Stocks slump; A&T scraps its T-Mobile bid

The mobile phone deal is killed after stocks slide and the Dow falls 100. Bank of America falls below $5 for the first time since 2009. Saab will go out of business. Nike and Oracle earnings are due Tuesday.

By Charley Blaine Dec 19, 2011 2:16PM
Charley BlaineUpdated: 11:45 p.m. ET.

Late Monday, AT&T (T) dropped its bid to acquire T-Mobile from Deutsche Telekom, taking a $4 billion charge for "break-up considerations."

The decision came as stocks slumped on the day. The Dow Jones industrials ($INDU) fell 100 points; most of the loss came in the late afternoon after Bank of America (BAC) shares fell below $5 a share for the first time since March 2010.

At the same time, European Union was unable to raise 200 euros billion for its rescue fund. Britain pointedly declined to contribute 25 billion euros to the fund. Gold (-GC) had been lower for much of the day but briefly poked into the black on the day. Crude oil (-CL) was higher.

Aggravating the market was Schnitzer Steel (SCHN), a big player in scrap steel markets. The company warned of lower earnings because of a slowing economies around the world -- but specifically mentioned Europe. 

The Dow's close to 11,766 was its fifth loss in the last six sessions. The Standard & Poor's 500 Index ($INX) was off 14 points to 1,205, but the index fell below a support level of 1,209. The Nasdaq Composite Index ($COMPX) was down 33 points to 2,522. The losses for the S&P 500 and Nasdaq were their fourth in six sessions.

Article continues below.
AT&T and T-Mobile scrapped their $39 billion deal after stiff opposition from the Justice Department and the Federal Communications Commission, which both said it would dampen competition. Also fighting the deal was Sprint (S), whose shares were up 14 cents, or 6.5%, to $2.30.

The government's opposition, the companies said, did not "change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately."

AT&T was off 0.5%, or 15 cents to $28.59 after hours. The shares had fallen 11 cents to $28.74 in regular trading.

The end of the deal will cost investment banks who were advising on the deal some $150 million in fees, The Wall Street Journal noted. These include Greenhill & Co. (GHL), JPMorgan Chase (JPM), Evercore Partners, (EVR), Morgan Stanley (MS), Deutsche Bank (DB), Credit Suisse (CS) and Citigroup (C).

A decent open ahead?
Futures trading suggests stocks will open higher on Tuesday.

The government will release its November report on housing starts and building permits.

Among the day's earnings are reports from General Mills (GIS) before the open and Nike (NKE) and Oracle (ORCL) after the close.

A bias to the downside
Monday's close was a bit of a downer, with just three of the 30 Dow stocks higher. In addition, only 48 S&P 500 stocks and 16 stocks in the Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks. The index was down 24 points to 2,214.

While financial stocks were the market's weakest sectors, technology, energy and materials stocks were lower as well.

It did not appear, however, that U.S. markets were much affected by the death of North Korean leader Kim Jong-Il. The announcement pushed Korean, Japanese and other Asian stocks lower.

Monday's pullback came as trading volume starts a slowdown that will last until after New Year's. New York Stock Exchange volume totaled just 775 million shares on the day.

The market, however, is struggling as its heads into the last two weeks of the year. The Dow finished the day up 1.6% for the year, with the S&P 500 down 4.2% and the Nasdaq off 4.9%.

The Dow is off 8.2% from its peak close on April 29, with the S&P 500 down 11.6% and the Nasdaq off 12.2%

Crude oil settled up 35 cents to $93.88 a barrel.

Gold settled down $1.20 to $1,596.70 and was down to $1,595.40 in electronic trading.Silver (SI) was off 79 cents to $28.88, and copper (-HG) had fallen 2.2 cents to $3.3085 a pound. Gold is off 9% this month, with silver down 12% and copper off 7%.

The dollar was down slightly against major currencies. The 10-year Treasury yield fell to 1.813% from Friday's 1.854%.

Energy prices -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Crude oil (-CL)

$93.88

$93.53

-6.46%

2.74%
(per barrel)











Heating oil (-HO)

$2.7804

$2.8005

-8.09%

9.31%
(per gallon)











Natural gas (-NG)

$3.096

$3.1270

-12.79%

-29.72%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.4891

$2.4870

-2.71%

1.46%
(per gallon)











Brent crude 

$103.64

$103.35

-6.23%

9.38%
(per barrel)











Retail gasoline

$3.2210

$3.2280

-2.25%

4.85%
(per gallon; AAA)












Big bank stocks sag on prospects for raising new capital
Bank stocks, especially stocks of big banks, sagged after The Wall Street Journal reported that the Federal Reserve is set to embrace rules by regulators in Basel, Switzerland, requiring major financial institutions to hold extra capital.

