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Friday's negative jobs report is hanging over the stock market today as the markets opened lower Monday morning. Investors will look to corporate earnings of major companies this week as the second-quarter earnings season unofficially begins.
Even though some major companies such as Research in Motion Ltd. (Nasdaq: RIMM) and Nike Inc. (NYSE: NKE) have recently announced earnings, Alcoa (NYSE: AA) unofficially kicks off the market's second-quarter earnings.
Investors hope that earnings do not follow the disappointing trend set by RIMM and NKE, but many other companies have already issued lower guidance for the upcoming quarter. This does not bode well for the economy which is trying to shrug off manufacturing, jobs and consumer confidence reports that all point towards "Recession 2013."
Many analysts expect earnings to be weak across the board. Corporate profits are starting to feel the sting of economic concerns overseas and at home.
Troubles in Spain continue to impact the confidence of investors as the yield on the Spanish 10-year bond crossed the 7% mark again.
Along with Alcoa here are some other companies in the news today.
Amerigroup Corp (NYSE: AGP) is the first big healthcare stock to benefit since Obamacare was upheld by the Supreme Court after WellPoint Inc. (NYSE: WLP) announced today that it will purchase Amerigroup for $92 a share.
The deal is worth almost $4.9 billion and is expected to close in the first quarter of 2013. The acquisition will significantly boost WellPoint's Medicaid base. Amerigroup runs Medicaid coverage in 13 states, including Texas, Florida and New York and will bring WellPoint's Medicaid enrollment up to 4.5 million people from its current 1.9 million.
WellPoint expects this deal to add to its long term growth as Medicaid is expected to expand in 2014 with the aim of making more people eligible for Medicaid.
WellPoint, the second-largest insurer in the country, operates Blue Cross-Blue Shield in many states and currently has around 33.7 million people enrolled in its plans.
WellPoint stock was up 2.5% and Amerigroup stock was up 38% as of noon.
Alcoa (NYSE: AA) will announce its second-quarter earnings after the markets close today.
Many analysts expect Alcoa, the nation's largest aluminum producer, to report very weak earnings as the company has struggled to deal with low aluminum prices.
Analysts have been lowering their expectations for Alcoa over the past month and now expect the company to post earnings, excluding one-time items, of 5 cents a share. That is down 84% from last year's second-quarter earnings of 32 cents per share.
Alcoa has been helped by its sales of components to automakers and manufactures but its aluminum-smelting business has taken a toll on profits due to the lower price of aluminum.
"The company continues to talk about their productivity gains, and I think it's an important and notable effort on their side to lower cash cost, but not enough to offset the sharper drop in aluminum prices," Brian Yu an analyst at Citigroup told Bloomberg News.
The price of aluminum averaged $2,019 a ton during the second quarter on the London Metal Exchange, 23% less than a year earlier, and traded below $1,900 a ton earlier today.
Though analysts expect a slightly higher price in the next quarter there is not going to be a serious move upward in aluminum prices with the current oversupply.
Alcoa shares are down more than 47% in the past year and the stock is down more than 1.3% as of noon.
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