Market Snapshot
briefing.com
| Dow | 34947.85 | +362.59 | (1.05%) | | Nasdaq | 14377.98 | +132.65 | (0.93%) | | SP 500 | 4557.07 | +33.01 | (0.73%) | | 10-yr Note | +1/32 | 3.79 |
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| | NYSE | Adv 2027 | Dec 814 | Vol 879 mln | | Nasdaq | Adv 2701 | Dec 1734 | Vol 4.8 bln |
Industry Watch
| Strong: Energy, Information Technology, Financials, Materials, Health Care, Industrials |
| | Weak: Utilities, Real Estate, Consumer Staples |
Moving the Market
-- Reacting to better than expected results from the likes of Bank of America (BAC), Morgan Stanley (MS), and Charles Schwab (SCHW)
-- Microsoft (MSFT) rising sharply after releasing AI update
-- Digesting economic data that mostly corroborated the soft landing narrative
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Closing Summary
18-Jul-23 16:25 ET
Dow +366.58 at 34951.84, Nasdaq +108.69 at 14354.02, S&P +32.19 at 4556.25
[BRIEFING.COM] The stock market started the session more mixed at the index level, but closed with solid gains. Initially, weak mega caps held back the major indices while the underlying market exhibited some decent strength. The market turned higher, though, after several mega caps recovered from early losses. The major indices all closed near their highs of the day, led by the Russell 2000 (+1.3%).
Microsoft (MSFT 359.49, +13.76, +4.0%), down 1.0% at its low of the day, charged higher after announcing the introduction of Bing Chat Enterprise, Microsoft 365 Copilot pricing, and an expanded AI partnership with Meta Platforms (META 312.05, +1.43, +0.5%). NVIDIA (NVDA 474.94, +10.33, +2.2%) also climbed in response to the news due to the AI connection. The Vanguard Mega Cap Growth ETF (MGK) closed 0.8% higher, rebounding from an earlier loss of 0.7%.
As money flowed into Microsoft, other parts of the market softened up somewhat. The Invesco S&P 500 Equal Weight ETF (RSP), which had been up 0.8% at its high of the day, closed with a 0.6% gain.
Gains for the broader market were driven by the idea that the U.S. economy will avoid a hard landing. The retails sales report for June helped corroborate that idea, but it didn't appear that way at first.
Briefly, total sales and sales, excluding autos, were up a weaker-than-expected 0.2%, but there were upward revisions to both numbers for May. Control group sales, which factor into the computation for personal spending in the GDP report, were up a solid 0.6%.
Strong gains in Bank of America (BAC 30.70, +1.30, +4.4%), Charles Schwab (SCHW 66.01, +7.37, +12.6%), and Morgan Stanley (MS 91.94, +5.57, +6.5%) following their earnings reports, which seemed to be missing in pre-open trading, were another source of support for the broader market. The SPDR S&P Bank ETF (KBE) rose 3.5% and the S&P 500 Regional Banking ETF (KRE) jumped 4.2%.
On a related note, the S&P 500 financials sectors (+1.1%) was among the top performers along with information technology (+1.3%) and energy (+1.0%). Only three of the 11 sectors closed with losses, real estate (-0.8%), utilities (-0.8%), and consumer staples (-0.1%).
Reflective of the upbeat economic view, the Dow Jones Transportation Average jumped 2.0% to a new 52-week high.
Treasuries settled mixed. The 2-yr note yield rose four basis points to 4.76% and the 10-yr note yield fell one basis point to 3.79%.
- Nasdaq Composite: +37.1% YTD
- S&P 500: +18.6% YTD
- Russell 2000: +12.2% YTD
- S&P Midcap 400: +11.8% YTD
- Dow Jones Industrial Average: +5.4% YTD
Reviewing today's economic data:
- Total retail sales in June increased a weaker-than-expected 0.2% month-over-month (Briefing.com consensus 0.5%), yet May sales were revised up to 0.5% (from 0.3%). Excluding autos, June retail sales also increased a weaker-than-expected 0.2% (Briefing.com consensus 0.3%) following an upwardly revised 0.3% increase (from 0.1%) in May. After accounting for the upward revisions to May sales, the June results were roughly consistent with expectations.
- The key takeaway from the report is that control group sales, which are used in the computation for personal spending in the GDP report, were up a solid 0.6%, leaving them far afield of an economy in recessionary distress.
