Little Reaction to Economic Data

Although the dollar weakened further, stocks moved little following mixed economic data this morning. Futures didn’t react much to a slightly disappointing Q3 GDP reading today (up 2.0 percent vs. up 2.1 percent consensus). Similarly, slightly higher-than-expected October Chicago PMI (60.6 vs. 58.0 consensus) did little to move stocks up at 9:45am ET.

Clearly, instead of reacting to Friday’s economic data, traders and the investment community remained more zeroed in on Tuesday’s elections results and then the likely details of the Fed’s QE2 program following the FOMC meeting on Wednesday.

Still it has been a good month for stocks, which have posted their second straight month of gains and are up 3 of the last 4 months. In October, the Dow is up 3.0 percent, S&P is up 3.7 percent, Nasdaq is up 5.8 percent, Russell 2000 is up 5.1 percent. In fact, it is the best October for the Dow and S&P since 2003.

Some earnings highlights this morning:

1) Monster Worldwide soars 20 percent after beating estimates ($0.02 vs. breakeven consensus). Although sales in the last quarter fell just shy of estimates, bookings (a measure of future revenues) soared 26 percent. Shares are jumping as the online career website operator also provides strong full-year guidance (loss of $0.05-$0.09 vs. loss of $0.05 consensus on better-than-expected revenues of $919 million-$933 million vs. $909 million).

2) American Axle is up 7 percent after handily beating estimates ($0.52 vs. $0.39 consensus) on stronger-than-expected revenue growth (up 50 percent from the year-ago quarter!). The auto supplier continued to effectively cut costs, but also benefited from “a recovery in market demand for full-size pickups and SUVs.”

The firm also boosted its full-year revenue growth outlook to up 45 percent-50 percent vs. up 44 percent consensus.

3) Genworth Financial falls 7 percent after missing estimates ($0.06 vs. $0.25 consensus) as its insurance businesses were weak. Premiums fell 3 percent and the insurance firm reported a larger loss in its mortgage insurance operations.

4) Estee Lauder beats estimates ($0.95 vs. $0.77 consensus) on higher-than-expected sales

The cosmetics firm also raises its 2010 earnings and revenue forecasts. Earnings are now seen at $2.90-$3.10, inline with $3.06 consensus, on full-year sales growth guidance to 7 percent-9 percent, above 5.7 percent consensus.


a) Knight Capital buys the designated market maker (DMM) operations of Kellogg Capital Market. This includes the firm’s NYSE market making business—which includes 800 listings on NYSE and NYSE Amex as well as 322 NYSE Arca ETF listings. No purchase price was disclosed, but the deal is expected to close in the fourth quarter.

Regardless, it’s an important deal as it reaffirms that the NYSE’s current market making model is working, with firms willing to make investments in it. While the NYSE’s market making model is by no means the same as it was 10 years ago, it has continued to evolve in the electronic marketplace. The most evident example—over the past year or so, outside electronic market making/trading firms like Knight and GETCO have invested into the NYSE’s market making model (GETCO became a DMM last March).

b) Shares of AIA Group jumped 17 percent in its first day of trading in Hong Kong. The strong start came after the Asian life insurance company raised $18 billion by pricing its shares at the high end of the range, becoming Hong Kong’s biggest IPO ever. Recall, AIG had to sell the AIA Group operations as part of a restructuring to help repay its outstanding loan to the U.S. government.

c) Halliburton is down another 2% on uneasiness over cement tests related to BP oil spill. This comes after its 8 percent decline late in the day yesterday.

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