1) The government shutdown is starting to show up in earnings reports. This morning, Stanley Black & Decker lowered its full year earnings guidance to $4.90 to $5 a share, from $5.40 to $5.65. They cited slower margin rate recovery within the security segment, weakening emerging markets and the impact of the U.S. government shutdown on organic growth.
Separately, Linear Technology reported first quarter earnings below expectations, and said second quarter revenues would be flat to down 4 percent as the U.S. government shutdown might affect their business.
This is what Wall Street is really worried about: that corporations will use the shutdown as an excuse to lower earnings guidance even more than usual. Fourth quarter earnings estimates for the S&P 500 are high (currently about 9.8 percent growth is expected), and will come down quickly in the next couple weeks. The Street will be fine if it goes down to 4 or 5 percent, but if it goes to zero or negative, the reaction will be negative.
2) Another big day for IPOs; largest IPO of the year prices. Plains GP Holdings (PGAP), a Limited Partnership (oil and natural gas pipelines), priced 128 million shares at $22, the low end of the price talk of $22-$25, a $2.8 billion offering, far and away the largest IPO this year.
Separately, Veeva Systems (VEEV), another business enterprise cloud computing deal, priced 13.1 million shares at $20; that is well above the initial price talk, which first was $12-$14 than raised to $16-18. The deal size was increased as well. They enable pharmacies and other life sciences companies to put their data in the cloud.
An exchange-traded fund (ETF) for IPOs starts trading today. The Renaissance IPO ETF (IPO) will track the Renaissance IPO Index, which is a portfolio of the largest, most liquid U.S. listed IPOs in the last two years. New companies are included in the index on the fifth day of trading and are removed after two years when the IPOs become seasoned stocks.
Among its top holdings as of September 30, 2013 are an 11.0 percent position in Facebook, a 9.8 percent position in Michael Kors Holdings, and a 4.5 percent position in cloud-based HR platform Workday.
I will have Kathleen Smith from Renaissance Capital on Squawk on the Street at 11:20 ET today to talk about the IPO market and about the new IPO ETF.