Consumer spending impact to cut profit growth
Global Market
Chairman of Bear Stearns Cos. sold his shares in the crippled securities firm for $61 million prior to a vote on the company's pending takeover by JPMorgan Chase & Co.
He sold 5.66 million shares at $10.84 apiece. The value of his stake plummeted from almost $1 billion last year, when the shares peaked at $171.50 before the collapse of the subprime mortgage market toppled two of the firm's hedge funds and prompted a contraction in credit markets worldwide.
He led Bear Stearns as CEO for 15 years until January, when he stepped down after Bear posted the first loss in its 85-year history. Once the biggest underwriter of mortgage-backed bonds, the company was forced to seek funding from the Federal Reserve and then submit to a takeover by JPMorgan after a run on the securities firm drained cash reserves. JPMorgan is paying $10 a share. Bear Stearns had no comment on why or to whom Cayne sold his stock. Last weekend Bear Stearns's board said its members would vote their shares in favor of the acquisition.
The bank quadrupled its initial offer for Bear Stearns to $10 a share and struck a deal to buy 39.5 percent of the company without a shareholder vote, making it unlikely opponents can block the takeover.
Bear Stearns investors seeking a higher price than the JPMorgan bid asked a Delaware judge to delay Bear Stearns's plan to issue 95 million new shares as part of the sale.
The securities firm agreed to issue the new shares to JPMorgan without seeking shareholder approval, giving the bank a stake of about 40 percent to vote in favor of the merger.
Bear Stearns also faces investor suits. One filed March 17 in Manhattan federal court accuses the company of misleading investors about its finances.
Stock Market
U.S. stocks dropped as concern that profit growth will weaken at financial and technology companies overshadowed a bigger-than-forecast gain in consumer spending.
Oracle Corp. tumbled on revenue that trailed analysts' estimates. Google Inc. slid after the most popular search engine received fewer ad clicks last month. Lehman Brothers Holdings Inc. lost 9 percent as options traders increased bearish bets on them, while Bank of America Corp. and JPMorgan Chase & Co. fell on reduced earnings estimates for large banks.
The Standard & Poor's 500 Index slipped 15.37 points to 1,325.76. The Dow Jones Industrial Average lost 120.4 to 12,302.46. The Nasdaq Composite decreased 43.53 to 2,280.83..
The market opened the day higher after the government said personal spending rose at a 2.3 percent annual rate and jobless claims unexpectedly decreased.
Lehman shares dropped after options traders speculated the bank faces funding shortages. The company said the speculation is unfounded.
Oracle fell $1.51 to $19.43. The threat of a U.S. recession brought about by falling home prices and losses in mortgage-related investments has made customers hesitant to spend on technology. Sales climbed to $5.37 billion in the first quarter lower than estimate.
Fourth-quarter earnings at S&P 500 companies fell almost 23 percent, dragged down by record losses at financial companies. Excluding financials, earnings grew almost 16 percent.
Google retreated $14.11 to $444.08. Clicks on Google's ad were down 3 percent from January. In January, Google had no growth after a 25 percent increase in fourth quarter. It could imply risk to first-quarter earnings estimates.
Bank of America and JPMorgan led financial shares lower after their biggest retreat yesterday. Analyst slashed his earnings-per-share estimates for U.S. banks this year by 7 percent.
Bank of America fell $1.20 to $38.64. JPMorgan lost $1.25 to $42.86. First-quarter earnings for financial companies are forecast to fall 45 percent from the year-earlier quarter, the average forecast was for a 28 percent decline.
Lehman Brothers fell $3.78 to $38.71. Lehman fell on speculation it faced a liquidity crisis similar to Bear Stearns Cos. Merrill Lynch & Co. fell $2.52 to $41.90. Analysts said Merrill may write down $4.5 billion on collateralized debt obligations and post a first-quarter loss.
Merrill's first-quarter earnings estimate to a loss of $1.60 per share. As a result, Analyst estimates that Merrill will earn $1.18 per share in 2008, compared estimate of $4.10.
