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Citigroup leads financials lower

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Shares of Dow component Citigroup (NYSE:C) $33.69 -5.17% trade lower after a Wall Street Journal reports that the NY Attorney General's office will question the company's CEO Sanford Weill after gathering new evidence in its broad investigation into research activities at Citigroup.

The KBW Banks Index (BKX.X) 736.83 -2.24% of which Citigroup (C) is a components leads the sector losses in the financials group, with the more regional banking S&P Banks Index (BIX.X) 282.52 -1.14% trading lower on profit taking. Also showing some weakness in the financial sectors are the Securities Broker/Dealer Index (XBD.X) 392 -1.3% and S&P Insurance Index (IUX.X) 263 -2.4%.

Shares of medical device maker Boston Scientific (NYSE:BSX) $38.21 +6% have broken to a 52-week high today. The stock is benefiting from perception that it will be a front-runner in late 2004 in the coated stent market along with Johnson & Johnson (NYSE:JNJ) $57.39 -4%. Late yesterday, JNJ received FDA advisory panel recommended approval of the company's drug-coated stent, but with conditions. JNJ indicated that it had submitted additional information on Monday adressing the problems the FDA pointed out in its September "major deficiency letter." Analyst Sheryl Zimmer at Deutsche Bank believes that the "deficiency letter" and issues contained within it, could potentially delay final FDA approval on the stent.

CIBC World Markets analyst Mara Goldstein downgraded the stock to "sector performer" from "sector outperformer," citing valuation and limited upside from $60.00.

Sector bright spots are limited today with the Disk Drive Index (DDX.X) 58.34 +3.2% the only sector showing a gain of greater than 2% as shares of component Storage Technology (NYSE:STK) $15.25 +17.76% surge higher after reporting earnings late yesterday that beat estimates by 4-cents. The company also gave forward guidance for its fourth-quarter of sequential growth in product sales in the neighborhood of 10-15%, which is lower than last year's high teens, but levels high enough to have the company delivering on the bottom line of $0.35 per share. First Albany upped its rating on the stock to "buy" on the better than expected results.

Most sectors are in the red today with the Pharmaceutical Index (DRG.X) 294 -3.29% follow shares of Eli Lilly (NYSE:LLY) $58.00 -7.93%. Before the bell, LLY reported earnings that were in line with estimates, but said upcoming Q4 earnings would be in the range of $0.68-$0.70, which was below consensus of $0.73. The lowering of guidance for full-year and Q4 was driven by the need to continue to make investments in its business, including supporting Zyprexa and preparing for several new product launches, in order to implement the company's long-term growth strategies.

Jeff Bailey

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