- Total industrial production declined 0.5% month-over-month in June (Briefing.com consensus 0.0%) following a downwardly revised 0.5% decline (from -0.2%) in May. The capacity utilization rate slipped to 78.9% (Briefing.com consensus 79.5%) from a downwardly revised 79.4% (from 79.6%) in May.
- The key takeaway from the report is that most major market groups posted declines in June, reflecting the softening demand that has plagued the manufacturing side of the economy more so than the services side of the economy.
- Business inventories rose 0.2% in May (Briefing.com consensus 0.2%) following a revised 0.1% increase in April (from 0.2%).
- The NAHB Housing Market Index rose to 56.0 in July (Briefing.com consensus 56.0%) from 55.0 in June.
Elevance Health (ELV), Goldman Sachs (GS), ASML (ASML), U.S. Bancorp (USB), Baker Hughes (BKR), and Halliburton (HAL) are some of the more notable names reporting earnings ahead of the open tomorrow.
Looking ahead to Wednesday, market participants will receive the following economic data:
- 7:00 a.m. ET: Weekly MBA Mortgage Applications Index (prior +0.9%)
- 8:30 a.m. ET: June Housing Starts (Briefing.com consensus 1.475 million; prior 1.631 million) and Building Permits (Briefing.com consensus 1.472 million; prior 1.491 million)
- 10:30 a.m. ET: Weekly EIA Crude Oil Inventories (prior +5.95 million barrels)
Market remains near best levels ahead of the close
18-Jul-23 15:25 ET
Dow +384.52 at 34969.78, Nasdaq +141.65 at 14386.98, S&P +37.70 at 4561.76
[BRIEFING.COM] The main indices continue to trade in narrow ranges near their highs of the day.
Omnicom (OMC), J.B. Hunt Transport (JBHT), Interactive Brokers (IBKR), and Western Alliance Bancorp (WAL) headline the earnings reports after the close today.
Elevance Health (ELV), Goldman Sachs (GS), ASML (ASML), U.S. Bancorp (USB), Baker Hughes (BKR), and Halliburton (HAL) are some of the more notable names reporting earnings ahead of the open tomorrow.
Looking ahead to Wednesday, market participants will receive the following economic data:
- 7:00 a.m. ET: Weekly MBA Mortgage Applications Index (prior +0.9%)
- 8:30 a.m. ET: June Housing Starts (Briefing.com consensus 1.475 million; prior 1.631 million) and Building Permits (Briefing.com consensus 1.472 million; prior 1.491 million)
- 10:30 a.m. ET: Weekly EIA Crude Oil Inventories (prior +5.95 million barrels)
Energy complex futures settle higher
18-Jul-23 15:00 ET
Dow +362.59 at 34947.85, Nasdaq +132.65 at 14377.98, S&P +33.01 at 4557.07
[BRIEFING.COM] The major indices have been moving mostly sideways over the last half hour.
Energy complex futures settled the session higher. WTI crude oil futures rose 2.1% to $75.61/bbl and natural gas futures rose 4.4% to $2.62/mmbtu. On a related note, the S&P 500 energy sector (+1.2%) remains atop the leaderboard for the 11 sectors.
Only three sectors trade down now, utilities (-1.3%), real estate (-1.2%), and consumer staples (-0.3%).
Netflix nabs tgt raises ahead of earnings, Prologis slips despite earnings beat
18-Jul-23 14:30 ET
Dow +358.68 at 34943.94, Nasdaq +123.01 at 14368.34, S&P +31.38 at 4555.44
[BRIEFING.COM] The S&P 500 (+0.69%) is making HoDs in recent trading, although the index sits at the bottom of the three major indices as we approach an hour and a half remaining on the day.
S&P 500 constituents Caesars Entertainment (CZR 55.38, +2.91, +5.55%), Mosaic (MOS 37.38, +1.62, +4.53%), and Netflix (NFLX 471.19, +21.14, +4.70%) pepper the top of today's standings. Sell side firms raised tgts on NFLX this morning ahead of tomorrow's earnings.
Meanwhile, Bay area REIT Prologis (PLD 122.51, -5.47, -4.27%) slips to the bottom of the S&P despite reporting upside results and issuing equally decent guidance; shares were up some +4% month-to-date heading into the print, and while shares opened higher the stock quickly faded.
