Stocks hit record highs after yesterday Fed announcement. Facebook (FB) is launching a big offering and may be headed to court over its IPO. The stock is under pressure this morning. And, a couple of billion-dollar drug deals are in the offing.
But first, here are this morning's business headlines.
The Dow (^DJI) and S&P (^GSPC) hit record highs after the Fed announced it will begin to cut back bond buying by $10 billion a month to $75 billion beginning in January. Fed Chairman Ben Bernanke cited positive signs in the job market as a major factor in the decision. The latest jobless claims were released as the show was streaming this morning. The Labor department reports new claims rose 10,000 to 379,000. The consensus was for 337,000.
The Fed also warned that stubbornly low inflation bears watching, and the central bank said short-term rates will likely remain near zero well past the time the unemployment rate gets below 6.5%.
There are two big drug deals - in pharmaceuticals. AstraZeneca (AZN) has agreed to buy Bristol-Meyers Squibb's (BMY) stake in a joint venture between the companies for up to $4.3 billion. The venture included several diabetes drugs, including one drug that received an endorsement from the FDA last week. With diabetes expected to affect 550 million people worldwide by 2030, AstraZeneca's CEO Pascal Soriot said the disease is "a core strategic area" for the company. Meanwhile, Bayer won a bid from Norwegian drug maker Algeta for a $2.9 billion offer to buy the company. Bayer and Algeta are partners in the prostate cancer drug Xofigo, that they just began selling in the U.S. this year. The deal still has to be approved by the Oslo stock exchange and Algeta's shareholders.
And a fire in a Tesla (TSLA) Model S sedan may not have been the car's fault, that's according to Southern California fire investigators. The Orange County Fire Authority said either the wall socket or the Tesla charger caused a November 15th fire in Irvine, California. Investigators also said the cause of the fire is unclear. Tesla disagrees with some of the findings, saying the fire wasn't due to the car, the battery or the charger. That Irvine fire was among three other road fires in Tesla cars in October and November. Since those fires, Tesla shares are down more than 20% from their September high of $194.50.
Now a look at four hot stocks the Yahoo Finance team will be watching today.
First, Darden Restaurants (DRI). The company reported profits of $0.15 per share which missed on estimates of $0.20 and is way down from last year's $0.26. Revenue also came in at $2.05 billion missing estimates of $2.07 billion, but up from last year's $1.96 billion. Now, Darden had been on the rise this week after hedge fund investor Barington Capital proposed the company split in two. Barington believes a split would help the company deliver stronger returns after underperforming recently. One side of the split will include more established brands, Red Lobster and Olive Garden, while the other side will include smaller chains like LongHorn SteakHouse. It's been an up and down year for Darden, but overall it is up over 16%.
Next, KB Home (KBH), which reports this morning and will try and keep up the good mojo for the housing industry that we've seen the past couple weeks. First we saw rivals Toll Brothers and Lennar both beat analyst expectations on earnings. And then we saw housing starts report a 6-year high yesterday. KB Home reported profits of $0.31 per share missing on estimates of $0.45, but is way up from last year's $0.10 a share. The homebuilder also saw revenue rise 7% to $578.2 million, missing estimates of $662.46 million. For the year KB Home is up close to 8%.
Now, Carnival (CCL), which is expected to report earnings this morning. Analysts are expecting the cruise line to break-even on earnings, after last year's posting of $0.13 a share. Revenue is expected to come in at $3.58 billion which would be the exact same posting as last year. Carnival has had a roller-coaster ride of a year with consumer spending falling, cruise liner problems and a PR nightmare since its Costa Concordia disaster last year. Shares of Carnival are down just over a percent for the year.
Finally, Nike (NKE), which is expected to report earnings later today. The athletic-wear giant will try to justify its place on the Dow, which it joined earlier this year. It also will try to show that it is still king of the industry staving off competition from the likes of Adidas and Under Armour. Nike is expected to post profits of $0.58 per share which would beat last year's posting by $0.01. It is also expected to see revenues rise 8.2% to $6.44 billion. For the year Nike is up more than 51%, hitting its 52-week high just last week.
The stock market rallied after the Fed's taper announcement, hitting new all-time highs with the Dow closing up 292 points yesterday. Our poll question today: Will it continue? Cast your vote and post some comments as well.
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