Crude oil rose and exceeded $107 a barrel after a pipeline explosion in southern Iraq cut supplies to the country's main export terminal.
Sempra Energy adding $1.98 to $53. Sempra said it expects 2009 per-share profit to rise to $4.35 to $4.60 as the company opens natural- gas import terminals and extends pipeline operations.
ConAgra Foods Inc. is climbing $1.56 to $23.45. They reported quarterly profit rose more than analysts predicted, boosted its full-year profit forecast and sold its commodity-trading unit to focus on food.
Clear Channel Communications Inc. adding $2.68 to $26.60 as lawsuits filed by the broadcaster and its private-equity buyers bolstered speculation that the $19.5 billion deal will be salvaged.
They accused banks led by Citigroup Inc. of backing out of commitments to provide $22.1 billion in financing because of lenders remorse. Judge issued a temporary injunction to tell banks they can't thwart the buyout by refusing to fund it.
McCormick & Co. added $1.73 to $37.84. They increased its prediction for sales growth after boosting prices to counter rising commodity prices.
EBay Inc. rose $1.27 to $30.74. Analyst said they may beat first-quarter earnings estimates on faster-than-expected sales-listings growth. EBay cut charges for listing items by 25 percent to 50 percent last month and raised the fee it gets when an item sells in an effort to keep customers from defecting to Amazon Inc.
Currencies
The dollar fell against the euro as traders increased bets that the Federal Reserve will cut interest rates again to avert a recession. The dollar dropped 2.5 percent versus the euro before a forecast by economists to show spending in the U.S. posted the smallest gain. New Zealand's dollar rose after a report showed the nation's economic growth accelerated at the fastest annual pace in three years.
The U.S. may have already entered into a recession, The Fed will keep lowering rates to defuse criticism that it always falls behind the curve. Analyst said they super-dollar bearish.
The dollar fell to $1.5810 per euro. The U.S. currency was at 99.55 yen. The dollar may fall to $1.60 a euro next month. The New Zealand dollar rose to 80.63 U.S. cents. It also climbed to 80.23 yen.
Japan's statistics bureau will release today, its reports on the jobless rate, overall household spending and the consumer price index.
Commodities
Oil
Crude oil fell amid speculation that an inflation report will prompt gains in the U.S. dollar. A government gauge of inflation probably slowed to 0.1 percent in February from 0.3 percent the prior month. The Commerce Department is scheduled to release the inflation data today.
Crude oil for May delivery fell as much as 46 cents to $107.12 a barrel.
An indication of slower inflation in report would be bullish for the dollar because stagflation doesn't seem to be as big of an issue anymore. The dollar could strengthen to $1.55 per euro in the next two weeks.
Oil futures rose $1.68 to $107.58 a barrel, after a pipeline explosion in southern Iraq cut supplies to the country's main export terminal. The Iraqi oil ministry didn't yet know the cause of the blast one of two that transport oil to the Basra terminal. Trader believe that it happen because clashes between Iraqi forces and militants loyal to Shiite Muslim cleric continued. The Basra facility can handle 1.97 million barrels of crude oil a day. Iraq exported 80 percent of its oil to international markets from Basra terminal.
Brent crude for May settlement rose $1.01 to $105 a barrel.
Gold
Gold fell after the dollar rebounded against the euro. Silver rose. The dollar rose 0.8 percent against the euro after falling to all-time low yesterday. Gold futures for June delivery fell 20 cents to $954 an ounce. Silver futures for May delivery gained 16.7 cents to $18.55 an ounce.
The dollar fell 2.7 percent against the euro in the two sessions through yesterday. The U.S. currency strengthened today after a report showed fourth-quarter consumer spending rose more than forecast. The euro touched $1.5727 today.
Declines in price are opportunities to buy. Gold may surge $1,000 again before it decline to $900 level again. There's potentially more downside to go for the dollar. People are still looking gold to hedge against inflation and the falling dollar.
