Fiscal Cliff Looms, But Many Stocks Marked Down for the Holidays

Indie Research

Stocks traded virtually flat on a relatively quiet day on Wall Street. The housing sector, which had seen signs of bottoming, took a hit after two homebuilders were out with cautious comments today. Meanwhile, the fiscal cliff remains the biggest issue facing investors as we head toward the holiday season. We remain relatively cautious because of this, but think the likelihood of a deal being reached is high and that a number of stocks have recently been thrown into the bargain bin.

The Swine Flu and Bird Flu Stocks Index was the top performing tickerspy Index on the day, led by Sarepta Therapeutics (SRPT) with a 19% gain. The Tobacco and Tobacco Product Stocks Index was the day's worst performing tickerspy Index, with Star Scientific (STSI) down -27%.

Stocks ended the day basically flat, with the Dow down fractionally to 12,815. The S&P closed up fractionally to 1,380, while the Nasdaq lost -1 point to finish at 2,904. Oil fell -50 cents to $85.57 a barrel, while gold was unchanged at $1730.90 an ounce.

In earnings news, shares of homebuilder D.R. Horton (DHI) slid -5.8% after CEO Donald Tomnitz told investors U.S. employment growth is likely to remain weak and could adversely impact home sales. The company posted a quarterly profit of $100.1 million, or 30 cents a share, compared with $35.7 million, or 11 cents, a year earlier. Analysts had expected a profit of 28 cents.

Shares of fellow homebuilder Beazer Homes (BZH) plunged -17.3% after the company posted a fiscal fourth-quarter loss of -$66.2 million, or -$2.82 a share, compared with a year-earlier loss of -$43.2 million, or -$2.91 a share. Revenue increased 11% to $370.9 million. Analysts had expected a loss of -$1.22 a share on $335.1 million in revenue.

Gilead Sciences (GILD) shares surged 13.7% after the biotech company reported positive trial data for its experimental hepatitis C therapies. The company combined GS-7977 with GS-5885 and ribavirin. Twenty-five patients that took the combination for 12 weeks showed undetectable levels of the virus four weeks after completing treatment.

Shares of Jefferies (JEF) soared 14.1% after Leucadia National (LUK) agreed to acquire the 71.4% of the boutique investment bank it does not currently own for $2.8 billion. The deal values all of Jefferies at $3.78 billion, or $17.01 per share.

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