U.S. stocks traded lower Monday as the Dow Jones Industrial Average fell 1% to 11923, the Standard & Poor’s 500 was off 1.2% to 1289 and the Nasdaq Composite slipped 1% to 2689. Among the companies whose shares are actively trading in the session are Lubrizol Corp. (LZ), Hitachi Ltd. (HIT) and Entergy Corp. (ETR).
Barely two weeks after saying he was itching to make a big acquisition, Warren Buffett on Monday said his Berkshire Hathaway Inc. (BRK.A, $125,766.00, -$2,234.00, -1.75%)(BRK.B, $83.84, -$1.46, -1.71%) agreed to buy chemical company Lubrizol Corp. ($134.26, +$28.82, +27.33%) for about $9 billion in cash. Berkshire said it would pay $135 a share, a 28% premium over Lubrizol’s closing price on Friday. Other companies that make chemicals used by the energy sector also climbed, including NewMarket Corp. (NEU, $145.00, +$14.39, +11.02%), Ashland Inc. (ASH, $57.01, +$0.97, +1.73%), and Innospec Inc. (IOSP, $28.69, +$0.74, +2.65%).
Hitachi (HIT, $49.80, -$9.32, -15.76%)(6501.TO) said Monday that operations are currently suspended at its six manufacturing facilities in the Japanese earthquake-struck areas. The facilities make various products, including home appliances, auto parts, elevators and power-generation systems. A spokesman for the Japanese electronics conglomerate said the company is still trying to assess the damage at the facilities and doesn’t yet know when operations can resume. Rival Sony Corp. (SNE, $31.11, -$2.34, -7.00%) also traded lower.
The nuclear-power industry is on edge after last week’s quake caused serious damage to several reactors. Bank of America Merrill Lynch cut its stock-investment rating of Entergy ($69.60, -$4.09, -5.55%) and Scana Corp. (SCG, $38.76, -$1.29, -3.22%) to underperform from neutral, citing risks including delays and higher approval costs for relicensing existing plants. Dahlman Rose said as many as 10 reactors could be affected, which consume the equivalent of 340,000 pounds of uranium each month. The firm cut its price targets for Cameco Corp. (CCJ, $31.87, -$5.51, -14.74%) and Uranerz Energy Corp. (URZ, $2.96, -$0.99, -25.06%). Also trading down are Uranium Energy Corp. (UEC, $3.63, -$1.22, -25.15%), Uranium Resources Inc. (URRE, $1.70, -$0.63, -26.89%) and Denison Mines Corp. (DNN, $2.48, -$0.81, -24.62%).
Renewable-energy stocks rose in the U.S. in the wake of the nuclear-power plant concerns in Japan putting a fresh pall over that industry and some investors believing non-nuclear energy sources away from fossil fuels will get a boost. Solar-power companies are leading the way, including First Solar Inc. (FSLR, $145.13, +$5.39, +3.86%), ReneSola Ltd. (SOL), Suntech Power Holdings Co. (STP) and Yingli Green Energy Holding Co. (YGE). Also on the march is China Wind Systems Inc. (CWS).
Toyota Motor Corp. (TM, $81.00, -$4.65, -5.43%)(7203.TO) said Monday it is suspending production at all domestic factories through Wednesday as the auto maker tries to adjust to the logistics dislocation caused by Friday’s earthquake and tsunami. Honda Motor Co. (HMC, $37.93, -$1.81, -4.55%) and Nissan Motor Co. (NSANY, $17.59, -$1.41, -7.42%) also traded lower.
Other Stocks In Focus:
Wind-turbine maker and provider of power-generation systems A-Power Energy Generation Systems Ltd. (APWR, $4.99, +$0.29, +6.17%) agreed to build a biomass power plant in China under a contract valued at RMB200.7 million ($30.5 million).
Brean Murray Carret upgraded its stock-investment rating on American States Water Co. (AWR, $33.90, +$0.97, +2.95%) to buy from hold, noting favorable year-on-year comparisons after the water utility-holding company incurred a number of one-off items in 2010 that obscured its earnings potential.
Online jewelry retailer Bidz.com Inc.’s (BIDZ, $1.47, -$0.26, -15.03%) fourth-quarter results topped analysts’ expectations, as net revenue increased more than 5% year-over-year. But the company forecast first-quarter earnings below estimates.
China Shen Zhou Mining & Resources Inc. (SHZ, $3.79, -$0.33, -8.01%) said it has formed a special committee and hired a law firm to help determine its course of response after an analyst report last week said the company was misrepresenting its business and was overvalued by the market.
Cleveland BioLabs Inc. (CBLI, $7.88, +$0.69, +9.60%) climbed as investors are apparently betting on some positive developments for the drug developer’s treatment for acute radiation sickness. It is being studied to reduce the risk of death after total body irradiation during or after exposure. Cleveland BioLabs has been working with the Department of Defense on development of the drug.
