business conditions index dropped -27 points to -11.1 in November, the first time it has fallen below zero since mid-2009, while the new orders index sank -37 points to -24.4.

In earnings news, shares of Lowe’s (LOW) edged down -1.1% after the company reported that its quarterly profit climbed 17%. For Q3, net income was $404 million, or 29 cents per share, up from $344 million, or 23 cents per share, last year. Adjusted EPS was 31 cents, which beat estimates by a penny. Revenue grew 1.9% to $11.6 billion, while the gross profit margin rose to 35.05% from 34.20%. Looking forward, Lowe’s guided for full-year EPS of $1.37-$1.40, down from its prior view of $1.38-$1.45, on sales growth of 3-4%, compared with an earlier target of 4%. A total of 44 Pro investors counted the stock in their top-15 U.S.-listed equity holdings at the start of Q3, while 557 tickerspy members held the stock in their portfolios.

Drybulk carrier Diana Shipping (DSX) said that its Q3 results topped expectations, but its shares still fell -0.4%. For the quarter, the company earned $33.8 million, or 42 cents per share, compared with $28.7 million, or 36 cents per share, a year earlier. Voyage and time charter revenue jumped 23% to $71.6 million. The Street was expecting EPS of 40 cents on revenue of $68.3 million. A total of 2 Pro investors counted the stock in their top-15 U.S.-listed equity holdings at the start of Q3, while 983 tickerspy members held the stock in their portfolios.

In M&A news, heavy equipment maker Caterpillar (CAT) announced that it would purchase mining equipment company Bucyrus International (BUCY) for $7.6 billion in cash. The deal that is expected to close in mid-2011. Shareholders of Bucyrus will receive $92 per share, a premium of 32% over the stock’s closing price on Friday. Shares of Bucyrus surged 29.0% on the news, while Caterpillar moved up 1.0%.

Shares of Isilon Systems spiked 28.5% after data storage equipment maker EMC (EMC) said it plans to acquire its rival in a deal worth $2.25 billion, or $33.85 per share. The cash offer is a 29% premium over Isilon’s closing share price on Friday. EMC also reaffirmed its earlier FY10 guidance, stating that it still expects adjusted EPS of $1.25 on revenue of $16.9 billion.

Tags: BUCY, CAT, DSX, EMC, ISLN, LOW