Daily Wrap
DJIA +109.67 (+0.73%) to 15,179.85;S&P 500 +12.31 (+0.76%) to 1,639.04;NASDAQ +27.40 (+0.93%) to 2,971.26
The market started the week strong with a gap higher on upbeat earnings reports and optimism that the Federal Reserve and Ben Bernanke will remove uncertainty around the current bond buying situation. While lack of clarity does hamper the markets, I think the market is also betting on a statement that will leave the foot on the monetary gas for the longer. If the committee as a whole starts to sound more hawkish there could be, even albeit only initiate, adverse reaction.
Two big name companies announcing a partnership today were Netflix (NFLX) and DreamWorks (DWA). In the announcement the companies disclosed that DWA will provide over 300 hours of content for NFLX and that content is expected to roll out next year. The news sent NFLX closing up X% while DWA managesd to gain X%.
In a somewhat un-merger Monday, it was reported that Starboard Value disclosed a 5.7% ownership stake in Smithfield Foods (SFD) and looks to be attempting to block a purchase by Shuanghui, a Chinese company. It was reported that Starboard’s argument is that SFD has a much greater break-up value than the $34 per share that Shuanghui offered. The news did not send SFD rocketing higher but while it closed up roughly 1%, it is still below the $34 offer price showing that Wall Street is currently not placing much likelihood on Starboard Value’s success.
In more traditional merger news, Johnson & Johnson (JNJ) bought private Aragon Pharmaceuticals for $650M cash and another $350M in potential milestone payments. This news sent Medivation (MDVN) down over X% on the day as Aragon is developing a prostate cancer treatment drug which could compete with MDVN’s XTANDI.
The following noteworthy companies are scheduled to report earnings before tomorrow’s open: KFY
In analyst notes today, Petrobras (PBR) was upgraded to Buy at Jefferies. Raymond James upgraded 3 stocks to Strong Buy, Extra Space Storage (EXR), CubeSmart (CUBE) and Comcast (CMCSA). On the other side of CMCSA, Raymong James downgraded Time Warner Cable (TWC) to Market Perform. Some of these and other upgrades and downgrades for the day can be found each morning when I post my 9 @ 9 in the Upgrades/Downgrades section.