Looking for Focus on Fundamentals, Not Europe (KNXA, JNY, CAR, HTZ, DTG, AA, FREE, CCG)

The major market averages rebounded from early-morning losses to close in the green, except for the Dow, which finished slightly lower. While it was a nice bounce, it was actually one of the calmer days for a market that has been defined by volatility. The key at this point is whether there will be an inflection point where investors start to focus on the fundamentals, instead of the fears over Europe. If that becomes the case, we think the market sees a nice earnings-season rally. Note, however, that we don’t think Alcoa (AA), which reported lackluster Q3 results after the bell, is very reflective of what we expect to see this earnings season, as we’ve never viewed it as a particularly strong company.

The Dry Bulk Shipping Stocks Index was the top performing tickerspy Index on the day, led by FreeSeas Inc. (FREE) with a 16% gain. The Residential REITs Index was the day’s worst performing tickerspy Index, with Campus Crest Communities (CCG) down -4%.

Stocks ended the day mixed, with the Dow the sole loser down -17 points to 11,416. The S&P tacked on 1 point to 1,196, while the Nasdaq gained 17 points to close at 2,583. Oil rose 40 cents to $85.81 a barrel, while gold fell -$9.80 to $1,661.00 an ounce.

In earnings news, shares of Kenexa (KNXA) jumped 11.7% after the employee management software firm said its Q3 results would come in at or above the high-end of its previous guidance. The company had previously forecast adjusted EPS of 19-20 cents on revenue of $72-$74 million. The consensus was for a profit of 20 cents per share on revenue of $73.2 million.

On the M&A front, dollar store operator 99 Cents Only (NDN) has agreed to be acquired by private equity firm Ares Management LLC and Canada Pension Plan Investment Board for approximately $1.6 billion in cash, or $22 per share. Leonard Green & Partners LP and the founding Schiffer/Gold family previously offered to take the company private in a $1.34 billion deal in March. CEO Eric Schiffer and President Jeff Gold will maintain their positions with the company after the buyout. The stock rose 4.4%.

Shares of Jones Group (JNY) climbed 10.4% after the apparel and accessories maker confirmed that it was in talks with Israel’s Delta Galil Industries to sell its jean business for between $350-$400 million. Jones’ jean brands include Gloria Vanderbilt, Jessica Simpson and Nine West. If a deal is completed, the company expects to use a substantial part of the proceeds to buy back its shares.

After more than a year of being courted by two larger rivals, Avis (CAR) and Hertz (HTZ), car-rental company Dollar Thrifty (DTG) announced it was taking itself off the market. Avis originally made an informal offer of $45.79 per share in cash and 0.6543 shares of its shares for Dollar Thrifty before pulling out in September. Hertz’s most-recent offer was for $57.60 in cash and 0.8546 shares of Hertz stock. Dollar Thrifty also announced it would repurchase up to $400 million of its shares. Dollar Thrifty shares fell -2.0%.

Tags: AA, CAR, CCG, DTG, FREE, HTZ, JNY, KNXA