Google, deal talk mask market stresses

The Dow struggles to a 43-point gain. Energy shares jump on BHP's bid for Petrohawk Energy. Wall Street cheers Google's earnings. But the US debt ceiling fight and weak economic reports hold the market back.

By Charley Blaine Jul 15, 2011 1:20PM
Charley BlaineUpdated: 8 p.m. ET

If you're a bull, there were two stories to cheer about today: Google (GOOG) and deals. The rest of the stock market wasn't much to write home about.

Google's blowout earnings sent its shares up 13% to $597.62 today and were  responsible for more than half of the Nasdaq-100 Index's ($NDX.X) gain.

Shares of oil-and-gas producers were sharply higher after BHP Billiton (BHP) agreed to buy natural-gas producer Petrohawk Energy (HK) for $12.5 billion, and takeover speculator Carl Icahn bid $10.2 billion to take over Clorox (CLX), the venerable maker of bleaches, cleaners and related products.

Petrohawk shares were up 62.8% to $38.23 on the news. Eight of the top 10 performers in the Standard & Poor's 500 Index ($INX) were natural-gas-related stocks.

Without those catalysts and options expirations, the market probably would have finished flat. The Dow Jones industrials ($INDU) closed up 43 points to 12,480, with half of the 30 stocks higher.  The S&P 500 Index had added 7 points to 1,316, and the Nasdaq Composite Index ($COMPX) had added 27 points to 2,790. The Nasdaq-100 was up 32 points to 2,357. Google was responsible for half the gain by itself.

The market ended the week lower after two weeks of gains. The Dow dropped 1.4%, with the S&P 500 off 2.1% and the Nasdaq down 2.5%.

Next week will feature continued bitter wrangling over the U.S. debt debt and a host of earnings from the likes of Apple (AAPL), Bank of America (BAC), General Electric (GE) and McDonald's (MCD).

Keeping the market in check was the continuing bitter wrangling over the U.S. debt ceiling. Standard & Poor's joined Moody's in warning about a downgrade. One smaller ratings firm, Weiss Research, actually downgraded U.S. debt.

Meanwhile, there was some mediocre economic news, including disappointing reports on consumer sentiment and manufacturing.

In addition, Citigroup (C) shares were lower, despite better-than-expected second-quarter earnings.

Markets for the week



7/15/2011

7/8/2011

% chg.

YTD chg.
Dow Industrials

12,479.73

12,657.20

-1.40%

7.79%
S&P 500

1,316.14

1,343.80

-2.06%

4.65%
Nasdaq 

2,789.80

2,859.81

-2.45%

5.16%
Russell 2000

828.78

852.57

-2.79%

5.76%
Crude oil 

$97.24

$96.20

1.08%

6.41%
(per barrel)











U.S. Dollar Index 

75.52

75.51

0.01%

-$0.05
10-yr. Treasury

1/0/1900

1/0/1900

-3.58%

-$0.12
Gold

$1,590.10

1,541.60

3.15%

$0.12


Natural-gas stocks jump on Petrohawk news
The deals were exciting. BHP Billiton, one of the world's largest mining companies, is trying to get into the U.S. natural-gas business in a big way. Petrohawk, whose revenue was about $1 billion in 2010, is a sizable player in that business, even if it was founded only in 2003.

BHP is assuming big demand gains for natural gas, although right now the market is glutted.

Nonetheless, the deal has investors looking around for the next big deal in gas. So, Range Resources (RRC) jumped 12.1% to $61.78. Pioneer Natural Resources (PXD) rose 10.4% to $95.03. Cabot Oil and Gas (COG) is up 9.3% to $68.43.

Clorox shares, meanwhile, were up 8.9% to $74.55 after Icahn announced his bid. Most of Wall Street believes Icahn is simply trying to get Clorox to sell out to another consumer products company, like Procter & Gamble (PG)., Unilever (UN) or Colgate-Palmolive (CL). Icahn rarely takes over the management of companies.

Google is the day's star 

Google shares were up 12.8% to to $596.81 after the Internet search giant easily beat Wall Street's expectations late Thursday with a quarterly profit of $8.74 a share on revenue of $6.92 billion. Analysts had been looking for earnings of $7.85 a share on revenue of $6.55 billion.


All of Wall Street was warbling praise of Google today. Paid clicks were up, along with revenue per click. There were lots of predictions the stock was headed to $650.


Apple, which reports quarterly results on Tuesday, was up 2% to $364.92. Microsoft, which reports after Thursday's close, added 1.2% to $26.78. The gain was tops among Dow stocks. (Microsoft publishes MSN Money.)


