Morning Commentary: Earnings drive trading action; U.S. Steel, Yahoo! higher outright with shares

By Rebecca Melvin

New York, Jan. 28 – United States Steel Corp.’s convertibles were higher on an outright basis early Wednesday as shares of the Pittsburgh-based steelmaker popped as much as 10% on lower fourth-quarter net income that beat estimates.

Yahoo! Inc.’s 0% convertible notes due 2018 traded up compared to the bulk of trades in the name on Tuesday with shares of the Sunnyvale, Calif.-based internet company up about 2% after news that it is spinning off its remaining stake in Alibaba Group Holding Ltd.

“All trading at the moment is earnings related,” a New York-based trader said.

U.S. Steel’s 2.75% convertibles were 116.25 versus an underlying share price of $23.00, the trader said. That compared to 111 bid, 111.75 offered, with the underlying shares closing at $21.27 at the end of Tuesday.

Yahoo!’s convertibles were 114 versus an underlying share price of $50.00, the trader said. That was on par with levels on Monday.

Yahoo!’s initial share gains were slipping, and by late morning, they were up only 1% at $49.50.

A second trader said that the Yahoo! convertibles were trading actively before the market open, “probably on people looking at a conversion adjustment on the Alibaba spinoff,” he said.

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