Stocks drop on danger signs in Europe
The need for leaders to hash out a bailout plan for Spain grows more urgent as the nation's borrowing costs soar. US earnings expectations are generally low as Alcoa prepares to post results after the close.
Updated at 12:42 p.m. ETThe Associated Press with TheStreet.com
Stocks fell in early trading Monday on more signs of instability in Europe and ahead of the start to second-quarter earnings season in the U.S.
The Dow Jones Industrial Average ($INDU) was down 66 points at 12,706. The S&P 500 ($INX) was down 6 points at 1,349. The Nasdaq Composite ($COMPX) was down 15 points at 2,923.
The need for European financial leaders gathering in Brussels to hash out a bailout plan for Spain grew more urgent as borrowing costs for the country hit extraordinarily dangerous levels.
The yield on the Spain's 10-year bonds rose to 7% Monday, a level at which Greece, Ireland and Portugal sought international bailouts.
Greece is still trying to right itself after electing leadership that vowed to stick with repayments to international lenders. The nation's deputy labor minister resigned from the new coalition government Monday, saying it should have pressed harder to renegotiate the terms of the country's bailout agreements. Greece is in its fifth year of recession and has survived as a nation for two years on international rescue loans.
Spain is in better shape financially and can afford the high rates for a few weeks at least. However, a long-term solution is very much needed to prevent the nation, which has an unemployment rate near 25%, from defaulting.
The U.S. economic calendar is light Monday, with May U.S. consumer credit numbers expected at 3 p.m. ET.
Dow component Alcoa (AA) kicks off the second-quarter earnings season after the close. Analysts expect the aluminum producer to report profit of 5 cents a share over the past three months.
Overall, expectations for second-quarter earnings are low. According to Reuters, earnings are expected to show growth of 5.8% over the same time last year. However, the financial sector is benefiting from an easy comparison because of the Bank of America (BAC) mortgage lawsuit settlement, the report pointed out. Excluding Bank of America, second-quarter growth is estimated to come in at 0.7%. Excluding the entire financial sector, second-quarter growth is estimated to be down 0.3%.
In company news, Health benefits company WellPoint (WLP) said Monday it reached a deal to acquire managed health care firm Amerigroup (AGP). WellPoint agreed to pay $92 a share in cash for Amerigroup, or about $4.9 billion. Amerigroup shares closed Friday at $64.34, making the premium of the deal 43%.
Best Buy (BBY) is laying off 2,400 workers as part of its restructuring efforts. The company will cut 600 jobs in its Geek Squad technical support business and 1,800 other workers in its retail stores.
Celgene (CELG) isn't buying Human Genome Sciences (HGSI), according to a source in contact with Celgene management, reported TheStreet's Adam Feuerstein. Late Friday, Reuters, citing an unnamed source, reported that Celgene was one of two possible bidders for Human Genome Sciences, which is trying to fight off a hostile, $13-a-share offer from GlaxoSmithKline (GSK). Celgene has no interest in an acquisition of Human Genome or a merger of equals between the two companies, a source told Feuerstein. Human Genome has set a July 16 deadline for takeover offers from suitors other than Glaxo.
Air Lease (AL) placed an order for 60 Boeing (BA) 737 MAX 8 and 15 737 MAX 9 airplanes. The order is valued at $7.2 billion.
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Hmmm seems strange that everything is so wrong with the world economy and yet the central banks are still pumping trillions of dollars into the super rich bank accounts instead of generating jobs and putting people back to work.
We are still in a Death Spiral of lost jobs and an ever weaker and weaker economy.
Watched as much as my stomach could handle of Madcow , HeaED, the other commie, loonies of MSNBC over the weekend.
Seems the new lefty attack word is the word outsourcing !
IE, Romney's companies "outsources" jobs, blah, blah .
More of the same evil rich , evil rich corporations, fair share, screwing the little guy- BLAH, BLAH
rants but "outsourcing" kept coming up. I see even here, over the weekend, one of the cretins , Tumbleweed, went into a mini rant on "outsourcing"
It's like they are all told by ACLU, MSN, MSNBC, ACORN other prestigious organizations, what the commie marching orders should be.
