Tough Week For IPOs — Here’s Why
Stocks
were higher on lower oil prices, good economic data and reduced worries about
China’s economy. This is the third session where all three
indices — the Dow, S&P and NASDAQ –Â all closed above their 200-day
moving average. Boeing
(
BA |
Quote |
Chart |
News |
PowerRating) led the Dow — even after the Pentagon
pulled a $23.5 tanker deal — up over 3%. The US economy growing at a faster
rate than initially thought, with GDP coming in at a revised rate of 4.4%, up
from the previous 4.2% and with inventory levels at $28.2 billion. Economists
believe the economy is currently growing between 4 1/2% – 5%.
Oil prices pulled back after OPEC’s president said they would consider
increasing output. The next OPEC meeting is June 3 in Beirut. Energy Secretary
Spencer Abraham said that he saw signs of extra oil supplies from Mexico,
Nigeria, Russia, as well as Saudi Arabia.
Jobless claims for last week fell 3,000 to 344,000, less than expected. The
4-week moving average rose 1500 to 335,000.
Costco Wholesale
(
COST |
Quote |
Chart |
News |
PowerRating)
reported earnings that beat estimates by 5 cents, earning $198.7 million, with
same-store sales up 11%. Total sales rose 14% to $10.67 billion. Computer
product distributor Tech Data
(
TECD |
Quote |
Chart |
News |
PowerRating) reported earnings of $34.7
million, 10 cents better than Wall Street expectations, with net sales up 23% to
$4.8 billion; European net sales also rose 19%. Looking ahead, the company
expects to earn $27.5 million on revenue of $4.4 billion.
Several IPOs debuted today,
including Arcadia Pharma
(
ACAD |
Quote |
Chart |
News |
PowerRating), Republic Airways
(
RJET |
Quote |
Chart |
News |
PowerRating),
Critical Therapeutics
(
CRTX |
Quote |
Chart |
News |
PowerRating), and AngioDynamic
(
ANGO |
Quote |
Chart |
News |
PowerRating).
It was a tough week for IPOs: not one of the six IPOs this week traded at prices
set by underwriters. ACAD was originally set at $12 – $14 and came at $7 and
traded down from there. CRTX was priced at $7, but the original talk was $11 –
$13. RJET came at $14, down from the original $14 – $16 range. The range on STAN
was $14 – $16 but the stock came at $7. The biggest IPO of the year, Genworth
(
GNW |
Quote |
Chart |
News |
PowerRating), came at $19.50, down form the original $21 – $23 talk.
| Dow | +95.31 | 10205.20 |
| S&P 500 | +6.34 | 1121.28 |
| Nasdaq | +8.35 | 1984.50 |
Strong today were Internet
(
GIN.X |
Quote |
Chart |
News |
PowerRating) +1.73%, Gold and Silver
(
XAU.X |
Quote |
Chart |
News |
PowerRating) +1.36%, Amex Gold
Bugs
(
HUI.X |
Quote |
Chart |
News |
PowerRating) +1.90%, Chemicals
(
CEX.X |
Quote |
Chart |
News |
PowerRating) +1.68%, Retail
(
RTH |
Quote |
Chart |
News |
PowerRating) +1.70%.
Weak today were Oil Services
(
OSX.X |
Quote |
Chart |
News |
PowerRating) -2.17%, Natural Gas
(
XNG.X |
Quote |
Chart |
News |
PowerRating) -1.35% and
Energy
(
DXE.X |
Quote |
Chart |
News |
PowerRating)Â -1.28%.
Economic news releases today
include preliminary GDP rate that showed a 4.4% growth rate, chain deflator that
rose by 2.6% and initial claims missed expectations, dropping 3,000 to 344,000.
10-year Notes were +195
at 110 125
The dollar
was -1.09 at 88.63
Gold was +4.00 at 394.80
Crude Oil was -1.23 at
39.44
Volume was 1.44 billion
on the NYSE, and 1.64 billion on the Nasdaq.
Market breadth was positive.
| NYSE | Issues | |
| Advancing | 2302 | Up Vol 1037 |
| Declining | 1017 | Down Vol 385 |
| Ratio | 2.26 | 2.69 |
| Nasdaq |
||
| Advancing | 1697 | Up Vol 1041 |
| Declining | 1414 | Down Vol 493 |
| Ratio | 1.20 | 2.11 |
Stocks in the news:
Home Depot
(
HD |
Quote |
Chart |
News |
PowerRating) was higher
after increasing its quarterly dividend by 25% and approved an additional $1
billion to its stock buyback program.
Aetna
(
AET |
Quote |
Chart |
News |
PowerRating) filed an anti-trust lawsuit against
Abbott Laboratories
(
ABT |
Quote |
Chart |
News |
PowerRating) accusing them of trying to monopolize the
protease inhibitor AIDS drugs by sharply raising prices on its Norvir drug.
Dollar Tree Stores
(
DLTR |
Quote |
Chart |
News |
PowerRating) reported earnings of
$35.15 million on revenue of $710.3 million. The company affirmed previous Q2
forecasts of sales of $700 million with $3.2 billion in annual sales.
Brice Wightman
bricew@tradingmarkets.com