Energy prices -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Crude oil (-CL)

$97.24

$95.69

1.91%

6.41%
(per barrel)











Heating oil (-HO)

$3.1180

$3.0849

5.83%

22.58%
(per gallon)











Natural gas (-NG)

$4.5460

$4.3780

3.93%

3.20%
(per mil. BTU)











Unleaded gasoline (-RB)

$3.1293

$3.1248

5.39%

27.56%
(per gallon)











Brent crude 

$117.26

$116.97

4.25%

23.76%
(per barrel)











Retail gasoline

$3.6670

$3.6550

3.56%

19.37%
(per gallon; AAA)












Crude oil, gold move higher
Crude oil (-CL) settled up $1.55 to $97.24 a barrel in New York. Brent crude for September delivery in London was up 33 cents to $117.30. AAA's Daily Fuel Gauge report showed gasoline nationally averaging $3.667 a gallon, up 12.6 cents since June 30.

Gold (-GC) for August delivery settled up 80 cents to $1,590.10 an ounce. Silver (-SI) was up 38 cents, or 1%, to $39.07 an ounce. For the week, gold rose 3.2%; silver was up nearly 7%.

The dollar was off slightly against major currencies. The 10-year Treasury yield was down slightly to 2.908%.

Despite the histrionics coming from Republicans and Democrats, the financial markets still see the odds of a U.S. default on its debt after Aug. 2 as slim to none. A deal involving some $1.5 trillion in spending cuts is starting to come together, although it's not clear if the hard-core Tea Party members of the House of Representatives will go along with it.

Citigroup sees a profit gain; shares slip
Citigroup shares fell 1.6% to $38.38. The decline was part of a broad decline of bank stocks today.

The company earned $3.34 billion, or $1.09 a share, up from $2.7 billion, or 90 cents, a year ago. Analysts had expected 97 cents. The gains were powered by a 61% increase in investment banking revenue -- the fees collected in facilitating various deals -- and fewer losses tied to troubled assets.

Because more loans were performing better, the company was able to reduce its loan-loss reserve by $2 billion -- all of which flowed to the bottom line.

But the company, like many financial companies, is struggling to see growth overall. Total revenue fell 1% to $16.3 billion. And that why the stock fell

The results are similar to those reported Thursday by JPMorgan Chase (JPM).

Citigroup suffered huge losses from subprime mortgages that nearly killed the company. It replaced most of its management in 2008 and needed a federal government bailout in 2009.

Seventeen of 24 stocks in the KBW Philadelphia Bank Index ($BKX) were lower. The index slipped 0.3% to 46. Bank of America (BAC), which reports Tuesday. Its close of $10 was down 0.7% on the day and a 52-week low.

News Corp.'s Brooks resigns
Shares of Rupert Murdoch's News Corp. (NWSA) were up 1.3% to $15.64 after initially falling as much as 3.6% after Rebecca Brooks resigned as CEO of the company's British newspaper group.

As chief of News International, Brooks managed the company's News of the World tabloid, which shut down after Sunday's edition in the wake of accusations that the paper not only hacked into voicemail accounts of celebrities and members of the royal family, but also crime and terrorism victims as well.

The outrage forced News Corp. to withdraw its bid for the 60% of British Sky Broadcasting it doesn't own.

After the close, Lee Hinton, who was CEO of the News Corp.-owned Dow Jones & Co., resigned. Hinton had headed News Corp.'s News International business in Britain when the phone-hacking allegations roiling the media empire first arose.

Murdoch and his son James are to testify about the scandal before Parliament next week.

Shares have fallen 13.7% since July 5.

The economy is still struggling

Consumer sentiment weakened in July, according to the University of Michigan's preliminary reading. The consumer sentiment index fell to 63.8, from June's level of 71.5. Economists had been projecting a milder decline, to a reading of 71.4.


Consumer prices fell 0.2% in June after rising 0.2% in May, according to the Labor Department's consumer price index. Economists had anticipated a decline of 0.1%. The core rate, which excludes volatile food and energy costs, rose 0.3% in June after similar growth in May. Core CPI was expected to inch up by 0.2%, according to Briefing.com.


Besides the dismal consumer sentiment report, there were disappointments on manufacturing.


The Federal Reserve Bank of New York said manufacturing activity in New York State  improved slightly in July, rising to a reading of minus 3.76, from minus 7.79 in June. But analysts had expected the Empire State Manufacturing Survey to turn positive.


Separately, the Federal Reserve said industrial production rose 0.2% in June, meeting expectations, after dipping 0.1% in May. Capacity utilization, meanwhile, held at May's level of 76.7%. Economists had forecast a slight increase to 76.8% in June.

