IPO Surprise: CBOE Prices at High End
The euro is up again, so European bourses are up for the most part. Next test will be Spain, which will auction 10 and 30 year bonds on Thursday.
The UK's FTSE and France's CAC indices are both having their first five-day winning streak in nearly four months.
Finally, some good news for IPOs: Chicago Board Options Exchange successfully priced their IPO at the high end of the range: 11.7 million shares priced at $29, upper range of the $27 to $29 expected. They are the last of the U.S. exchanges to demutualize.
Quadruple witching expiration on Friday: most of the options action in the S&P is around the 1050 strike, but there is also sizeable open interest at 1,100 and 1,000.
Elsewhere:
1) Best Buy falls 6 percent after Q1 earnings significantly missed expectations ($0.36 vs. $0.50 consensus). Disappointing same-store sales (up 2.8 percent) and higher expenses weighed on the big electronics retailer.
Sales of notebook computers, cell phones, and appliances saw low double-digit sales growth. Offsetting that was softer media sales (games, music, movies) and a decline in TV sales due to lower pricing (unit sales though were actually up high single digits).
While Q1 was certainly a disappointment, the good news is that the first quarter is the typically the weakest quarter of the year for the electronics retailer.
2) Oil execs are distancing themselves from BP :
a) Chevron Chairman and CEO John Watson said "this incident was preventable."
b) ExxonMobil CEO Rex Tillerson will reportedly tell Congress that "This incident represents a dramatic departure from the industry norm in deepwater drilling." Tillerson notes that drilling in the other 14,000 deep-water projects worldwide have occurred without incident.
The Thursday hearings are going to be ugly. Rep. Waxman, chairman of the Committee on Energy and Commerce, sent a letter to BP CEO Tony Hayward ahead of his hearing, flatly stating that "BP repeatedly chose risky procedures in order to reduce costs and save time and made minimal efforts to contain the added risk."
Waxman cites five instances where BP made decisions that "appears to have created pressure to take shortcuts to speed finishing the well."
3) Illinois Tool Works reported a strong 21 percent rise in revenues over the past 3 months as the industrial products manufacturer saw robust growth across several of its segments. As a result, the company is raising its Q2 earnings guidance to $0.80-$0.86 vs. $0.81 consensus. Despite the expected fluctuations in the Euro (33% of revenues come from Europe), Illinois Tool Works reaffirms its guidance for the full year ($2.72-$3.08 vs. $3.02 consensus).
4) Tenet Healthcare raised its 2010 guidance as cost efficiencies will continue to help boost its bottom line. The hospital operator now sees full-year earnings of $0.27-$0.40 vs. $0.30 consensus.
CEO Trevor Fetter notes that despite softness in volumes, improvements have been seen. He adds that if volume growth returns soon, the company's earnings could be raised even higher.
5) Capital One (COF) reported a decline in delinquencies and charge-offs in May. Despite a slight rise in auto loan charge-offs last month, total charge-offs (loans no longer expected to be collected) fell to 9.48 percent from 9.68 percent in April. Meanwhile, delinquencies (loans more than 30 days overdue) dropped to 4.8 percent in May, down from 5.07 percent in the prior month.
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