Gold higher as yields dip
18-Jul-23 14:00 ET
Dow +327.05 at 34912.31, Nasdaq +83.93 at 14329.26, S&P +25.15 at 4549.21
[BRIEFING.COM] With about two hours to go on Tuesday the tech-heavy Nasdaq Composite (+0.59%) is in second place.
Gold futures settled $24.40 higher (+1.2%) to $1,980.80/oz, aided in part by an only modestly stronger dollar and weakness in yields.
Meanwhile, the U.S. Dollar Index is up about +0.2% to $100.02.
Digesting some big gains
There is a lull in the trading action this morning. Whether it lasts remains to be seen, yet there isn't a great deal of conviction in the equity futures trade at the moment despite a round of mostly better-than-expected earnings news from leading financial firms, Goldman Sachs lowering its probability of a recession in the U.S. over the next 12 months to 20% from 25%, and the June Retail Sales Report still meshing with a soft landing outlook for the economy.
Currently, the S&P 500 futures are down seven points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 34 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 41 points and are trading 0.1% below fair value.
This is not a "bad" indication. Rather, it seems to reflect a view that the cash market has already made a big run, bolstered by a belief that the economy will achieve a soft landing without a big jump in unemployment, that the Fed is close to being done raising rates, and that earnings growth will return in the second half of the year.
In other words, a lot of good news has been priced into stocks since the S&P 500 flirted with 4,100 in late May. Yesterday, the S&P 500 hit a 52-week high at 4,532.85 before closing at 4,522.79. The latter marks an approximately 10% gain since the lows in late May.
That may help explain why better-than-expected results from Bank of America (BAC), Morgan Stanley (MS), Charles Schwab (SCHW), Lockheed-Martin (LMT), and Prologis (PLD) have failed to move the needle for the broader market in pre-market trading.
The same can be said for the June Retail Sales Report, which was better than the headlines might suggest.
Total retail sales in June increased a weaker-than-expected 0.2% month-over-month (Briefing.com consensus 0.5%), yet May sales were revised up to 0.5% (from 0.3%). Excluding autos, June retail sales also increased a weaker-than-expected 0.2% (Briefing.com consensus 0.3%) following an upwardly revised 0.3% increase (from 0.1%) in May. After accounting for the upward revisions to May sales, the June results were roughly consistent with expectations.
The key takeaway from the report is that control group sales, which are used in the computation for personal spending in the GDP report, were up a solid 0.6%, leaving them far afield of an economy in recessionary distress.
The Treasury market experienced some knee-jerk volatility immediately after the release but has settled back to levels it was trading at just before the Retail Sales Report was published. The 2-yr note yield is down two basis points to 4.70% and the 10-yr note yield is down four basis points to 3.76%.
Lower market rates should be thought of as generally supportive for the equity market, but, here again, that hasn't provided an incentive yet to whet the appetite of buyers. If rates drop further, it might change things, but for the time being, the stock market is settling into a digestive mode.
-- Patrick J. O'Hare, Briefing.com
Masimo's bearish Q2 revenue forecast sends shares significantly lower today (MASI)
Investors are cutting their Masimo (MASI -18%) holdings today after the medical technology manufacturer projected Q2 revs significantly below analyst forecasts due to order delays and lower-than-expected single-patient use sensor sales. MASI projected Q2 revenue of $453-457 mln, a 20% decline from the $565 mln posted in Q1 and the year-ago period. The company also expects FY23 sales in its healthcare business to slip to $1.30 bln from its prior prediction of $1.45 bln and its non-healthcare unit to see revs of $800-850 mln from $965-995 mln. Stifel downgraded the company today following its Q2 guidance.
MASI manufactures various noninvasive patient monitoring and hospital automation products, selling primarily to hospitals and other care facilities, with 56% of sales stemming from the U.S. Its primary competitor is Medtronic PLC (MDT), which rebounded quickly off intra-day lows of -3% today. However, tech giants like Alphabet (GOOG), Amazon (AMZN), Apple (AAPL), and Samsung (SSNLF), which have not historically operated in the medical device space, have also become meaningful threats in recent years.
