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Recapping the big headlines: DOW, DD, YHOO, BABA, LULU

The production plant for high density polyethylene of Dow Chemical in Tessenderlo.
Yorick Jansens | AFP | Getty Images
The production plant for high density polyethylene of Dow Chemical in Tessenderlo.

Three big stock stories moving the markets Wednesday afternoon: A potential merger between two chemical giants, Yahoo cans spin-off plans and Lululemon shares tumble.

Industrial Giants Have Great Chemistry

Shares of Dupont and Dow Chemical spiking Wednesday afternoon on the news the two chemical companies could join forces

A combination between the of America's oldest companies would create a chemical behemoth worth more than $120 billion dollars.

Money manager William Smith at Sam Advisors, LLC, remains long Dow Chemical and thinks the deal is "spectacular" and offers huge upside for both short and long term-term investors.

Appearing on CNBC's"Power Lunch" Wednesday, Smith said the deal goes long way in "placating" activist investors and hedge fund billionaires, Nelson Peltz of Trian and Third Point's Dan Loeb.

Yahoo Shelves Alibaba Spin-off

Yahoo scrapped plans to spin-off its remaining, $31 billion dollar stake, in Alibaba, opting instead to reverse spin its core web business into a separate, publicly traded company.

Appearing on CNBC Wednesday morning, Yahoo chief executive Marissa Mayer defended her plan and addressed the internet company's valuation

"i think right now the narrative around our valuation is complicated because each person who buys the stock has to have a viewpoint as to Alibaba, Yahoo Japan, the tax rates there, the likelihood of taxation in addition to the a cash and the core. That's one of the things we would really like to provide clarity around through the separation of the Alibaba stake."

B Riley analyst Sameet Sinha, downgraded Yahoo to neutral from buy on Wednesday, with a $35 price target. Sinha told CNBC's "Power Lunch" the reason for the downgrade.

"The higher valuation for Yahoo-only assets is impossible," said Sinha. " Hence (Yahoo's) stock should remain range bound search monetization could be depressed for foreseeable future."

Lululemon Tumbles

A downbeat guidance from Lululemon Athletica, sent shares plummeting eight percent on Wednesday.

The Vancouver-based athletic apparel maker posted a 12 percent dip in third quarter profit, as inflated inventories, heavy discounting and sluggish international expansion weighed on margins. Lululemon shares have fallen about 12 percent since the beginning of this year.

Roxanne Meyer, senior research analyst and MKM Partners, told CNBC's "Power Lunch" Lululemon remains "on track with supply chain initiative and we look for improved gross margin improvement."

Disclosure: B. Riley makes a market in the securities of Yahoo and seeks to do business with companies covered in its research reports. The firm and the analyst hold more than one percent of Yahoo shares.

MKM holds more than one percent of Lululemon. Meyer and her firm hold a more than one percent stake in Lululemon.