Stocks on Wall Street were lower at midday following reports on the state of manufacturing in the U.S., China and the European Union. The Purchasing Managers’ Indexes, or PMIs, showed that manufacturing activity contracted last month in China but that it had expanded again in the U.S. and the EU.
ECONOMIC EVENTS: In the U.S., Markit’s manufacturing PMI for March fell to 55.5 from February’s 57.1 reading. The reading was 1 point below the consensus forecast, but was still strongly in expansionary territory, as 50 is the dividing line between expansion and contraction. In China, Markit’s flash PMI came in at 48.1, falling short of expectations for a 48.7 reading. In Europe, the PMI for the euro area as a whole came in at 53.2, which was just below last month’s 32-month high reading of 53.3.
MAJOR MOVERS: Among the notable gainers was MicroVision (MVIS), which jumped 20% after announcing that it has agreed to supply customized PicoP display modules to shipping giant UPS (UPS). Also higher was Symantec (SYMC), which rose 2% after research firm BMO Capital upgraded the stock and said it believes all strategic options, including a sale or divestiture of underperforming assets, will be considered following the company’s recent termination of its CEO. Among the noteworthy losers was Arrowhead Research (ARWR), which dropped more than 15%. Research firm Piper Jaffray attributed the move lower to competitor ISIS Pharmaceuticals (ISIS) having announced preclinical data on its own antisense compound targeting hepatitis B virus, which is a clinical area that Arrowhead is also exploring. A number of other biotechnology companies’ shares were also lower, with Oppenheimer attributing the continued weakness in the sector to investor concerns that were sparked by a letter sent Friday by several members of Congress to Gilead (GILD) regarding the price of its Hepatits C drug, Sovaldi. Also lower were shares of Internet radio company Pandora (P), which slid almost 9% after Billboard reported on Friday that Apple (AAPL) is considering launching a new music service and is also weighing a new iTunes app for Android smartphones..
Nu Skin surges after ‘modest’ penalty in China – Shares of Nu Skin Enterprises (NUS) are surging after the company’s China business was penalized $540,000 for direct sales of certain of its products. Nu Skin develops and distributes anti-aging personal care products and nutritional supplements under its Nu Skin and Pharmanex brands, respectively.
WHAT’S NEW: China’s Administration of Industry and Commerce fined Nu Skin’s China unit $524,000 for illegal product sales and misleading local consumers. The company was also fined $16,000 for product claims the AIC found were deemed to lack sufficient documentary support. In addition, six sales employees will face individual fines totaling $241,000 after engaging in unsanctioned sales and misleading consumers. In a statement, Nu Skin said it is already taking steps to correct the issues raised in the AIC reviews and that it is not aware of any other material enforcement investigations currently pending in China.
ANALYST REACTION: Research firm Deutsche Bank said it expects Nu Skin to announce a "significant" share repurchase program over the next several quarters after the China investigation was resolved with "modest" fines. Deutsche thinks today’s news lifts an overhang on Nu Skin and keeps a Buy rating on the stock with a $110 price target.
WHAT’S NOTABLE: On January 16, Nu Skin shares plunged over 26% to close at $84.80 after the company confirmed that Chinese authorities had opened a probe into the company’s business practices. That was on top of a greater than 15% slide in the prior day’s session after a cautious article about the company was published in the Chinese-language periodical "People’s Daily." PRICE ACTION: Nu Skin shares are up 18% to $88.59 in mid-morning trading. Even with today’s recovery, the stock is down more than 35% year-to-date. NUS +$14.37 to $89.37
Pandora sinks on report of potential new Apple music service – Shares of Internet radio operator Pandora (P) are falling after Billboard reported on Friday that Apple (AAPL) was considering launching a new music service. WHAT’S NEW: Music publication Billboard, citing unnamed sources, reported on Friday night that Apple was in talks with senior music label executives about launching a new music streaming service. Apple is also considering launching a new iTunes app for smartphones that utilize Google’s (GOOG) Android operating system, stated Billboard. Apple is considering the move in the wake of double digit percentage declines in the U.S. sales of its iTunes Music Store, the publication stated. WHAT’S NOTABLE: Pandora’s own streaming music service is available to customers on the web, in automobiles and via apps for both Apple and Android.
PRICE ACTION: In mid-morning trading, Pandora sank 8.4% to $31.15, while Apple added 0.75% to $537.
High option volume stocks: BCEI STSI DATA CBST MILL
Gold is down $24.40 at $1,311.60 an ounce. Crude oil is down $0.03 to $99.43 per barrel. The buck is higher. The dollar last traded at $1.3779 to a euro; $1.6481 to a British Pound; and 102.200 yen to a dollar.
Dow down 56
Nasdaq down 69
S&P 500 down 14
NYSE market internals summary – Volume is extremely heavy for this time of day. Breadth is mixed with issues and volume bearish while new highs to new lows are bullish (positive divergence). Advancing Issues: 1262 / Declining Issues: 2949 — for a ratio of 0.4 to 1. Advancing Volume: 496,412,000 / Declining Volume: 1,348,243,000 — for a ratio of 0.4 to 1. New 52-Week Highs: 67 / New 52-Week Lows: 25.
NASDAQ market internals summary – Volume is heavier than average for this time of day. Breadth is mixed with issues and volume bearish while new highs to new lows are bullish (positive divergence). Advancing Issues: 432 / Declining Issues: 2050 — for a ratio of 0.2 to 1. Advancing Volume: 144,189,000 / Declining Volume: 1,011,920,000 — for a ratio of 0.1 to 1. New 52-Week Highs: 42 / New 52-Week Lows: 29.