Corinthian Colleges Inc. (COCO, $4.88, +$0.34, +7.49%) shares jumped after the company issued “incrementally positive” news for shareholders, RBC Capital Markets said. The for-profit college said it expects new-student enrollment growth to decline more than previously expected as it boosts tuition 12%. But, on the plus side, Corinthian Colleges said it sees “positive trends” in cohort default rates and believes it has “significantly reduced” its risk of exceeding federal default thresholds under new three-year measure rules. “It demonstrates the success that management is having with regard to addressing the company’s regulatory situation,” RBC said.
Covidien PLC (COV, $51.88, -$0.85, -1.61%) said Monday it has stopped enrolling patients in its U.S. clinical trial for a blockage-removing product called Solitaire due to recommendations from the trial’s data safety-monitoring board. A spokesman for Covidien said there were no safety issues regarding the device to warrant the action, but didn’t have any specifics on why patient enrollment was halted. The company said it anticipates moving forward with the U.S. Food and Drug Administration application process once the FDA reviews data from the trial, and continues to follow already enrolled patients.
Epicor Software Corporation (EPIC, $10.60, +$0.48, +4.74%), the business-software solutions maker, announced a deal to provide its Epicor 9 next-generation enterprise resource planning solution to Argentine home- and kitchen-appliance maker Longvie SA.
Oil and gas company Gulfport Energy Corp.’s (GPOR, $27.49, +$2.12, +8.36%) fourth-quarter results topped analysts’ expectations, buoyed by higher oil production volume and higher oil prices.
Oil and gas explorer Hyperdynamics Corp. (HDY, $5.27, -$0.33, -5.89%) said seven deep-water oil leads near the Republic of Guinea were estimated to have 3.7 billion barrels of potentially recoverable, unrisked prospective oil resources.
Copper-clad bimetallic-wire manufacturer Fushi Copperweld Inc. (FSIN, $8.27, -$1.15, -12.21%) said it is re-evaluating the application of generally accepted accounting principles for its 2007, 2008 and 2009 financial results as well as its previously filed financial statements for the first three quarters of 2010.
General Electric Co. (GE, $19.55, -$0.81, -3.96%), which supplied three of the six Japanese nuclear reactors at Fukushima Daiichi, dropped in the wake of expectations that expansion of the global nuclear-power sector will slow in the wake of last week’s earthquake that damaged the Japanese power plants. CreditSights and other analysts form a chorus that the “nuclear renaissance” of new plants in emerging markets and developed nations will slow, while the potential for new design and safety measures could challenge sector economics. Separately, officials said GE would invest an initial $50 million to build a manufacturing facility in India as part of its strategy to expand local production across a range of its businesses, a sign of confidence in India’s prospects at a time when foreign direct investment overall has fallen sharply.
Greenhouse-gas abatement company Green Holdings Enlow Inc. has listed a landmark coal-mine methane-abatement project with the Climate Action Reserve, the leading carbon-offset registry in North America. Consol Energy Inc. (CNX, $50.03, +$1.42, +2.92%), the largest operator of underground coal mines in the U.S., will host the project, which will abate ventilation air methane emissions from its Enlow Fork operation in southwestern Pennsylvania. It is estimated that the project will become operational in July 2011, and that it will destroy the equivalent of 190,000 metric tons of carbon dioxide on an annual basis.
Numerous North American life insurers with exposure to Japan lost ground in early trading, including Hartford Financial Services Group Inc. (HIG, $26.58, -$1.02, -3.70%), Manulife Financial Corp. (MFC, $17.00, -$0.88, -4.92%), MetLife Inc. (MET, $44.69, -$1.16, -2.53%) and Prudential Financial Inc. (PRU, $60.78, -$2.32, -3.68%). Prudential has one the biggest presences in Japan of any U.S. life-insurance company, and recently expanded its operations there with the purchase of two Japan-based life insurers from American International Group Inc. (AIG). International insurer Aflac Inc. (AFL, $53.34, -$2.21, -3.98%) also traded down, as some 70% to 75% of Aflac’s earnings coming from Japan. But the major seller of life-insurance and supplemental-health policies said Monday it isn’t changing its earnings guidance for the year. The prefectures hardest hit by the earthquake, tsunami and nuclear-reactor woes represent less than 5% of Aflac’s sales in Japan.
Japanese financial-company shares trading in New York stumbled Monday as investors digested the economic impact of last week’s earthquake, and authorities tried to contain radiation from damaged nuclear reactors. Mizuho Financial Group Inc. (MFG, $3.55, -$0.33, -8.58%) (8411.TO), Sumitomo Mitsui Financial Group Inc. (SMFG, $6.38, -$0.51, -7.40%) (8316.TO) and Nomura Holdings Inc. (NMR, $5.31, -$0.47, -8.13%) (8604.TO) all traded lower in New York.