Now, lets take a look at hypocracisy at it's absolute highest and most pathetic level.
Dear Emperor Obuma's favorite lapdog company ?
Why that would be the very owner of this rag , MSNBC, other media outlets --
Good old GE !
Yes, the same GE that made a living under "Hatchet" Jack Welch then CEO, outsourcing and killing thousands and thousands of American jobs.
Why "hatchet" Jack was the virtually first CEO to use this strategy on a large scale (outsourcing) and he was praised back then in the 90's for his vision. Put thousands of families on the street.
On the cover of every major magazine as a guru, a cost cutter , a man of vision !
Ring any bells ?
I don't seem to remember the fake outrage then?
Let's look at GE today, shall we?
Most of the company is outsourced, surprise !
Even better, GE paid ZERO, NADA, NIENTO, ZILCH , CORPORATE TAXES IN THE USA , LAST YEAR
ZERO TAXES PAID !
NO TAXES PAID !
NOTHING COMING BACK TO THE USA IN TAXATION !
Why, you ask ? Why they use that bad word "outsourcing" but when THEY use it -- it's GOOD outsourcing !
See, understand that's GOOD outsourcing, good greed, good evil rich !
No hypocrisy there. It's all good !
Understand the lefty mind and it's quite simple to figure there game plan.
Do what I say -- NOT what I do !
Isn't that the case here and over and over, with these corrupt animals?
See, if GE outsources , fires thousands of people BUT they pimp for Obuma , control the media For Obuma - IT'S GOOD OUTSOURCING !!
Then , you get the reward from sugar daddy - Hey you just won the lottery GE , no taxes should be paid by GE.
Yes, lets keep the discussion going on "outsourcing" shall we lefties?
OMG, we had better start looking out for the danager signs in this country. We don't need to
go to Europe to find danger signs. The globe stops here.
There three things that need our immediate attention in this country.
1. The tax code. If we don't find a suitable way to levy and collect taxes, and yes there
is a diffrence between levying and colleting taxes, that will raise the revenue we need
to cover this huge debt we have accumulated it will do no good to cut spending.
2. Cut spending, see 1 above. Of course we need to cut spend, but we need to do it in
a way that will not decemate certain segments of our society.
3. Regulate, but regulate what needs to be regulated. That probably will require a completely
new start on almost every regulatory agency and regulation we have in place right now.
I know one thing. If we don't start regulaing politics, and yes I mean both political parties,
and start to run this country as it needs to be run, we are going to go over the edge before
long.
The people in Europe are just as smart as we are, so let them worry about their situation.
We don't have any smarts to give away. We need all of it here.
Fed QE merely means : they have loaned so much money to the banks so the banks can buy US T-bills. That the banks are getting nervous ( holding so much US debt when the USA could default the next time congress does not rise the debt limit ) that they refuse to borrow the money and the Fed has to step up and buy the US T-bills directly instead of indirectly.
Why do you think the government bailed out the banks??
They did not want everyone to know that they screwed up in 2008 and did not realize that $10 trillion of our debt was coming due at the same time and $5 trillion was not rolling over and the government did not have the $5 trillion to pay out.
Hence the grid lock in the banks.
That is why they are twisting the debt to long term to get most of it locked up in thirty year notes but that is going to take a long time. In the meanwhile they still have to figure out how to roll over or pay out on about $8 trillion a year.
Given that no one is their right mind is going to roll over the US T-bills at the end of this year when we fall off the fiscal cliff things are going to be worse than 2008.
>>>recent poll showed only 14 congressmen and Senators read the whole thing. <<<
And it's a sad state of affairs that none of our elected officials read ANY of the bills before they vote on them, but rather vote in lock-step with their parties. Perhaps that should be a issue during the campaigns... "and Mr. Candidate, how many bills did you actually read before voting on them?"
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