U.S. stock futures are lower this morning, after a strong earthquake in the northeastern part of the Japan. Tsunami warnings were also issued for Hawaii, parts of the West Coast of the US and 19 other countries. Futures on the Dow Jones Industrial Average dipped 50 points to 11,870.00 and futures on the S&P 500 index fell 4.40 points to 1,285.10. Nasdaq 100 futures dropped 10.25 points to 2,270.50.

Negative sentiment ruled the European markets today. While STOXX Europe 600 Index has dropped 0.83%, London's FTSE 100 Index moved down 0.48%.

What good are analysts who are consistently wrong? For instance, take Arena Pharmaceuticals (ARNA) after FDA Panel Votes Against Arena's Diet Drug Lorcaserin. How much money did their clients lose? Not all analysts work for brokerage houses, but many do, and their pay is not determined by the accuracy of their calls but the increase in sales.

How do they explain their backpedaling? One day they are pushing the stock and the next they are running for cover. Clearly they have to change their opinions based on new information, but perhaps there was too much wild speculation to begin with. More likely, they made too many false assumptions, which they love to do in a crowd so as not to be the lone incompetent.

It really wasn't a very good news day for stocks, but the market was flat anyway. The University of Michigan consumer index hit a one year low, which was not expected. It dropped to 66.6 in September from 68.9 last month. Consensus estimates were for the number to be 70.

Consumer inflation literally dropped to zero, once food and energy were factored out. There has not been much talk about deflation recently, but when price pressure dissipates, the specter appears.

Today's closing bell numbers:

Dow Jones 10,607.85 +13.02 (0.12%)
S&P 500 1,125.59 +0.93 (0.08%)
Nasdaq 2,315.61 +12.36 (0.54%)

Analyst Upgrades

• Baird upgraded Oshkosh (OSK) to outperform from neutral, citing valuation as it believes post-Iraq U.S. military spending concerns are overdone. The firm keeps a $42 price target for shares.
• Goldman transferred coverage on CenturyTel (CTL) with a buy from a neutral and has a $42 price target on the stock. The firm believes CenturyTel could increase buybacks and or increase its dividend given free cash generation and low payout ratio.
• Lazard Capital upgraded Hatteras Financial (HTS) to buy from hold to reflect increased dividend projections. The firm has a $30 price target for shares.
• EOG Resources (EOG) was upgraded to neutral from underperform at Credit Suisse.
• Donaldson (DCI) was upgraded to neutral from underperform at BofA/Merrill.

Arena Pharmaceuticals (ARNA) is taking a serious beating, with the stock down about 40% at last look. Traders are reacting to new concerns raised by the Food and Drug Administration (FDA) over Arena's experimental obesity drug, lorcaserin. Following an initial review, FDA staff cited "three noteworthy safety issues" with lorcaserin: heart valve disease, psychiatric and memory problems, and excessive tumors in rats.

The drug met one of the FDA's effectiveness standards "by a slim margin," with 47% of study participants shedding 5% or more of their body weight -- but lorcaserin fell short on another measure of effectiveness. Patients treated with lorcaserin in a study experienced just 3% greater weight loss than patients treated with a placebo, falling short of the FDA's 5% benchmark.

Arena Pharmaceuticals (ARNA), which soared over 10% in Monday morning trading, has set a new 52-week high of $6.75. Over the past month, Arena signed a licensing deal for its potential weight-loss drug, lorcaserin, with Japan's Eisai; released study results for the drug; and got a boost from a decision by a Food and Drug Administration panel on rival's Vivus (VVUS) drug. Arena's shares have more than doubled during that time.

The Eisai licensing deal is potentially worth about $1.3 billion. Meanwhile, the study results Arena released showed lorcaserin helped nearly half the patients lose 5% of their weight and improved their chances of keeping it off. Arena's drug did that while exhibiting a safer safety profile than either of its competitors' treatments: Vivus's Qnexa and Orexigen's (OREX) Contrave.

Pharmaceutical company Vivus (VVUS) has lost more than half of its value in pre-market trading Friday. Unfortunately for VVUS, the Food and Drug Administration (FDA) rejected the company's Qnexa weight-loss drug late Thursday -- citing a lack of long-term safety data.

The news triggered a glut of downgrades and target price cuts, including downgrades from Brean Murray, Needham, JP Morgan, and Jefferies.

The drop for VVUS is understandable when considering that Qnexa is the company's main drug. There is a slight (ever-so-slight) glimmer of hope for VVUS, as the FDA is not obliged to follow the recommendations of its panels. Of course, the agency usually does follow the recommendations of its panels.

Puts are flying across the tape today on Arena Pharmaceuticals (ARNA), with volume surging to 43 times the expected level within the first hour of the session. Roughly 11,000 puts changed hands by 10:40 a.m., and most of the activity was focused on ARNA's front-month strikes.

The equity's July 3 put was most active, with more than 9,000 contracts trading. Several large blocks changed hands at the ask price, implying they were most likely purchased, and implied volatility rose 18.6 percentage points as a result of the increased activity. With more than 45,000 contracts in residence at the July 3 put, it's unclear how much of this volume will translate to new open interest tomorrow; however, buyers seem to be responsible for the bulk of the activity.