Despite the growing competition, MASI was still registering excellent sales growth, boasting four consecutive quarters of +78-88% growth yr/yr. Although MASI was forecasting revs to decelerate considerably in FY23, guiding to around +20% growth yr/yr, it is now expecting nearly flat sales growth, a huge drop-off. Also, MASI's Q2 guidance is surprising given that U.S. health insurance giants UnitedHealth Group (UNH) and Humana (HUM) recently warned of a meaningful uptick in deferred care, underscoring pent-up health care demand following a lengthy pandemic.
- What happened? Within MASI's primary healthcare division, Large orders expected for Q2 were delayed to 2H23. Also, single-patient use sensor sales were lower-than-expected due to soft U.S. hospital inpatient counts and elevated inventories across several customers as previous discounting stopped and the flu season ended abnormally early. At the same time, hospital labor shortages caused new customer conversions to be below expectations while also increasing labor costs, straining hospital budgets, and ultimately lowering demand for capital equipment.
- Meanwhile, in non-healthcare, waning demand previously witnessed purely in lower-end consumer audio categories seeped into the premium market and extended across additional geographic regions.
- Despite the setbacks, management remained bullish on the long-term health of the organization. New hospital customers continue switching to MASI's offerings, spurring additional market share capture. The company also enjoyed record contracting during 1H23 globally, which will materialize as an expected +11-12% yr/yr growth in its Unrecognized Contract Revenue segment in Q2.
- Although MASI conceded it is unclear when softness within the premium consumer categories will improve, it is encouraged by initial demand for a few of its products, including hearables and baby monitors.
Bottom line, MASI's Q2 revenue shortfall is discouraging, especially after the company reiterated its FY23 guidance three months ago and health insurance giants discussed higher-than-anticipated inpatient and outpatient trends in recent weeks. Although the news is being brushed off by MASI's competitors today, it could indicate a broader trend that may adversely impact their earnings results over the next few weeks. If not, then MASI's woes might be related to internal issues.
Morgan Stanley banks an earnings beat on strength in Wealth Management segment (MS)
Buoyed by its Wealth Management segment, which is now the company's largest business, Morgan Stanley (MS) surpassed 2Q23 EPS and revenue estimates as its strategy to lessen its dependence on its trading and investment banking operations paid off.
As anticipated, the deal-making doldrums once again kept a lid on MS's investment banking business, while lower market volatility in both the fixed income and equity markets acted as a headwind for trading revenue. Higher interest rates, though, pushed net interest income sharply higher in Wealth Management, leading to record net revenue of $6.7 bln (+17.5%) for the segment in Q2.
- To rewind, in October of 2020 MS completed its $13.0 bln acquisition of E*Trade, elevating its Wealth Management segment in order to create a powerhouse in three distinct financial markets (institutional securities, investment management, wealth management) while diversifying its revenue streams.
- Looking ahead, MS's exposure to the more volatile trading and investment banking businesses looks set to decrease further as the company prioritizes the Wealth Management segment.
- Through a combination of asset growth, increased lending, and market expansion, the company has set a long-term goal of more than $12 bln in annual pretax profits for the business.
- For context, Wealth Management generated pretax income of $6.6 bln in FY22.
Meanwhile, the Institutional Securities segment continued to struggle as net revenues dropped by 6.6% yr/yr to $5.7 bln.
- Investment banking revenue was flat at $1.08 bln, but that was on top of a 55% plunge in the year-earlier quarter. Similar to the past several quarters, fewer completed M&A deals caused advisory fees to decline (-24% yr/yr), while the sluggish IPO market continued to weigh on equity underwriting activity.
- Although equity underwriting revenue was up by 52% yr/yr to $225 mln, the growth is misleading because MS lapped a dreadful quarter in which revenue plummeted by 86% in 2Q22.
- Turing to trading, revenue came in at $4.26 bln, falling short of analysts' expectations. Both equities (-14%) and fixed income (-31%) trading fees were lower on a yr/yr basis with declines seen across most products. The lone exception were rate-based products which benefited from the rising interest rate environment.
One key takeaway from MS's results is that rival Goldman Sachs (GS) could be in line for a rough earnings report tomorrow morning. While GS is also striving to diversify its revenue streams by expanding its consumer business (cards, loans), it's much more reliant than MS is on its investment banking and trading businesses. Last quarter, GS's Global Banking & Markets segment accounted for nearly 70% of its total revenue.
Overall, MS's results were better-than-feared as the Wealth Management business saved the day for the company, providing a buffer against the soft conditions in the investment banking industry.