"It's pretty clear that the economy had not started to pull out of its 'soft patch' in June," Paul Ashworth, chief U.S. economic correspondent for Capital Economics, wrote clients today.

Short hits from the markets -- New York close



Fri.

Thur.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.010%

0.010%

-50.00%

-91.67%
5-year Treasury note 

1.439%

1.488%

-17.96%

-28.62%
10-year Treasury note

2.908%

2.944%

-7.92%

-12.01%
30-year Treasury bond

4.251%

4.242%

-2.99%

-2.54%
Currencies











U.S. Dollar Index

75.52

75.562

1.19%

-4.75%
British pound

1.6137

1.6150

0.69%

3.40%
(in U.S. $)











U.S. $ in pounds

£0.620

£0.619

-0.69%

-3.29%
Euro in dollars

$1.41

$1.42

-2.31%

5.74%
(in U.S. $)











U.S. $ in euros

€ 0.707

€ 0.707

2.36%

-5.43%
U.S. $ in yen 

79.24

79.12

-2.06%

-2.61%
U.S. $ in Chinese

6.48

6.46

0.35%

-1.98%
yuan











Canada dollar

$1.049

$1.042

1.09%

4.53%
(in U.S. $)











U.S. dollar 

$0.954

$0.959

-1.08%

-4.33%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,590.10

$1,589.30

5.81%

11.87%
(per troy ounce)











Copper (-HG)

$4.413

$4.380

3.05%

-0.76%
(per pound)











Silver (-SI)

$39.0710

$38.6940

12.17%

26.29%
(per troy ounce)











Wheat (-ZW)

$6.9475

7.07

18.81%

-12.53%
(per bushel)











Corn (-ZC)

$7.0125

6.9075

11.49%

12.65%
(per bushel)











Cotton 

$1.0146

1.0635

-36.50%

-29.94%
(per pound)











Coffee

$2.5355

2.5735

-4.45%

5.43%
(per pound)











Crude oil (-CL)

$97.24

$95.69

1.91%

6.41%
(per barrel)










 

28Comments
avatar
Great we could not keep Osama from destroying the World Trade Towers but we can sure keep a couple of young girls from operating a lemon aid stand. 
How is it they claim it was for health reasons when they do not shutdown meat packing plants which are packaging poisoned meat and have in the past killed 53 plus people because they were running a dirty shop???

Our government looks the other way when the super rich break the law and when we the people try to exercise our rights they shut us down. Like we voted out red light cameras and now a paid off Federal Judge says they are legal and the voters were illegal. 

I say tax the super rich to death and hope they and their crooks in office leave the country.
Jul 15, 2011 2:16PM
avatar

Consumers not spending, aha! Make my day. The Perfect Storm is underway!

Budget (and Debt) talks are halted, Euro crisis widens, China's growth slumps, high unemployment rates, still slumping house market, US growth slumps, and finally consumers on hold spending. Yeah, what more do we need to bring in The Perfect Storm?

It is underway to strike any moment from now. Be careful out there!

Jul 15, 2011 4:13PM
avatar

Due to the economy, the light at the end of the tunnel has been turned off .........

 

Jul 15, 2011 5:00PM
avatar
Unfortunately America's markets are NO longer a level playing field. They are rigged just like the little "crane" games at the supermarket where you can win a Pokémon animal if you can just grip it and lift it out with the tiny crane. Statistics show only one in 1,000 will win this "rigged" game. The odd's of winning the rigged Wall Street game are about the same, if not worse.
Jul 15, 2011 3:15PM
avatar
GET READY HERE COMES THE STOCK MARKET CRASH OF 2011  !!!!!!!!!!!!!!
Jul 15, 2011 2:08PM
avatar
Looks like those providing $7 trades are the ones making the killing today. Work that shaft boys. Make that trade then get up and go to the fridge,go to the toilet and get a cold one and come back and sell.hahaha. One minute its in the red-, next minute the black+.
Jul 15, 2011 4:28PM
avatar
There is NEVER any rhyme or reason as to what makes this market go up or down. It is nothing more than a "trap" to catch the unsuspecting, who in reality think they can still win the shell game.
Jul 15, 2011 3:41PM
avatar

Two worlds out there.  The one that thinks it can continue to take and the one that has nothing left to give.

Raising the debt limit amounts to treason.

Not increasing taxes on the top 1% by 2 trillion, is a bought and paid for  government.

Not decreasing benefits to the bottom 1% by 2 trillion, is buying votes with taxpayer dollars.

 

NO WONDER THEY CAN WORK OUT A DEAL!!!!! 

