Stocks began the day in negative territory and have moved lower throughout the morning. The early weakness was attributed to yesterday’s signal from the Fed that it will continue to gradually raise interest rates along with a hotter than expected producer prices inflation report. A subsequent reading on consumer confidence was generally in-line with expectations, but down from the prior month. The economic data, coupled with weak energy prices, has put the sellers in control.
ECONOMIC EVENTS: In the U.S., the producer prices index surged 0.6% month-over-month in October, which topped the 0.2% growth forecast. The core PPI rate, excluding food and energy, expanded 0.5%, which also compared to a 0.2% monthly growth forecast. The University of Michigan consumer confidence survey fell 0.3 points to 98.3 in the preliminary November report from the final reading of 98.6 in October. The wholesale report revealed a lean 0.2% sales gain in September, after increases of 0.7% in August and 0.2% in July, though wholesale inventories beat the advance figures with a 0.4% September increase. WTI oil prices have fallen below $60 a barrel, tumbling deeper into a bear market. WTI crude is down about 1% on the session at midday.
COMPANY NEWS: Shares of Disney (DIS) are up 2% after the media giant's fourth quarter earnings and revenue topped expectations, powered by strength in its film studio segment.
Meanwhile, today's earnings blow-up is Yelp (YELP), which has cratered by nearly 30% after the company reported a Q3 revenue shortfall and issued fiscal year revenue guidance that was significantly lower than the consensus view. In response, the stock was downgraded by several Wall Street analysts, including Wedbush's Ygal Arounian, who said Yelp's strategy "completely fell apart" this quarter.
In M&A news, II-VI (IIVI) announced an agreement to acquire Finisar (FNSR) in a cash and stock transaction with an equity value of approximately $3.2B. The transaction values Finisar at $26.00 per share and Finisar shareholders would own approximately 31% of the combined company.
In China, American Express (AXP), Mastercard (MA) and Visa (V) have only been able to issue co-branded cards, but AmEx has become the first U.S. credit card company to get approval to start building its own payments network in the Asian nation. American Express can now begin building a network business to process domestic, RMB transactions through its joint-venture in mainland China with Chinese fintech services company LianLian.
MAJOR MOVERS: Among the noteworthy gainers was Infinera (INFN), which rose 5% after Jefferies analyst George Notter upgraded the stock to Hold from Underperform while cutting his price target to $5 from $7.75. Also higher were Hertz (HTZ) and Dropbox (DBX), which gained a respective 17% and 6% after reporting quarterly results.
Among the notable losers was Bristow Group (BRS), which slid 23% after reported quarterly results and said it agreed to combine with Columbia Helicopters for $560M. Also lower after reporting quarterly results were Activision Blizzard (ATVI) and Skyworks (SWKS), which fell 11% and 7.5%, respectively.
INDEXES: Near midday, the Dow was down 267.13, or 1.02%, to 25,924.09, the Nasdaq was down 149.63, or 1.99%, to 7,381.25, and the S&P 500 was down 35.45, or 1.26%, to 2,771.38.
Disney
+2.42 (+2.08%)
Yelp
-12.23 (-28.10%)
Acquired by IIVI
+3.67 (+19.45%)
II-VI
-7.84 (-16.72%)
American Express
-1.07 (-0.99%)
MasterCard
-4.01 (-1.92%)
Visa
-2.43 (-1.67%)
Infinera
+0.24 (+5.41%)
Hertz
+2.6 (+15.95%)
Dropbox
+1.37 (+5.52%)
Bristow Group
-2.325 (-23.16%)
acquired by MSFT
-6.5 (-10.40%)
Skyworks
-6.08 (-7.29%)