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.
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.|
|U.S. Dollar Index||75.52||75.51||0.01%||-$0.05|
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%|
|Heating oil (-HO)||$3.1180||$3.0849||5.83%||22.58%|
|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; 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.|
|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%|
|U.S. Dollar Index||75.52||75.562||1.19%||-4.75%|
|(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%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$97.24||$95.69||1.91%||6.41%|
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!
Due to the economy, the light at the end of the tunnel has been turned off .........
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!!!!!
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.
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!
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.
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...
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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[BRIEFING.COM] The major averages continue holding modest losses with the S&P 500 down 0.2%. Even with the early retreat, the benchmark index is still higher by 1.7% this week and up 3.0% for the month.
Cyclical sectors continue to weigh, while all four countercyclical groups trade a bit ahead of the broader market. Heavily-weighted technology and financials will be in focus as the session continues, considering the two top-weighted groups have the potential to influence the overall ... More
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