There's been a raging argument in Europe and the United States over whether financial institutions need to raise capital. The effect is to make less money available for investment and lending. It also forces companies to trim staff.

Bank of America fell 21 cents to $4.99, and JPMorgan Chase (JPM) lost $1.19 to $30.70. They were the biggest losers among the 30 Dow stocks. Citigroup (C) was off $1.32 to $24.82.

Three of the 10 biggest decliners among S&P 500 stocks were financial issues, with Genworth Financial (GNW) the biggest decliner, down 51 cents to $5.75. The others were Morgan Stanley (MS), down 82 cents to $14.16 and Citigroup.

The worry about the capital affects the biggest banks, but even smaller or regional institutions are caught in the downdrafts. All of the stocks in the KBW Bank Index ($BKX) are lower today. The index was off 1.02 points to 36.69. It'd down nearly 30% this year.

Schnitzer's warning points up global economic worries

Schnitzer Steel is a big merchant of scrap steel, gathered into 41 facilities in 14 states.

The company said it expects fiscal-first-quarter earnings of 18 cents to 25 cents, well below the consensus estimate of 56 cents.

The company cited a weaker-than-anticipated global market conditions for recycled metals. Worries about a global recession have risen, primarily because of the European debt crisis which escalated during the quarter. That resulted in a significant slowdown in buying patterns and a sharp decline in sales prices

Schnitzer now expects operating earnings per ferrous ton to fall about 50% from year-earlier levels of $21 a ton in the metals recycling segment -- its largest business. In December, Schnitzer had expected operating earnings would be roughly flat with the year-earlier period.

Congressional squabbling hits markets
One of the issues that first weighed on markets was the Republican opposition in the House to extending payroll tax breaks for two months.

The payroll tax rejection expected later today came as House rank-and-file Republicans revolted against their leaders.

Admittedly, a two-month extension on payroll taxes is dumb; a year makes much more sense. But the House refusal to do even that shows yet again how difficult it is to get an ideologically driven Congress to get much of anything done.

Zynga shares continue to struggle
Zynga (ZNGA) shares were off 45 cents to $9.05 this afternoon; they had been down to as low as $8.75.

The decline is unusual after an initial public offering that has been ballyhooed as much as this one. The company went public Thursday at $10, jumped to as high as $11.50 on Friday and ended the first day of trading at $9.60.

But there have been concerns about the stocks and the growth rates of some of its signature games such as Farmville. Over the weekend, Paul Kedrosky of the Infectious Greed blog, said he saw the shares felling to $6.

Zynga wasn't alone in having problems. Groupon (GRPN) was down $1.04 cents to $22. It had gone public at $20 and had fallen to as low as $14.85 on Nov.28.

Saab will go out of business
Saab Automobile threw in the towel on Monday, filing for liquidation after its hopes of receiving a life-saving investment from Chinese investors collapsed in the face of opposition from its former owner, General Motors (GM). 

Repeated deals fell through, blocked by regulators or by GM, which was concerned that its technology would end up in the hands of Chinese competitors.

Saab and two subsidiaries filed with the District Court in Vanersborg, Sweden, according to a statement from Saab’s parent company, Swedish Automobile. The parent "does not expect to realize any value from its shares in Saab Automobile," it said, "and will write off its interest in Saab Automobile completely."

Viktor Muller, a Dutch entrepreneur who had previously been chief executive of a sports car maker, Spyker, acquired Saab from GM in January 2010 for $74 million in cash and $326 million in preferred shares. But he was unable to obtain the financing he needed to modernize the Saab line-up at a time of global financial turmoil.

The company is likely to sold off piecemeal. It's not clear how many jobs will be lost.

