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Stocks Mixed Ahead of Tomorrow’s Options Expiration!

Stocks on Wall Street were mixed at midday after the government finally ended its partial shutdown and pushed the debt ceiling debate out into the start of next year. Congress voted last night to fund the government and lift the debt limit, and the president signed the bill into law very early this morning, but the deal sets a new deadline for the next round in this ongoing fight. Despite the political news stocks began the session deep in negative territory, thanks in part to weakness in the shares of Dow members IBM (IBM), UnitedHealth (UNH) and Goldman Sachs (GS). The averages hit their lows a short time after the open and by late morning the S&P had eclipsed its previous all-time closing high, the Nasdaq was back in positive territory and the Dow recovered about two-thirds of its early losses.

ECONOMIC EVENTS: In the U.S., weekly jobless claims fell to 358K, though they were expected to be down by an even greater amount to 330K. The Philadelphia Fed manufacturing survey for October dipped 2.5 points to 19.8 in October, which was not as bad as the expected slide to 15.0.

COMPANY NEWS: IBM slid 6% after the company reported third quarter earnings that beat expectations, but its revenue missed the mark by about $1B due in part to the company’s China business being down from last year’s levels. Shares of “Big Blue,” which is heavily weighted in the Dow, were downgraded at UBS while four other firms also lowered their price targets on the shares. Like IBM, though to differing degrees, Dow components UnitedHealth and Goldman Sachs reported revenues that missed forecasts and those two similarly fell sharply following their reports. American Express (AXP) and Verizon (VZ) led the advancers on the Dow following their own quarterly reports.

MAJOR MOVERS: Among the notable gainers was SanDisk (SNDK), which rose over 7% near midday after the flash memory maker reported better-than-expected earnings and said its fiscal-year 2013 revenue will come in higher than previously expected. Also higher following its quarterly report was Danaher (DHR), up about 4.5% near midday. Among the noteworthy losers was Select Comfort (SCSS), which dropped about 24% in midday trade after the company last night reported disappointing earnings and guided sharply below expectations, triggering downgrades from at least two analyst firms. Bedding peers Tempur Sealy (TPX) and Mattress Firm (MFRM) also fell in sympathy. Also lower were shares of biopharmaceutical company Amarin (AMRN), which plunged 60% after FDA advisors voted against recommending approval for an expanded indication for the company’s Vascepa capsule..