The Rumor-Driven Month of September (NETL, BRCM, CAR, RIMM, DLB, BAC, WATG)

Stocks rallied late in a seesaw session to end up on the day. The market focused on Europe’s woes early, worried that Moody’s would downgrade French banks, sending U.S. equities headed for a third-straight session of big declines. However, the market managed to gain some traction and rallied late in the day on news that China is considering buying a significant amount of Italian debt. We continue to expect September to be a very volatile headline and rumor driven month.

The Specialty Semiconductor Stocks Index was the top performing tickerspy Index on the day, led by NetLogic Microsystems (NETL) with a 51% gain. The Chinese Auto Parts Stocks Index was the day’s worst performing tickerspy Index, with Wonder Auto Technology (WATG) down -55%.

Stocks rose on the day, with the Dow up 69 points to 11,061. The S&P added 8 points to 1,162, while the Nasdaq jumped 27 points to 2,495. Oil edged up 95 cents to $88.19 a barrel, while gold fell -$46.20 to $1,812.30 an ounce.

In M&A news, shares of NetLogic surged 50.8% after semiconductor maker Broadcom (BRCM) agreed to acquire the company for $3.7 billion in cash. California-based Broadcom is paying $50 a share for NetLogic, a 57% premium to where the stock closed on Friday. Broadcom said the deal could add 10 cents a share to earnings next year. The company also forecast third-quarter revenue in the middle of the previously disclosed $1.9-$2 billion range. Analysts are expecting $1.95 billion. Fourteen pros counted Broadcom among their top holdings at the end of Q1 and nearly 460 tickers spy members own the stock in their portfolios.

Car rental firm Avis Budget Group (CAR) forecast third-quarter revenue growth of 7-8%, which would result in revenue of $1.6 billion, slightly above the $1.59 billion analysts were expecting. The company also said it expects an adjusted third-quarter profit on an EBITDA basis of $265-$275 million. Shares of Avis fell -2.5%.

BlackBerry maker Research In Motion (RIMM) agreed to pay patent royalties to Dolby Laboratories (DLB) to settle a legal dispute between the two companies. Financial terms of the settlement weren’t disclosed, but Dolby previously said it was counting on $15 million in back royalties from RIM in the fiscal fourth quarter, as well as interest income, Bloomberg News reported. Shares of Dolby fell -0.7%, while RIM shares rose 1.7%

Shares of Dow component Bank of America (BAC), the largest U.S. bank by assets, rose 1.0% after the North Carolina-based bank said at a conference that it will cut 30,000 jobs as part of a plan to save $5 billion a year in expenses by 2014. Rumors previously swirled that Bank of America could cut up to 40,000 jobs. Bank of America CEO Brian Moynihan also said the bank wasn’t required by regulators to raise outside capital, despite investor speculation that it will need to do so at some point. More than 100 pros held Bank of America in their portfolios at the end of Q1 and nearly 6,800 tickerspy members own the stock in their portfolios.

Tags: BAC, BRCM, CAR, DLB, NETL, RIMM, WATG