Short hits from the markets -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0100%

0.030%

0.00%

-91.67%
5-year Treasury note 

0.806%

0.815%

-15.34%

-60.02%
10-year Treasury note

1.813%

1.854%

-12.33%

-45.14%
30-year Treasury bond

2.801%

2.855%

-8.52%

-35.79%
Currencies











U.S. Dollar Index

80.207

80.249

2.19%

1.16%
British pound

1.5583

1.5649

-0.64%

-0.14%
(in U.S. $)











U.S. $ in pounds

£0.642

£0.639

0.65%

0.14%
Euro in dollars

$1.30

$1.30

-2.96%

-2.52%
(in U.S. $)











U.S. $ in euros

€ 0.758

€ 0.748

1.93%

1.46%
U.S. $ in yen 

78.13

77.63

0.39%

-3.98%
U.S. $ in Chinese

6.38

6.36

-0.10%

-3.51%
yuan











Canada dollar

$0.974

$0.000

-0.74%

-2.94%
(in U.S. $)











U.S. dollar 

$1.027

$1.020

0.73%

3.02%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,596.70

$1,597.90

-8.78%

12.33%
(per troy ounce)











Copper (-HG)

$3.309

$3.331

-7.47%

-25.60%
(per pound)











Silver (-SI)

$28.8740

$29.6710

-11.98%

-6.67%
(per troy ounce)











Wheat (-ZW)

$5.9975

$5.8375

-2.32%

-24.49%
(per bushel)











Corn (-ZC)

$6.0100

$5.83

-1.15%

-3.45%
(per bushel)











Cotton 

$0.8672

0.8593

-4.61%

-40.11%
(per pound)











Coffee

$2.1945

2.151

-7.37%

-8.75%
(per pound)











Crude oil (-CL)

$93.88

$93.53

-6.46%

2.74%
(per barrel)










 

55Comments
Dec 19, 2011 3:41PM
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Holiday Greetings to All From The USA!

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This greeting is subject to clarification or withdrawal. It is freely transferable with no alteration to the original greeting. It implies no promise by the wisher to actually implement any of the wishes for her/himself or others, and is void where prohibited by law, and is revocable at the sole discretion of the wisher. This wish is warranted to perform as expected within the usual application of good tidings for a period of one year, or until the issuance of a subsequent holiday greeting, whichever comes first, and warranty is limited to replacement of this wish or issuance of a new wish at the sole discretion of the wisher.

Sincerely,

(Name withheld for legal, social and cultural considerations.)



Dec 19, 2011 2:43PM
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Beware of sucker's rallies, do not fall for them...A 1335 hrs they called to accelerate the selling so we are going down fast again...Manipulators​ in complete control...No need to blame anyone or anything, the enemy is right here among us...Lets see what happens these last couple of hours.
Dec 19, 2011 5:03PM
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The Investment firms, Brokers, Stock Markets , and Hype IPO's Markets are not fooling the investors anymore....Look for the Media to always be pushing , selling and urging the idea to stay long OR to buy now, OR to look the other way as this happens every year ....and distract with so called analyst pointing out what to buy now.....with good False signs of housing confidence...Euro fixing itself....improving data points are all false. ALL THE BIG Investors are getting OUT quietly.....They know something BIG is coming....I feel it is going to fall fast and all the way down...!! The Government cannot PROP IT UP ANY LONGER...!!!The BAD BAD BAD SIGNS ARE ALL THERE.....BAD INVESTMENTS, HIGHER COMMODITIES COST, HIGHEST DEBT EVER, HIGHER and HIGHER INTEREST PAYMENTS, BANKS ARE NOT STABLE,  SALES ARE DECREASING, FOOD STAMPS RECIPIENTS HIGHEST EVER.....NO JOBS...!!! GET OUT OF THE MARKETS NOW BEFORE IT IS TOO LATE....!!!
Dec 19, 2011 4:22PM
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SAME THING DIFFERANT DAY BUT THE GREAT DEPRESSION WILL CONTINUE KNOW THAT
Dec 19, 2011 4:06PM
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There are times that MSN doesn't even give readers the opportunity to comment on some of their posts, or at least on my end anyway. I wonder when the time will come,when we are not even allowed to comment about these rediculous articles will be?  I am saddened, by the way Washington, the media,  simply "STATE" what we are to believe.  It is too bad the election is not this year. Time to clean house!!!!!!!!!!!!  Clean house with your vote Americans or we will be living off of kool-aid!!!
Dec 19, 2011 7:49PM
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I would like to see a complete and total crash. Most of working class wouldn't be any worst off than we are right now. The only ones that would suffer would be the rich that's already raped the poor working class.
Dec 19, 2011 4:39PM
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Oh great, if we don't have the boneheads of Washington dictating what the banks should do.  We now have the Europeans throwing in their 2 cents also.  Perhaps things in this world would be better if we would just forget Europe and worry about our own country.  Isn't unique that the European Market has been closed since 10:00 this morning but yet the 6 hour after effect is hitting now.  Oh and by the way it was rather interesting to see the Asian Stock Market dropping because of worries about North Korea!!!  Like politics should really play a factor in Financial Affairs.  At least with regards to who is the President or Not.  Whether it's Old Kim or Young Kim, it doesn't make a difference!  Monkey See, Monkey Do.  It was interesting to read that a TV reporter in N. Korea was all dressed in Black and crying because Kim died.  I'm sure if she didn't she probably would have either been shot or locked up for the rest of her life!
Dec 19, 2011 3:16PM
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News at 6 - North Korea shoots down Santa's sleigh - market down 236 on speculation that Santa is really a South Korean spy...... according to Nostradamus quatrain #69, war is imminent and ET will rise from the dead to melt all the universal snow and cause massive catastrophic flooding of the Sun - update at 11.
Dec 19, 2011 6:39PM
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1QTR 2012 all that real estate, commercial foreclosures, going to be interesting how the big boys will spin this unexpected news. 