Jul 15, 2011 6:22PM
avatar
Bank of America and J.P Morgan Chase into Receivership By FDIC  (TBTF)= OFF THE CLIFF YOU GO !!    GOD BLESS THE AMERICAN MIDDLE CLASS !
Jul 15, 2011 4:57PM
avatar
Anyone who plays the stock market is taking their financial security in their own hands. These people are experts at scamming you, and they will make even the most savvy and seasoned investor go broke in time. STAY AWAY at all cost from these thief's.!!!
avatar
It is strange how every one is saying the US never defaulted on it's payments. We only have to look back to 1979 to find the lastest time this has happened.

In this connection, I would call to the Committee?s attention a little known incident from 1979 when the Treasury briefly defaulted. Owing partly to Congress?s failure to raise the debt limit in a timely manner and some problems with Treasury?s equipment for printing checks, some payments that were due on May 3 and May 10 were missed. By May 17, all payments had been made and the Treasury was current with all bondholders. Nevertheless, yields on Treasury bills rose 60 basis points and stayed higher for years.
Jul 15, 2011 3:11PM
avatar

Love it love it love it!

 

today's traders on the floor reminiscent of the scene from TRADING PLACES..hence:

 

Trader 1:   "How's the hypertension Larry?"  (gulps milk of magnesia)

 

Trader 2:   "Oh maintaining as best as can...Hows the ulcer Harry? (downs blood pressure pills)

 

They'll ALL be droppin' soon enough!Open-mouthed

Jul 15, 2011 3:37PM
avatar

JustenterDisplay.....Yeah, I pointed that mini default in '79 out, within the last 2 weeks, so soon our so-called leaders have conveniently forgot.

 

Over the next few years, it cost us "the taxpayers", billions in added cost and interest.

It was a stupid mistake or badly timed problem.

 

At approximately the same time, there were heated debates in Washington about the debt ceiling and deficits.....Like Now.

When it happened; Debt holders around the World and here, thought the Gov. had defaulted.

 

It may have been a Partsian Ploy to get Carter out of office??  I'm not sure ?

But the chilling repercussions and perceptions were very costly.

You would think that D.C. would take a lesson, from that fiasco....They are Stupid.

 

Jul 15, 2011 3:02PM
avatar
If Wall Street is worried about Moody's and The S&P they are more stupid than i can beleeive. This whole week has been a set up for speculaters and manipulation within the market. They have kept the fires burning over Europe, debt ceiling , economy and nothing actually happened or will happen to affect anything financially in the world. It was a snow job!
Jul 15, 2011 8:00PM
avatar
Speculation in the oil trading is going to lead to the ruination of our economy. If oil was where it should be(somewhere in the 60's a barrel) our economy would be thriving, but instead the american consumer is looking at close to $100 a barrel oil and once again, gas prices are skyrocketing. Congress needs to pass legislation that requires the speculators to take physical delivery of the millions of futures that they buy ahead and make them pay for storage, ect., then see how many millions they buy . These traders are getting rich, while the rest of us are scratching to make ends meet. It is time that things changed.
Jul 15, 2011 7:12PM
avatar
Let the house of cards fall.We will pick up the pieces and start over.
Jul 15, 2011 3:43PM
avatar

I posted something similar but it is so relevant and is being proved once again that I am going to repost an altered version so I cant be accused of "spamming" by the msn money police...

The smallest and most insignificant thing will make the market go up or down. For instance, if an iguana crawled onto Wall Street, the traders would "panic" and stocks would plummet, until they researched as to why an iguana could possibly be there. Then when they gave the all clear, stocks would rise once again...that is until they saw a turtle appear...

Jul 15, 2011 5:52PM
avatar
Goggle- Please stop circulating my naked images you stole from my wireless router. I am getting many complaints that computers are crashing and the image is causing women and young children to scream in horror.  Goggle - thanks for showing "Takers" my address and image of my home. You are so nice, you will also give the thief direction.  The Obam census workers have coordinates for my front door.
Jul 15, 2011 4:13PM
avatar
Hahaha. Google's fixing to have to payout on a whats probably a class action lawsuit over stealing personal info from computers. Has the a$sclowns not been watching the news.
Jul 17, 2011 12:59PM
avatar

James M,

 

Maybe people are remember Sen. Obama voting against every debt ceiling increase.  "It is ludicrous in totally irresponsible to vote for a debt ceiling increase"  Obama, 2006....

 

Why would "57 States" want to do so now, except to continue this Donkey Party plan of TAX, SPEND, BORROW and DEBASE?   Do you really think this can bring prosperity?

 

Raise the Debt Ceiling and taxes to pay down the debt, WHEN THE BUDGET IS BALANCED.

 

"57 States" truely is the most clueless President in my lifetime.  I never thought anyone could beat out Carter for that title, but he is the hands down winner...

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