Analyst Upgrades

• Goldman Sachs upgraded BJ's Wholesale (BJ) to neutral from sell and has a $43 target on the stock. Note that private equity firm Green Equity took a 9.5% stake in the company. Shares were also upgraded at Jefferies to buy from hold.
• Stephens upgraded Covenant Transportation (CVTI) to overweight from equal weight after the company positively preannounced Q2 results. The firm raised its target for shares to $12 from $5.
• Leerink upgraded Arena Pharmaceuticals (ARNA) to outperform from market perform after the company signed a partnership deal with Eisai for U.S. commercialization rights to lorcaserin. The firm believes the deal removes a major concern and upped its target for shares to $6 from $5.
• Fortune Brands (FO) was upgraded to hold from sell at Citigroup.
• KeyBanc upgraded NiSource (NI) to buy from hold.
• Akzo Nobel (AKZOY) was upgraded to buy from neutral at UBS.

Almost every important economic indicator announced today was below expectations, The included June sales for GM and Ford Motor Company (F), less than robust jobless claims, the Challenger Gray planned layoff numbers, and pending home sales. The only good news was that mortgage rates for most loan durations hit all-time lows. That does not matter much if no one is buying a house.

Todays closing bell numbers:

Dow 9,732.53 -41.49 (-0.42%)
S&P 500 1,027.37 -3.34 (-0.32%)
Nasdaq 2,101.36 -7.88 (-0.37%)

Honeywell (HON) closed at $45.27 after HON said, "The strong productivity actions taken last year are continuing to benefit the company, and along with improving economic conditions, we now expect our earnings to be near the high-end of our full-year guidance range of $2.20 – 2.40." The 2010 consensus EPS estimate is $2.40. April put option implied volatility is at 21, May and June is at 24, September is at 27; verses its 26-week average of 28 according to Track Data, suggesting decreasing near-term price movement.

Three stocks with IV rise on March 31; Liberty Property Trust (LRY) +3%, Arena Pharma (ARNA) +7%, Garmin (GRMN) +5% according to IVolatility.

CBOE Volatility Index-VIX at 17.59; 10-day moving average is 17.28, 50-day is 20.53, 200-day moving average is 23.26.

Update is by Stock Specialist Paul Foster of theflyonthewall.com

Today was one of those days where many traders looked like and acted like they wanted to just lock in gains after what was the first full week for many traders in about three weeks. Yet shares stayed strong. Options expiration dates and a S&P rebalance brought in some added volatility and money managers are now scared to tell their clients that they are not all-in on stocks. So while markets were up most of the day, the real closing bell with all of today's events was something that felt as though it would be down to the wire.

Here were today's unofficial closing bell levels:

Dow 9,819.52 +35.60 (0.36%)
S&P 500 1,068.26 +2.77 (0.26%)
Nasdaq 2,132.86 +6.11 (0.29%)

Top Analyst Upgrades
Top Analyst Downgrades
Top Day Trader Stocks

Analyst upgrades:

• Wells Fargo transferred coverage of Cooper Industries (NYSE: CBE) with an Outperform rating, upgraded from the previous analysts' Market Perform rating. The firm believes commercial construction will be of less of a headwind for the company than the Street thinks, and has a $38-$41 valuation range on the stock.
• Kaufman Bros. upgraded SuccessFactors (NASDAQ: SFSF) to Buy from Hold after channel checks indicated demand trends picked up in July. The firm raised its target on shares to $15 from $12.
• UBS upgraded eBay (NASDAQ: EBAY) to Buy from Neutral and believes Marketplace transaction growth is "turning the corner." Additionally, the firm believes the secondary market represents a long-term opportunity for the company. The firm raised its target to $28 from $24.
• Novartis (NYSE: NVS) was upgraded to Buy from Hold at Jefferies.
• Arcelor Mittal (NYSE: MT) was upgraded to Buy from Hold at Citigroup.
• Cardinal Health (NYSE: CAH) was upgraded to Buy from Neutral at Goldman.
• Yahoo! (NASDAQ: YHOO) was upgraded to Outperform from Market Perform AMC Monday at Bernstein.

Analyst upgrades:

• Keefe Bruyette upgraded American Express (NYSE: AXP) to Outperform from Market Perform to reflect improving credit trends following the July monthly data. The firm raised its target price on shares to $37.
• Oppenheimer upgraded Corning (NYSE: GLW) to Outperform from Perform as it believes 2010 estimates are achievable and concerns over falling LCD demand are overdone. The firm set a $19 price target on the stock.
• JPMorgan upgraded International Game Technology (NYSE: IGT) to Overweight from Neutral on valuation and expectations domestic replacement orders will pick up. The firm has a $23 price target on shares.
• Goldman Sachs (NYSE: GS) was raised to Buy from Neutral at Pali Capital.
• Portland General Electric (NYSE: POR) was upgraded to Buy from Neutral at Goldman.
• Mechel Steel (NYSE: MTL) was upgraded to Neutral from Reduce at Nomura.

When a $7 a share biotechnology company like Dendreon Corp. (NASDAQ: DNDN) rockets 200% to over $20 a share in one day, like it did yesterday after reporting successful Phase 3 trials of its prostate cancer drug, investors get interested in any biotech stock under $10.

But before investing in these speculative companies, you should have a clear understanding of how this niche operates. Marketing plays an important role in order for the companies to raise capital, therefore if you are interested in betting on a company's future, you should consider the risk factors and odds of success.