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.
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.
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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%|
|Heating oil (-HO)||$2.7804||$2.8005||-8.09%||9.31%|
|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; 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.|
|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%|
|U.S. Dollar Index||80.207||80.249||2.19%||1.16%|
|(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%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$93.88||$93.53||-6.46%||2.74%|
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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.
A 100 point loss at Wall Street is a good day in my world!
DIE WALL STREET, DIE!
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[BRIEFING.COM] The major averages finished the session on a modestly higher note, but not before heavy selling pressure sent the Nasdaq Composite (+0.3%) for a test of its 200-day moving average. The S&P 500, meanwhile, added 0.7% with all ten sectors posting gains.
Equities climbed at the open with the advance built on the relative strength of biotechnology and other momentum names. Despite the solid early gains in those areas, the market began fading from its high as multiple ... More
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