A confluence of events — a veritable “triple whammy” — brought the recent rally in U.S. markets to a screeching halt today. All three indices were down considerably, with the Dow falling more than 350 points by mid afternoon before gaining back a small fraction of that lost ground.
The first problem was a report in central Europe that either the European Central Bank (ECB) or banking authorities were telling banks to drop any sovereign Greek debt on their books if talks fail, which could mean that Greece could be leaving the ECB.
In addition, authorities in China were banning margin trades on over-the-counter stocks and limiting stocks that could be shorted, which actually triggered the volatility in worldwide markets that they were trying to prevent. Chinese markets finished lower by 4%. (One would think they would have learned the lesson from last January when markets plunged 8% after they also banned margin trades.)
The third whammy was a temporary, but wide outage on the Bloomberg Terminal, which actually forced a bond offering in the U.K. to be postponed.
The Dow Jones Industrial Average dropped 1.54%, the S&P 500 was off 1.13% and the Nasdaq lost 1.52%. Every sector finished lower today, with utilities taking the least beating.
But even on the worst days, there are always some stocks that buck the trend. Today those stocks were Mattel, Inc. (NASDAQ:MAT), Seagate Technology PLC (NASDAQ:STX) and Mylan NV (NASDAQ:MYL), which climbed higher on earnings beats and takeover rumors, thus making the list of today’s best stocks.
Mattel, Inc. (MAT)
Despite a weaker first quarter than a year ago, MAT stock gained more than 5% today after the maker of Barbie dolls and other toys reported a loss of 8 cents per share on sales of $922 million. A year ago, MAT also reported a loss, though only 3 cents per share, on sales of $946 million.
However, the EPS was a penny better than analysts were looking for, and Mattel’s revenue also beat the street’s expectations of $898 million.
The bottom line: A penny saved was a penny earned for MAT stock today!
Seagate Technology PLC (STX)
STX stock was up 4.5% at one point this morning, and finished nearly 3% higher today after Seagate’s fiscal third-quarter EPS came in at $1.08 — besting the analysts’ view of $1.04 per share.
Wall Street chose to overlook the fact that Seagate’s revenue of $3.3 billion, was below estimates of $3.4 billion. Seagate executives said that “macroeconomic conditions” had held back the drive industry in general.
Furthermore, the forecast of $3.2 billion to $3.3 billion for this quarter also missed estimates of $3.4 billion.
Yet, despite the gloom over Wall Street, traders were in a forgiving mood, and overlooked both misses. Perhaps it’s because STX stock has already fallen from $69 in December to a recent April low of $51 — a hefty 16% decline. At any rate, STX shareholders rejoiced, having dodged a bullet.
Mylan NV (MYL)
Mylan gained more than 4% today amid word from Bloomberg that Israeli based Teva Pharmaceuticals Industries Ltd (ADR) (NYSE:TEVA) may be about to make a bid for Mylan. Such a takeover would create a huge new international generic drug company.
Although a formal offer has not yet been made, Bloomberg is saying that Mylan is aware of Teva’s interest. Analysts have also been anticipating this possible acquisition for some time.
MYL stock is up 40% since November.
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
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