Stock Market Today: These Stocks Are Still on a Hot Streak
By , Money Morning•
Office Depot Inc (NYSE: ODP)
The major headlines in the stock market today include Europe putting a stop to the QE3 rally, another negative manufacturing report and a couple of stocks continuing to soar.
QE3 rally halted- After last week's Federal Reserve inspired surge where each U.S. market gained at least 2%, stocks opened lower Monday. The selling pressure might not last long though as investors are ready to profit off of the Fed's latest moves. "It looks like we need to take a small breather after the sizable rally that we've had," Randy Frederick, managing director of active trading and derivatives at Charles Schwab Corp., told Bloomberg News. "There's the potential for a small pull-back, but I think we will move back into the bull territory later in the week unless there's an unexpected negative news event." Also making investors somewhat cautious today are reports that a meeting between European Union finance ministers on Friday did not go smoothly. The ministers apparently could not come to terms on a timetable for a more unified banking sector and fought over specifics of bailout requests and the role of the European Central Bank.
Empire State index lowest in three years- The Empire State index fell to a negative 10.41 in September from a negative 5.85 in August, its lowest level since April 2009. The reading measures manufacturing in the New York region and economists on average had expected a reading of minus one. The index is calculated from a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. The decline shows the negative attitude manufactures have on the sluggish economy. "There's clearly been a souring of the business climate," Ken Mayland, chief economist at ClearView Economics LLC told Bloomberg. "We're not getting the income gains that would support consumer spending growth. There's no help from exports." Yet the part of the index that measures expectations six months from now rose to 27.2 from 15.2.
Office Depot Inc. (NSYE: ODP) surges- Shares of Office Depot jumped as much as 15% before paring some of those gains as activist investment fund Starboard Value revealed a 13.3% stake in the office retailer. Jeffrey Smith, CEO of Starboard, said in a press release that Office Depot remains "deeply undervalued." He wants to transition Office Depot's strategy towards higher-margin products and less overall goods sold. Office Depot stock has been beaten down over the past few years and never fully recovered from the recession. The stock traded above $35 a little over five years ago and now trades below $3. Yet the ODP stock is up over 5% today and has gained over 42% in the last five days.
Tesla Motors Inc. (Nasdaq: TSLA) moves on broker upgrade- Tesla Motors received a boost from Morgan Stanley (NSYE: MS) as the financial services company changed its "Underweight" rating on TSLA to an "Overweight" rating. Morgan Stanley also raised its price target for Tesla stock from $45 to $50. Tesla is up 5% today to $31.95 and the $50 price target would be a 56% gain if TSLA stock reaches that level.
The Dow Jones was down 22.35 points, or 0.16%, and the S&P 500 was down 3.09 points, or 0.21%, in early trading.