STOCKS NEWS US-Wall St dips after three days of gains

Stocks on the move

Real-time Equity news

U.S. stock market report
1655 ET 17Sept2009 Wall St dips after three days of gains

U.S. stocks dipped on Thursday after a three-day runup on concern recent gains were overextended despite the latest round of solid economic data.

Analysts said investors were trying to assess whether further market gains were justified, with the benchmark S&P 500 now up 58 percent since its early March lows.

The Dow Jones industrial average fell 7.79 points, or 0.08 percent, to end at 9,783.92. The Standard & Poor's 500 Index was down 3.27 points, or 0.31 percent, at 1,065.49. The Nasdaq Composite Index was down 6.40 points, or 0.30 percent, at 2,126.75.

Reuters Messaging: [e-mail]
1645 ET 17Sept2009 CBOE Volatility Index gets big option play

The CBOE Volatility Index, the implied volatility measure of the S&P 500 index, ended steady at 23.65. But in VIX products, one investor appears to be expecting much higher volatility levels by year-end. A significant trade was implemented in the VIX options pit in the December contract.

An investor apparently bought 72,000 40 calls for a 90-cent premium. The trader also sold a 22.50/27.50 strangle, 18,000 times on each side for $3.90 and collected 30 cents on the whole package. The transaction created a ratio of four December 40 calls to every one short December strangle, traders said.

'In one possible scenario, this strategy offers a profitable outcome if the VIX explodes and breaks out to the upside putting the December 40 calls in play,' said Dan Deming, VIX options trader at Stutland Equities.

Reuters Messaging: [e-mail]


1531 ET 17Sept2009 Susquehanna suggests Nike overwrite play

Nike Inc is due to report quarterly earnings next Wednesday. Ahead of the event, the stock's option implied volatility levels have increased as well as the premium for upside calls, said Susquehanna Financial Group in a note. SFG footwear analyst Christopher Svezia has a neutral rating on the stock. But he believes global revenue trends continue to be challenging and notes 'it will take until 3Q to see early signs of improvement, while continued inventory management, negative currency hedging, and higher 2H demand creation spending ahead of the World Cup will temper margins.' With little improvement likely in the global athletic footwear and apparel marketplace relative to the previous quarter, long investors could look at selling the Oct $60 calls at $1.05 ahead of the quarter, SFG said. Currently, the options imply a one-day earnings move of plus/minus 6 percent vs a realized average move of 4.6 percent and a median move of 3.7 percent over the past four quarters.
Reuters Messaging: [e-mail]
1502 ET 17Sept2009 Toyota ADRs up on $1 bln plan to boost U.S. sales

New York-listed shares of bellwether Toyota Motor Corp rose on Thursday, outperforming the broader Bank of New York Mellon index of leading American Depositary Receipts (ADRs) after the company announced a $1 billion marketing campaign to boost U.S. sales in the fourth quarter.

U.S.-traded shares of Toyota rose 0.22 percent to $82.63, while the ADRs index fell 0.6 percent. Asian ADRs also shed 0.84 percent, in line with the U.S. benchmark S&P 500 index that slipped 0.14 percent.

The $1 billion marketing and advertising plan by Japan's top automaker is 30 percent to 40 percent more than Toyota typically spends in the quarter.

Reuters Messaging: [e-mail]
1433 ET 17Sept2009 Hershey straddle implies bold stock move

One investor apparently bought a so-called option straddle in Hershey Co expecting shares of the candy maker to break above $44.50 or below $35.50 before Jan 2010 expiration. Its shares fell 38 cents to $39.01 in afternoon trade. Trade Alert president Henry Schwartz said an investor bought the January $40 straddle, 750 times for a premium of $4.50 in morning trade, suggesting a view that shares may be in for increasing volatility. The trust that holds voting control of Hershey has hired Warren Buffett's favorite banker to advise it on a possible bid for British chocolatier Cadbury, the Wall Street Journal reported. Such a bid would counter an offer made by Kraft Foods Inc, of which Buffett's Berkshire Hathaway Inc is the largest shareholder. Hershey's contracts outstanding held by investors now stand at 48,000 calls and 26,000 puts, the highest year-to-date. The largest block of open interest is at the Oct $45 call line with 10,738 contracts, he said.

Reuters Messaging: [e-mail]


1321 ET 17Sept2009
Dow 10,000 or not, correction seen on the cards

The Dow Jones industrial average is flirting with hitting the 10,000 level, but what might also grab headlines is a resurgence of worries that the economic recovery will be sluggish, thus making a further run-up in equities unjustifiable, a leading bond investors said on Thursday.

'The stock market has a correction to come. It might be 10-20 percent,' said Thomas Atteberry of Los Angeles-based First Pacific Advisors LLC.

He manages about $5.5 billion of fixed income assets, while his firm has another roughly $5.5 billion in equities.

Reuters Messaging rm://[e-mail] Keywords: MARKETS STOCKSNEWS

COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.