Stock Rally Stalling (JOYG, SAM, BRCM, NVS, ACL)
Stocks continued their recent trend of giving up gains late in the day, despite the Senate passing a bill to extend tax cuts. Debt worries over Europe and a stronger dollar were largely to blame. For now the stock rally seems to have stalled a bit, although we’re still generally optimistic heading into year-end.
Stocks fell on the day, with the Dow off -19 points to 11,457. The S&P declined -6 points to 1,235, while the Nasdaq fell -10 points to 2,617. Oil edged up 34 cents to $88.62 a barrel, while gold slipped -$18.10 to $1,386.20 an ounce.
On the economic front, the Labor Department said that its Consumer Price Index edged up 0.1% last month, slightly below the 0.2% rise expected by economists. Meanwhile, core CPI, which excludes food and energy, rose 0.1%, matching expectations. Core CPI has been flat the past three months. Industrial production, meanwhile, rose 0.4% in November, above the 0.2% increase economists were expecting.
In earnings news, shares of Joy Global (JOYG) climbed 6.9% after the company’s quarterly results topped estimates. For Q4, the mining equipment maker earned $146 million, or $1.39 per share, easily beating the $1.16 consensus. Last year, profit was $124 million, or $1.20 per share. Sales rose 9% to $1.05 billion, above the $922.8 million forecasted by the Street, while bookings soared 48% to $1 billion. For FY11, Joy Global projects EPS of $5.00-$5.30 on revenue of $3.9-$4.1 billion. Analysts were expecting FY11 EPS of $4.79 on revenue of $3.9 billion. Twenty Pros held the stock in their top-15 U.S.-listed equity positions at the end of Q3, and 548 tickerspy members hold the stock in their portfolios.
Boston Beer boosted its outlook for the full year, sending its shares up 12.1%. The beer maker also gave strong guidance for 2011, forecasting EPS of $3.95, which easily beat the $3.53 consensus. It raised its FY10 EPS to $3.30-$3.60 from $2.85-$3.15, coming in above expectations of $3.20. Boston Beer also said that core shipments through this month will be up 12% and full-year depletions, also known as the number of cases sold to retailers, are expected to rise 11-13%.
Shares of Broadcom (BRCM) fell -1.5% despite the chipmaker raising its Q4 sales outlook on strong wireless demand. For the period ended December 31st, the company expects revenue of $1.9 billion, which is at the high end of its previously issued $1.8-$1.9 billion forecast. Wall Street was looking for revenue of $1.85 billion. The company also said that gross margin is expected to narrow slightly versus its earlier projection of no change. Sixteen Pros held the stock in their top-15 U.S.-listed equity positions at the end of Q3, and 394 tickerspy members hold the stock in their portfolios.
In M&A news, Swiss drugmaker Novartis AG (NVS) saw its shares rise 5.7% after the company announced it will acquire the remaining 23% of eye-care company Alcon (ACL) for $12.9 billion. Novartis previously paid Nestle $38.7 billion in two tranches to acquire 77% of the company. Novartis had originally offered 2.8 shares of its stock for each Alcon share. The final offer gives Alcon shareholders 2.8 shares of Novartis stock and cash if necessary to ensure they receive $168 for each Alcon share. If the value of 2.8 Novartis shares comes to more than $168, the number of Novartis shares will be reduced. The deal is expected to close during the first half of 2011. Shares of Alcon moved up 1.0%.
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