Bank of America trades higher on Q2 earnings upside; echoed positive comments on US consumer (BAC)
Bank of America (BAC +5%) reported decent upside with its Q2 results this morning. BAC followed the lead of several large banks which reported EPS beats last week. BAC also echoed generally positive comments on the state of the consumer. With several banks having made similar comments, it makes us think that the US consumer is holding up better than expected, at least in the near term.
- Revenue, net of interest expense, increased 11% yr/yr to $25.2 bln. Net interest income (NII) rose 14% yr/yr to $14.2 bln, driven primarily by higher interest rates and loan growth. Noninterest income rose 8% yr/yr to of $11.0 bln, as higher sales and trading revenue more than offset lower service charges and investment and brokerage fees.
- Its standout segment was once again Consumer Banking, its largest segment. It posted solid 15% yr/yr revenue growth to $10.52 bln. Growth was fueled by increased NII driven by higher interest rates and loan balances, partially offset by lower service charges. BAC added ~157,000 net new consumer checking accounts in Q2. It also reported a record 36.3 mln consumer checking accounts with 92% being primary.
- Its Global Wealth and Investment Management segment saw revenue decline 3.5% yr/yr to $5.24 bln as lower average equity and fixed income market levels and transactional volumes drove fees lower. However, Global Banking revenue jumped 29% to $6.46 bln, driven by higher NII, higher leasing revenue, and the absence of mark-to-market losses vs last year. Global Markets revenue rose a respectable 8% to $4.87 bln.
- BAC continues to see a healthy US economy that is growing at a slower pace, with a resilient job market. Asset quality and the overall health of the US consumer remained strong in Q2. Provision for credit losses (PCL) of $1.1 bln increased $602 mln. Total loss rates remained below pre-pandemic levels.
Overall, this was a good quarter for Bank of America fueled by good organic customer activity coupled with a significant increase in NII thanks largely to higher rates. Investors are happy to see the nice EPS and revenue beat although the upside was not as robust as some other banks. For example, its NII growth of 15% was not nearly as strong as others, like JPMorgan Chase (JPM) which posted NII growth of +44%, or +38% excluding First Republic.
We think that is maybe why the stock reaction today is fairly muted. Nevertheless, it's clear that, despite macro concerns, bank stocks are benefitting from higher interest rates. The US consumer has remained resilient and defaults are not really materializing at this point.
Lockheed Martin struggling to take off today despite registering solid numbers in Q2 (LMT)
With shares down around 6% since peaking on encouraging Q1 results in mid-April, Lockheed Martin (LMT) was under some pressure to deliver an upbeat Q2 report to rekindle demand for its stock. Specifically, investors were eyeing F-35 deliveries after the leading defense contractor registered just five F-35 aircraft deliveries in the previous quarter. Recall earlier this year, the Technology Refresh 3 software upgrades slated for the F-35 were delayed until 2024, generating delivery issues. Although, management still forecasted low single-digit growth across the entire F-35 program over the next several years last month.
Fortunately for LMT, it did not buckle under the pressure, registering solid Q2 results, including a healthy increase in F-35 deliveries to 45. The company also topped earnings and sales estimates and hiked its FY23 outlook. However, a few items may have already been priced in. LMT also left its FY23 free cash flow outlook unchanged, possibly adding to today's lukewarm response.
- Primarily fueling LMT's overall sales growth of 8.1% yr/yr in Q2 to $16.69 bln was Aeronautics' 17.3% jump in revenue to $6.88 bln, boosted by higher production of F-35 aircraft. Note that LMT recognizes sales on production within its F-35 program instead of on delivery, which lifts cash flow.
- However, considering the weak volumes posted last quarter, which were impacted by delays in receiving additional contractual authorization and funding, a substantial uptick in Aeronautics revenue was expected in subsequent quarters.
- The other bright spot from Q2 was LMT's Space segment, which saw sales grow 12.1% yr/yr to $3.17 bln, similar to the +16% posted in Q1. A meaningful chunk of Space's consistent double-digit performance stemmed from higher net sales for strategic and missile defense, national security space, and commercial civil space programs.
- Given the massive hurdles required to clear to enter the commercial and government space industry, with only a few smaller players like SpaceX currently in the field, LMT commands a sturdy foothold, which should help sustain its solid growth in over the long run.