Chairman of Bear Stearns Cos. sold his shares in the crippled securities firm for $61 million prior to a vote on the company's pending takeover by JPMorgan Chase & Co.
He sold 5.66 million shares at $10.84 apiece. The value of his stake plummeted from almost $1 billion last year, when the shares peaked at $171.50 before the collapse of the subprime mortgage market toppled two of the firm's hedge funds and prompted a contraction in credit markets worldwide.
He led Bear Stearns as CEO for 15 years until January, when he stepped down after Bear posted the first loss in its 85-year history. Once the biggest underwriter of mortgage-backed bonds, the company was forced to seek funding from the Federal Reserve and then submit to a takeover by JPMorgan after a run on the securities firm drained cash reserves. JPMorgan is paying $10 a share. Bear Stearns had no comment on why or to whom Cayne sold his stock. Last weekend Bear Stearns's board said its members would vote their shares in favor of the acquisition.
The bank quadrupled its initial offer for Bear Stearns to $10 a share and struck a deal to buy 39.5 percent of the company without a shareholder vote, making it unlikely opponents can block the takeover.
Bear Stearns investors seeking a higher price than the JPMorgan bid asked a Delaware judge to delay Bear Stearns's plan to issue 95 million new shares as part of the sale.
The securities firm agreed to issue the new shares to JPMorgan without seeking shareholder approval, giving the bank a stake of about 40 percent to vote in favor of the merger.
Bear Stearns also faces investor suits. One filed March 17 in Manhattan federal court accuses the company of misleading investors about its finances.
Stock Market
U.S. stocks dropped as concern that profit growth will weaken at financial and technology companies overshadowed a bigger-than-forecast gain in consumer spending.
Oracle Corp. tumbled on revenue that trailed analysts' estimates. Google Inc. slid after the most popular search engine received fewer ad clicks last month. Lehman Brothers Holdings Inc. lost 9 percent as options traders increased bearish bets on them, while Bank of America Corp. and JPMorgan Chase & Co. fell on reduced earnings estimates for large banks.
The Standard & Poor's 500 Index slipped 15.37 points to 1,325.76. The Dow Jones Industrial Average lost 120.4 to 12,302.46. The Nasdaq Composite decreased 43.53 to 2,280.83..
The market opened the day higher after the government said personal spending rose at a 2.3 percent annual rate and jobless claims unexpectedly decreased.
Lehman shares dropped after options traders speculated the bank faces funding shortages. The company said the speculation is unfounded.
Oracle fell $1.51 to $19.43. The threat of a U.S. recession brought about by falling home prices and losses in mortgage-related investments has made customers hesitant to spend on technology. Sales climbed to $5.37 billion in the first quarter lower than estimate.
Fourth-quarter earnings at S&P 500 companies fell almost 23 percent, dragged down by record losses at financial companies. Excluding financials, earnings grew almost 16 percent.
Google retreated $14.11 to $444.08. Clicks on Google's ad were down 3 percent from January. In January, Google had no growth after a 25 percent increase in fourth quarter. It could imply risk to first-quarter earnings estimates.
Bank of America and JPMorgan led financial shares lower after their biggest retreat yesterday. Analyst slashed his earnings-per-share estimates for U.S. banks this year by 7 percent.
Bank of America fell $1.20 to $38.64. JPMorgan lost $1.25 to $42.86. First-quarter earnings for financial companies are forecast to fall 45 percent from the year-earlier quarter, the average forecast was for a 28 percent decline.
Lehman Brothers fell $3.78 to $38.71. Lehman fell on speculation it faced a liquidity crisis similar to Bear Stearns Cos. Merrill Lynch & Co. fell $2.52 to $41.90. Analysts said Merrill may write down $4.5 billion on collateralized debt obligations and post a first-quarter loss.
Merrill's first-quarter earnings estimate to a loss of $1.60 per share. As a result, Analyst estimates that Merrill will earn $1.18 per share in 2008, compared estimate of $4.10.
