Fears of Portugal seeking a bailout package negatively affected the indices on Monday. However, prospects of strong earnings helped markets move back to a better position as they closed just slightly lower.
The Dow fell 0.3% and closed at 11,637.45. The S&P 500 was down 0.1% and closed the day at 1,269.75 while the tech-laden Nasdaq ended the day at 2,707.80, up 0.2%. On the New York Stock Exchange, advancing stocks overshadowed declining ones by 1,543 to 1,458 on below average volumes.
The advancers outnumbered the decliners even on a day when the markets dropped a few points, primarily due to a positive outlook on earnings. Alcoa Inc AA was one of the companies to start off the earnings season with strong results. One of the largest producers of aluminum in the US, Alcoa reported better than expected results and its shares had climbed 0.4% at the close.
Strong earnings prospects helped investors shrug off concerns arising out of fears of Portugal asking for a bailout package. Concerns also faded as the European Central Bank is believed to have been in talks to lend support to the European nation.
On a sectoral basis, education shares sank due to a drop in student enrollments over the last couple of quarters as more government intervention has incited tougher enrollment standards. Key stocks in this sector, such as Strayer Education STRA plummeted 22.6% as the for-profit college slashed its 2011 forecast after its new-student enrollment dropped 20% on a yearly basis. Sterne Agee downgraded the stock from “neutral” to “sell”. Other education stocks to plunge were Corinthian Colleges COCO which sank 13.3%, ITT Educational Services ESI which dropped 12.5% and Capella Education CPLA which fell 19.7%.
On to mergers and acquisitions news, Conexant Systems CNXT, the manufacturer of communications and networking chips, surged 14.3% after Standard Microsystems SMSC agreed to buy Conexant Systems for $284 million in a cash and stock deal. Shares of Standard Microsystems slipped 9.8%. U.S. listed shares of medical devices maker Smith & Nephew SNN sprang 6.8% after it rejected a takeover bid from health care giant Johnson & Johnson JNJ. Shares of Johnson & Johnson edged down 0.7%.
Getting into earnings news, Auxilium Pharmaceuticals AUXL soared 15.9% after it reported fourth quarter earnings that surpassed street estimates. However, Acuity Brands AYI dropped 6.2% after it missed street estimates of the earnings release.
ALCOA INC (AA): Free Stock Analysis Report
AUXILIUM PHARMA (AUXL): Free Stock Analysis Report
ACUITY BRANDS (AYI): Free Stock Analysis Report
CONEXANT SYS (CNXT): Free Stock Analysis Report
CORINTHIAN COL (COCO): Free Stock Analysis Report
CAPELLA EDUCATN (CPLA): Free Stock Analysis Report
ITT EDUCATIONAL (ESI): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
STANDARD MICROS (SMSC): Free Stock Analysis Report
SMITH & NEPHEW (SNN): Free Stock Analysis Report
STRAYER EDUC (STRA): Free Stock Analysis Report
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