Market Trading with a Safety Net

Indie Research

After a strong August, stocks started September off on a mixed note. The economic data was weak, but with Fed Chief Ben Bernanke leaving the door open for QE3 with his speech last Friday, the market does appear like it is trading with a bit of a safety net.

The Semiconductor Fabricator Stocks Index was the top performing tickerspy Index on the day, led by Tower Semiconductor (TSEM) with a 10% gain. The Chinese Advertising Stocks Index was the day's worst performing tickerspy Index, with Charm Communications (CHRM) down -18%.

Stocks closed mixed, with the Nasdaq powering higher, up 8 points to 3,075. The Dow closed -55 points lower to 13,036, while the S&P fell -2 points to 1,405. Oil fell -$1.17 to $95.30 a barrel, while gold rose $8.40 to $1,696.00 an ounce.

In economic news, the Institute for Supply Management's factory index fell to 49.6 in August from 49.8 in July. Economists had expected an August reading of 50. Elsewhere, the Commerce Department said construction spending fell -0.9% in July. Economists had expected a 0.4% increase. July's decline was the first in four months.

In earnings news, Campbell Soup (CPB) said its fiscal fourth-quarter profit rose to $127 million, or 40 cents per share, from $100 million, or 31 cents per share, a year earlier. On an adjusted basis, the company earned 41 cents per share. Revenue was flat at $1.61 billion. Analysts had expected a profit of 39 cents on $1.59 billion in sales. Looking forward, the company expects a full-year profit of $2.51-$2.57 per share on revenue of $8.48-$8.64 billion. Analysts were expecting a profit of $2.52 per share on revenue of $8.47 billion. Shares of Campbell Soup were virtually flat on the day. Nine pros counted Campbell Soup among their top holdings at the end of Q2 and nearly 200 tickerspy members own the stock in their portfolios.

Shares of Medicis Pharmaceutical (MRX) surged 38.2% after rival Valeant Pharmaceuticals (VRX) offered to acquire the company for $2.6 billion. The deal values Medicis at $44 per share, a 39% premium to where the stock closed last Friday. Valeant said the deal will immediately add to its earnings.

Shares of Heckman (HEK) soared 37.9% after the water management company said it would acquire privately held Power Fuels. North Dakota-based Power Fuels provides environmental services in the oil rich Bakken Shale region. Heckman will pay $125 million, issue 95 million shares, and assume about $150 million in debt, valuing the deal at around $381 million based on Friday's close.

Online streaming video company Netflix (NFLX) shares dropped -6.4% after Amazon.com (AMZN) said it reached an agreement with content provider Epix to add movies such as "The Hunger Games" to Amazon Prime. Amazon Prime is the company's streaming video service developed to intensify the competition with Netflix and Apple (AAPL). Thirteen pros counted Netflix among their top holdings at the end of Q2 and nearly 1,150 tickerspy members own the stock in their portfolios.

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