Citigroup raised its stock-investment rating on JDS Uniphase Corp. (JDSU, $21.57, +$0.31, +1.46%) to buy from hold, citing a bullish outlook for optical fibers in 2011, with carriers requiring greater capacity and simpler, more agile networks, and reduced operating expenses.
Supplier of test systems and industrial position sensors MTS Systems Corp. (MTSC, $42.91, -$2.55, -5.61%) has been suspended from U.S. federal government contracting and benefiting from federal assistance programs because it failed to disclose two misdemeanors.
Susquehanna raised its stock-investment rating on National Semiconductor Corp. (NSM, $14.97, +$0.27, +1.84%) to positive from neutral, citing improvements in the company’s inventory levels and better revenue and margins on seasonal trends during the summer.
Interconnection-services provider Neutral Tandem Inc.’s (TNDM, $14.06, -$2.89, -17.05%) fourth-quarter results missed analysts’ expectations, as network and facilities expenses for the quarter rose due to an increase in network capacity expenses and expenses related to its acquisition of Tinet SpA, an international carrier and provider of Ethernet and IP Transit services.
A McLean County, Ill., jury handed down a verdict late Friday against four defendants, including Owens-Illinois Inc. (OI, $29.58, -$1.14, -3.70%), in a case alleging asbestos-related injuries. The jury awarded $90 million to the plaintiff. Owens-Illinois said in a statement that it is disappointed in the ruling and that it will challenge this verdict, if necessary, in the Illinois Appellate Courts.
Drug giant Pfizer Inc. (PFE, $19.76, +$0.29, +1.49%) may pursue a breakup strategy, said Bernstein in the wake of a recent meeting with the company’s new Chief Executive Ian Read. The investment bank speculated that Pfizer may shed not only its non-pharma assets, including consumer health, but also its generics business. “Jettisoning these different segments would shrink PFE’s revenue base from $67 billion to a more sustainable $35 billion to $40 billion,” Bernstein noted as it raised its stock-price target to $23 from $21.
Factory shutdowns in post-earthquake Japan are set to squeeze the semiconductor-components sector, which RW Baird analysts see as a positive for SanDisk Corp.’s (SNDK, $44.30, -$0.77, -1.71%) NAND flash pricing. A SanDisk spokesman said manufacturing operations south of Tokyo felt a “modest” impact and were stopped temporarily. “We expect shortages of various components in the electronic supply chain, notably commodities (memory, LCD, microcontrollers),” Baird wrote, predicting the shortages will outweigh any negatives from demand loss in Japan.
Northcoast Research cut its stock-investment rating on SFN Group (SFN, $13.29, -$0.37, -2.71%) to neutral from buy, citing the stock’s outperformance versus staffing peers and the market overall.
Japan’s nuclear-power crisis is hammering shares in the U.S. nuclear sector, but investors should keep an eye on engineering-and-construction stocks that work in the sector as well, J.P. Morgan said, citing Shaw Group Inc. (SHAW, $31.21, -$7.20, -18.75%), Babcock & Wilcox Co. (BWC, $31.25, -$3.12, -9.08%), URS Corp. (URS, $44.16, -$1.30, -2.86%) and EnergySolutions Inc. (ES, $6.14, -$0.25, -3.91%). “We believe the safety features of newer generation reactors will be considerably more advanced” than the older Fukushima units causing havoc over the weekend, the firm wrote, but it said it still sees a likelihood that renewed nuclear worries are a headwind for these stocks. DA Davidson also cut its stock-investment rating on Shaw Group to neutral from buy, noting that fallout from the Japanese nuclear problems could damp and delay new project opportunities for the company.
Tiffany & Co. (TIF, $59.48, -$3.71, -5.87%) shares are off as investors consider the effect the Japanese disaster will have on the retailer. Tiffany had 57 locations in the country, with sales representing more than half of its Asia-Pacific business, as of the end of 2009, the latest available figures. The retailer is also a big destination–especially its New York City flagship store–for Japanese tourists.
Toshiba Corp.’s (TOSBF, $4.90, -$0.97, -16.52%) production of NAND flash memory chips has been disrupted by the earthquake in Japan, creating an opportunity for Micron Technology Inc. (MU, $10.45, +$0.21, +2.06%) to gain market share, according to DigiTimes. Shares of MEMC Electronic Materials Inc. (WFR, $13.65, +$1.63, +13.56%), a maker of silicon wafers used in the production of semiconductors, also surged as its Japanese rivals declined.
Greek tanker company Tsakos Energy Navigation Ltd.’s (TNP, $9.92, +$0.54, +5.76%) fourth-quarter loss narrowed as fewer write-downs dented the bottom line but revenue slid amid lower utilization.