Crude oil rose and exceeded $107 a barrel after a pipeline explosion in southern Iraq cut supplies to the country's main export terminal.
Sempra Energy adding $1.98 to $53. Sempra said it expects 2009 per-share profit to rise to $4.35 to $4.60 as the company opens natural- gas import terminals and extends pipeline operations.
ConAgra Foods Inc. is climbing $1.56 to $23.45. They reported quarterly profit rose more than analysts predicted, boosted its full-year profit forecast and sold its commodity-trading unit to focus on food.
Clear Channel Communications Inc. adding $2.68 to $26.60 as lawsuits filed by the broadcaster and its private-equity buyers bolstered speculation that the $19.5 billion deal will be salvaged.
They accused banks led by Citigroup Inc. of backing out of commitments to provide $22.1 billion in financing because of lenders remorse. Judge issued a temporary injunction to tell banks they can't thwart the buyout by refusing to fund it.
McCormick & Co. added $1.73 to $37.84. They increased its prediction for sales growth after boosting prices to counter rising commodity prices.
EBay Inc. rose $1.27 to $30.74. Analyst said they may beat first-quarter earnings estimates on faster-than-expected sales-listings growth. EBay cut charges for listing items by 25 percent to 50 percent last month and raised the fee it gets when an item sells in an effort to keep customers from defecting to Amazon Inc.
Currencies
The dollar fell against the euro as traders increased bets that the Federal Reserve will cut interest rates again to avert a recession. The dollar dropped 2.5 percent versus the euro before a forecast by economists to show spending in the U.S. posted the smallest gain. New Zealand's dollar rose after a report showed the nation's economic growth accelerated at the fastest annual pace in three years.
The U.S. may have already entered into a recession, The Fed will keep lowering rates to defuse criticism that it always falls behind the curve. Analyst said they super-dollar bearish.
The dollar fell to $1.5810 per euro. The U.S. currency was at 99.55 yen. The dollar may fall to $1.60 a euro next month. The New Zealand dollar rose to 80.63 U.S. cents. It also climbed to 80.23 yen.
Japan's statistics bureau will release today, its reports on the jobless rate, overall household spending and the consumer price index.
Commodities
Oil
Crude oil fell amid speculation that an inflation report will prompt gains in the U.S. dollar. A government gauge of inflation probably slowed to 0.1 percent in February from 0.3 percent the prior month. The Commerce Department is scheduled to release the inflation data today.
Crude oil for May delivery fell as much as 46 cents to $107.12 a barrel.
An indication of slower inflation in report would be bullish for the dollar because stagflation doesn't seem to be as big of an issue anymore. The dollar could strengthen to $1.55 per euro in the next two weeks.
Oil futures rose $1.68 to $107.58 a barrel, after a pipeline explosion in southern Iraq cut supplies to the country's main export terminal. The Iraqi oil ministry didn't yet know the cause of the blast one of two that transport oil to the Basra terminal. Trader believe that it happen because clashes between Iraqi forces and militants loyal to Shiite Muslim cleric continued. The Basra facility can handle 1.97 million barrels of crude oil a day. Iraq exported 80 percent of its oil to international markets from Basra terminal.
Brent crude for May settlement rose $1.01 to $105 a barrel.
Gold
Gold fell after the dollar rebounded against the euro. Silver rose. The dollar rose 0.8 percent against the euro after falling to all-time low yesterday. Gold futures for June delivery fell 20 cents to $954 an ounce. Silver futures for May delivery gained 16.7 cents to $18.55 an ounce.
The dollar fell 2.7 percent against the euro in the two sessions through yesterday. The U.S. currency strengthened today after a report showed fourth-quarter consumer spending rose more than forecast. The euro touched $1.5727 today.
Declines in price are opportunities to buy. Gold may surge $1,000 again before it decline to $900 level again. There's potentially more downside to go for the dollar. People are still looking gold to hedge against inflation and the falling dollar.
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