Stocks slide on European bank fears
Moody's downgrades the credit rating of Anglo Irish Bank. Unilever agrees to buy Alberto Culver for $3.7 billion. Southwest will acquire AirTran for $1.4 billion.
By Melinda Peer, TheStreet
Updated at 1:22 p.m. ET
Stocks were falling as investors weighed concerns about debt European banks and a slew of new corporate deals.
At 1:22 p.m. ET, the Dow Jones Industrial Average ($INDU) was down by 23 points, or 0.2%, at 10,837. The S&P 500 ($INX) was down by 4 points, or 0.4%, at 1,145. The Nasdaq ($COMPX) was falling by 7.3 points, or 0.3%, to 2,374.
Moody's slashed the ratings of Anglo Irish Bank's covered bonds and unguaranteed senior debt, saying the bank might struggle to make payments on time. The move inflamed concerns about debt at European banks.
Today's decline follows Friday's rally, which boosted the Dow 198 points. Later this week, Wall Street will get updated data on personal incomes and spending, construction, and manufacturing.
"We're seeing some profit-taking today," said Peter Cardillo, chief market strategist at Avalon Partners. "We had a strong rally on Friday and four weeks of strong gains so in the absence of any economic news, we're seeing a bit of a pause."
The transportation sector was showing the strongest gains of the session lifted by news that Southwest Airlines (LUV) agreed to buy AirTran Holdings (AAI) in a cash and stock deal valued at roughly $1.4 billion. Southwest's stock was gaining 11% to $13.63 while AirTran shares were soaring 62% to $7.36.
Dutch consumer goods maker Unilever (UN) agreed to buy Alberto-Culver (ACV) for $37.50 a share, or $3.7 billion. The deal will expand Unilever's hair- and skin-care product lines. Unilever's American depositary shares were gaining 0.9% to $29.62. Alberto-Culver shares were jumping 19% to $37.58.
Sanofi-Aventis (SNY) is considering boosting its $18.5 billion offer for Genzyme (GENZ), The Wall Street Journal reported, citing unidentified sources familiar with the situation. Sanofi is seeking more financing from additional lenders. Sanofi-Aventis shares were falling 1.2% to $33.62 and Genzyme shares were up 0.5% to $71.97.
IBM (IBM) said it would buy privately held Blade Network Technologies for an undisclosed price. IBM shares were up 0.5% at $134.78.
In other company news, the Treasury Department might convert its $49 billion preferred stock stake in American International Group (AIG) to common shares by June, with plans to sell its position, Bloomberg News reported, citing unidentified sources. AIG shares were adding 0.6% at $36.71.
Ford (F) chief executive Alan Mulally expects the carmaker to post a profit this year, according to reports. He made the comments at the Confederation of British Industry. The company also plans to invest 1.5 billion pounds ($2.4 billion) in the U.K. during the next five years. Ford shares were unchanged at $12.56.
In commodity markets, November crude was gaining 2 cents at $76.51 a barrel. The December gold contract, the most actively traded gold future, was up by $1 at $1,299.10 an ounce.
The dollar was trading lower against a basket of currencies, with the dollar index down by 0.1%, while the benchmark 10-year Treasury note strengthened 9/32, diluting the yield to 2.576%.
Hong Kong's Hang Seng gained 1%, and Japan's Nikkei added 1.4%. he FTSE in London was slipped 0.5% while the DAX in Frankfurt lost 0.3%.
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[BRIEFING.COM] S&P futures vs fair value: -1.30. Nasdaq futures vs fair value: -2.50. U.S. equity futures hover near their pre-market lows amid cautious action overseas. The S&P 500 futures trade one point below fair value.
Reviewing overnight developments:
- Asian markets ended on a mixed note. Japan's Nikkei +1.1%, China's Shanghai Composite -0.3%, and Hong Kong's Hang Seng -1.0%.
- In economic data:
- China's HSBC Manufacturing PMI ticked up ... More
- In economic data:
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