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Stock Market Update for 10/11/2010

October 11, 2010

Stocks are turning in a lackluster performance in morning trading on Monday, although the markets have a modestly positive bias amid continued optimism about additional quantitative easing measures from the U.S. Federal Reserve.

The major averages have moved to the upside in recent trading and are currently posting modest gains. The Dow is up 17.66 points or 0.2 percent at 11,024.03, the Nasdaq is up 7.97 points or 0.3 percent at 2,409.88 and the S&P 500 is up 2.82 points or 0.2 percent at 1,167.97.

The markets continue to benefit from indications that the Federal Reserve will enact further stimulative measures following its meeting on interest rates early next month. Most expect the Fed to announce a new round of asset purchases.

Nonetheless, traders seem reluctant to make any significant moves ahead of the release of a slew of economic data later in the week, including reports on retail sales, consumer and producer prices, and consumer sentiment.

Some positive sentiment has been generated by continued activity on the merger-and-acquisition front, with shares of Gymboree (GYMB) moving sharply higher on news that the children’s apparel retailer has agreed to be acquired by Bain Capital for $1.8 billion.

Under the terms of the agreement, Gymboree shareholders will receive $65.40 in cash for each share of Gymboree common stock they own. The offer represents a 23.5 percent premium to Gymboree’s closing price last Friday.

Shares of Chesapeake Energy (CHK) are also seeing notable strength in morning trading after the company announced that it has agreed to sell a one-third stake in its Eagle Ford shale project in Texas to CNOOC Ltd. for $1.1 billion.

Chesapeake noted that CNOOC has also agreed to fund 75 percent of Chesapeake’s share of drilling and completion costs until an additional $1.1 billion has been paid. The transaction is expected to close in the fourth quarter of 2010.

Additionally, LDK Solar (LDK) has shown a strong upward move after the solar wafer maker raised its third quarter revenue guidance. The company said it now expects revenues of $610 to $640 million compared to its prior guidance for revenues of $570 to $600 million.

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