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U.S. stock market report 1358 ET 10Nov2009 Players eye Sun Micro calls and puts on deal uncertainty

Option traders circled Sun Microsystems Inc January 2010 calls as well as December puts, one day after the European Commission objected to Oracle Corp's acquisition of the computer maker, throwing the $7 billion deal into question. In all, about 20,000 calls and 15,000 puts traded in JAVA late in the session, according to Trade Alert.

The options market is trying to figure out when the deal will get finished and under what conditions. 'For example on Tuesday, we have seen good demand for January 2010 $9 JAVA calls,' said Steve Sosnick, equity risk manager at Timber Hill, a division of Interactive Brokers Group. He noted those calls drew high volume with buyers anticipating that the deal could close on its original terms by mid-January. 'On the other hand, there has also been demand for December $7 JAVA puts which only have a value if the deal breaks completely or is subject to a significant renegotiation in price,' he said.

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1220 EST 10Nov2009-MBIA short interest up from last week
DataExplorers

'The short base for MBIA is 9 percent, up from 6.6 percent a week ago,' according to DataExplorers, which tracks short interest.

The bond insurer reported a third-quarter loss after the bell on Monday, sending its shares sliding 'with the market particularly concerned about their unrealized loss on their portfolio of insured credit derivatives,' DataExplorers said. For details, see

Investors who 'short' a stock, borrow the share and sell it with the expectation the stock will fall and they will buy it back at the lower price, pocketing the difference.

MBIA Inc's shares shed nearly 20 percent to $3.85 in midday trading on Tuesday.
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1211 EST 10Nov2009
Homebuilder index falls after NAR data

The Dow Jones U.S. Home Construction index fell on Tuesday after the National Association of Realtors said home prices fell in the third quarter from year-earlier levels in about 80 percent of U.S. metropolitan areas. It said the national median price for single-family homes fell 11.2 percent from the year-earlier period. For details, see

The index fell 2.5 percent. Among its major components, D.R. Horton sank 4 percent to $11.65 while Toll Brothers was down 1.2 percent to $18.02 and KB Home shed 3.4 percent to $14.67.

On the upside, Beazer Home gained 9.6 percent to $5.14 after it posted its first quarterly profit in three years.

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1201 EST 10Nov2009
DA Davidson: low volume suggests investor fears

DA Davidson on Tuesday wrote that while recent gains in the stock market were encouraging, the absence of big volume on days of large advances 'may suggest growing investor skepticism as to the sustainability of the current rally.'

The firm added that the lack of volume also suggested a 'moderate to high level of investor fear,' with the primary fear being that 'the economy might dip back into even deeper recession.'

Such a dip could come on the weight of high unemployment, slow consumer spending, the possibility of a tax hike in 2010 and valuation levels, it wrote to clients.

'So far, we have not seen the obvious signs of unbridled investor optimism like the deluge of initial public offerings triggering big opening day premiums or a huge surge in merger activity,' DA Davidson wrote.

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1153 EST 10Nov2009
Thermo Fisher says Inverness ends contract

Thermo Fisher Scientific on Tuesday said that Inverness Medical Innovations ended a supply agreement on a line of diagnostic products, effective July 1, 2010. The company expects related revenue to more than halve in 2010 as a results of Inverness' decision.

Thermo said its recent decision to expand its product offerings with a broader menu of diagnostic solutions may have prompted Inverness' move.

For details, see

Shares of Thermo fell 1.3 percent to $44.76 while Inverness was up 0.9 percent to $41.02.

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1133 EST 10Nov2009
EU says U.S. comment on Oracle/Sun deal 'unusual'

The European Commission on Tuesday said comments by the U.S. Department of Justice after EU competition authorities formally objected to Oracle's plan to buy Sun Microsystems were 'unusual.'

Late Monday, Sun Micro said the Commission had objected to the combination of its MySQL database product and software maker Oracle's products because it could hurt competition in the database market. The DOJ then said it believed that customers would have a variety of choices if the companies merged, and that the merger was unlikely to be anti-competitive.

The DOJ cleared the deal in August.

For details, see

Shares of Oracle fell $21.62 while Sun Micro was down 1 percent to $8.16.

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