And then all the unexpected layoff's.

Tell me why diesel  is $4.40 a gallon.
Least expensive to produce no?
Dec 19, 2011 4:11PM
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Yup, it was just another sucker's rally, not only that, at exactly 1503 hrs they just dropped the hatchet, the call came to really accelerate the selling so down we go even further. close to 90 points and counting. Why? may you ask...because they can, that's the simple answer, because that's how these scumbags make their money, by cheating and stealing from the rest, by bringing the market down for their benefit without any reason whatsoever...Oh well, we will be down over 100 anytime now....Crooks continue to be kings down here.
Dec 19, 2011 7:54PM
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It seems that B of A is going to be angling for another bailout real soon. Quick grab your wallet.
Dec 19, 2011 5:19PM
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Sailor7 - How does the DOW going down make the rich richer?  Are all the rich people selling short?  If anything, it makes the rich poorer and the poor unchanged (since they are not investing in the market).
Dec 19, 2011 4:25PM
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Sad They are always blaming the stock movements on something like wall street is not responsible for everything that happens to peoples and corporate bailouts taxpayers  money.Disappointed
Dec 19, 2011 6:36PM
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The Republicans are sure doing everything they can to get Obama re-elected.  The Republican controlled House rejecting the extension of the payroll tax cut for the working people.  That's going to go over REAL big with the voters.  If the Republican Party and Tea Baggers  keep going the way they are, there will be a lot of Democrats in Congress next Fall with Obama re-elected.  Come on Repubs., get your act together before it's too late. 
Dec 19, 2011 8:24PM
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This market is literally right on the edge of the cliff.....just watch what happens when S&P and Moody's start downgrading.  Easy 1000 point drop in 2 days!
Dec 19, 2011 6:04PM
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BofA at less than $5 a share today???  now that's a laugh! If that isn't a sucker deal, nothing is. The government had to bail out the motor industry and Banking system, and they need to raise capital? WTF for?  Come this January 1st, all those crap bag bankers are set to collect on those people who have A.R.M.'s and can't pay. The housing market is going to take a second round dump, and their waiting in the wings to scoop up those forclosures again. If only the people in this country would pull their heads out of their @ss and out of the Wall Street "casino" market, you wouldn't be playing russian roulette with your future.If you don't know who Michael Ruppert is, you should research him and watch his video or go to his web site. He could have saved you years ago. I listen to him and took his advice, and i'm not one of the unfortunate people in America because of his advice.

Dec 19, 2011 4:43PM
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Why the worries about the Euro, I thought that Russia was giving 10 billion Euro to help save the currency?  Of course they can do that, yet they can't even take care of their own people!!!  Another brainy decision from Pukin Putin!!!!
Dec 19, 2011 8:28PM
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Banks need to keep more capital on hand because so many are withdrawing funds to live on due to unemployment or under employment.  Also for the same reasons deposits in said banks are smaller because people simply have less money.

What goes around comes around - and through fee's, etc. unemployment, no raises in SS for 3 years and no faith in our government or banks - they have bled the American public dry - and now are surprised that no one is putting their money into their institutions and the possibility of bank runs are much greater.
Dec 19, 2011 7:20PM
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A 100 point loss at Wall Street is a good day in my world! Party

 

DIE WALL STREET, DIE! Thumbs up

 

MERRY CHRISTMAS! Hot

Dec 19, 2011 7:56PM
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BANKS AND BIG BUSINESS NEEDS TO HIRE A REAL MONEY MANAGER. THINK ABOUT HOW MUCH MONEY BANKS HAVE FREE OF INTEREST TO USE. IF YOU HAD TONS OF FREE INTEREST MONEY COULDN'T YOU MAKE MONEY BY LOANING AND OR INVESTING?
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