- Headwinds still presented themselves during Q2. LMT's Missiles & Fire Control (MFC) and Rotary & Mission Systems (RMS) segments lagged, with MFC sales flat yr/yr while RMS experienced a 2.9% decline. The relatively soft performance was attributed to lower production volumes. Note that supply chain issues continue to hang over these two segments.
- However, these blemishes are being shrugged off as investors consider that growth will not return meaningfully until 2024. Management has repeatedly mentioned that orders are coming in, but deliveries will not occur until down the road, with production ramping in 2024.
- Looking ahead, LMT hiked its FY23 outlook, projecting FY23 EPS of $27.00-27.20, up from $26.60-26.90, and revs of $66.25-66.75 bln, an increase from $65.0-66.0 bn. LMT also reaffirmed its FY23 free cash flow guidance of at least $6.2 bln, underscoring lingering effects related to F-35 delivery timing.
Overall, LMT's Q2 results may have displayed a few rough patches, like tepid performance in MFC and RMS and a 30 bp contraction yr/yr in total segment operating margins to 11.1%. However, on the whole, LMT delivered solid numbers, including a sequential spike in F-35 deliveries and continued strength in its wide-moat Space division. Although LMT's conference call at 11:00 ET could create some volatility today, the company's long-term prospects remain bright.
AT&T dialing up more losses in wake of WSJ article and ensuing analyst downgrades (T)
An ugly month for AT&T (T) has become even uglier with shares down sharply yet again, reaching their lowest levels since the early 1990s. The sell-off, which now amounts to a 15% dive so far in July, hit another gear last Wednesday after the Wall Street Journal reported that AT&T and Verizon (VZ) have done little to remove toxic lead cables underground that may pose serious health risks. That article has prompted a couple notable downgrades for the stock, including a rating cut to Neutral from Buy this morning at Citigroup. The downgrade comes on the heels of JPMorgan lowering their rating on AT&T to Neutral from Overweight on Friday morning.
- According to John Malone, a senior AT&T manager who was cited in the WSJ article, the telecom giant was aware that employees who worked with the lead-sheathed cables regularly showed high amounts of metal in their blood.
- Lead exposure increases the risk of kidney issues, heart disease, and reproductive problems, but the concerns don't end there. Mr. Malone also stated in a 2010 presentation that the soil immediately surrounding these cables retained between 83-98% of the lead that was released, turning this into a potentially massive environmental hazard.
- At this point, there are many unknowns, including how widespread the problem actually is. However, the WSJ believes that there are more than 2,000 lead-covered cables crisscrossing around the country -- not all of which are AT&T's.
- For its part, AT&T is defending its practices and policies regarding its treatment of lead-covered cables, with a spokesman stating that the company has managed these outdated cables in accordance with relevant laws and regulations.
- The market, however, is betting that AT&T and VZ -- which is down by about 8% since the WSJ article -- may soon be facing a barrage of class action and government-backed lawsuits.
- In a worst-case scenario, both companies could be dragged through a multi-year litigation process that ends with billions paid out in claims and fines.
- Even if the companies ultimately aren't on the hook for a huge sum of money, the uncertainty surrounding this situation will cast an overhang on their stock -- similar to what 3M (MMM) has experienced over the past several years with its "forever chemical" lawsuits.
Making matters worse for AT&T is that its recent financial performance and growth has been subpar.
- Although the company broke a string of six consecutive quarters of yr/yr revenue declines in Q1, its top-line growth remained unimpressive at just 1.4%. Postpaid phone adds slowed considerably to 424,000 from 656,000 in Q4, while free cash flow of $1.0 bln also missed expectations.
- Perhaps the biggest issue that's kept a lid on the stock is AT&T's mountain of debt, which stood at a whopping $137.5 bln at the end of Q1. Being strapped with a heavy debt burden is not an ideal position to be in with interest rates climbing higher.
AT&T's hefty dividend with an annualized yield of about 7.7% is the best thing going for the stock, but investors may be questioning the sustainability of that rate given the company's debt load, slowing growth, and now, the possibility of mounting litigation against the company. The bottom line is that it was already difficult to make a strong bullish case for the stock before the WSJ article hit. Now, it's even more difficult to envision the stock making a meaningful recovery with this uncertainty hanging over the company.
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