U.S. Stocks Fall; Intergraph in $2.2 B Deal

Arthi Gupta, Mayank Mehta and Sanjay Barot
07 Jul, 2010
New York City

U.S. stocks trade lower following weaker-than-expected economic data. U.S. mortgage applications surge on refinancing. Sweden-based Hexagon agrees to buy U.S.-based Intergraph for $2.13 billion.

[R]9:35 AM New York – U.S. stocks trade lower following weaker-than-expected economic data. U.S. mortgage applications surge on refinancing. Sweden-based Hexagon agrees to buy U.S.-based Intergraph for $2.13 billion.[/R]

U.S. stocks and global markets fall on concerns that the global economy is faltering. Google is facing early stage anti-trust scrutiny in Europe, where regulators are looking ""very carefully"" at allegations that Google unfairly demotes rivals'' sites in search results.

Mortgage applications increased 6.7% on a seasonally adjusted basis from one week earlier, according to data from the Mortgage Bankers Association. The surge is mainly due to an increase in refinance activity, with the refinance share of mortgage activity accelerating to 78.7% of the total applications in the recent reporting week.

The Refinance Index increased 9.2% from the previous week, hitting its highest level since May 2009.

Toyota Motor announced to recall 138,874 of its Lexus vehicles in the U.S due to faulty valve break that may cause the engine fail abruptly while running.

This is part of a global recall announced last week that involves 270,000 vehicles worldwide that included around 138,000 in the United States.

The beleaguered automaker has already recalled more than 8 million vehicles worldwide for various problems, mainly faulty accelerator pedal parts that could jam the accelerator.

Toyota paid a record fine of $16.4 million in the U.S. earlier this year for not complying with auto safety regulations.

Europe''s top antitrust chief said today he is looking closely at anticompetitive allegations against the search engine Google.

The European Commission, Europe''s highest antitrust authority, is currently looking into ""some allegations of anticompetitive conduct in relation to search,"" Almunia said in his speech in London. Although the work is at an early stage, ""I am looking at the allegations very carefully,"" given the importance of online search to the marketplace, Almunia added.

Intergraph Corp., an engineering and geospatial software provider, announced the signing of an agreement to be acquired by Hexagon AB, a global measurement technology company, in a transaction valued at about $2.125 billion.

Upon closing of the transaction, Intergraph said it would operate as a separate Hexagon division under the Intergraph name and branding and would become Hexagon''s core software platform and continue to provide differentiated and vertically-focused software solutions to its core industries.

Halsey Wise, Intergraph chairman, president and chief executive noted, ""We believe the significant global resources and technologies of Hexagon will allow us to further invest in our customers, software solutions, people and future.""

The transaction, with pending regulatory approvals, as well as satisfaction of other customary closing conditions, is expected to be completed in the third or fourth quarter of 2010.

Commodities, Currencies and Yields

Dollar increased against euro to $1.2574 and decreased against the Japanese yen to 87.26.

Crude oil increased $0.06 to $72.04 a barrel for a front month contract, natural gas edged higher $0.01 cents to $4.69 per mBtu and gasoline increased 0.950 cents to 198.08 cents.

Gold decreased $7.10 in New York trading to close at $1,188.00 per ounce, silver closed lower $0.192 to $17.66 per ounce and copper for the front month delivery decreased 1.950 cents to $2.95.

Yields on 10-year U.S. bonds increased to 2.92% and on 30-year U.S. bonds traded at 3.88%.

Stock Movers

AMR Corporation fell 1.0% after the parent of American Airlines reported a June load factor of 86.8%, an increase of 1.6 points versus the same period last year. The company said that traffic increased 3.2% and capacity increased 1.3% year over year.

EMC Corporation rose 0.6% after the maker of storage computers today announced it has signed an agreement to acquire California-based Greenplum, Inc.

JA Solar Holdings Co., Ltd. climbed 5.3% after the Chinese maker of solar cells and modules today announced that it has entered into an agreement to acquire 100% of the shares of Shanghai Jinglong Solar Technology Co., Ltd. from Ningjin Jinglong PV Investment Co., Ltd., a company controlled by JA Solar’s Chairman, Mr. Baofang Jin.

Lockheed Marin Corporation fell 0.1% after the defense contractor was awarded a $522 million contract from the U.S. for long-lead efforts and materials associated with the production and delivery of 42 low-rate initial production Lot V F-35 Joint Strike Fighter aircraft, according to a statement on the Defense Department Web site.

US Airways Group, Inc. rose 2.1% after the airline reported its traffic in June rose 2.9% to 5.59 billion revenue passenger miles from 5.43 billion revenue passenger miles in June 2009.

Earnings Review

Family Dollar Stores Inc. ((FDO)), the discount chain retailer said third quarter net sales rose 8.4% to $1.997 billion from $1.843 billion. Net income in the quarter increased 19.0% to $104.4 million or 77 cents per diluted share compared to net income of $87.7 million or 62 cents per share a year ago. Comparable store sales increased 7.0%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 58.39 or 0.63% to 9,279.65, Hang Seng index in Hong Kong decreased 227.05 or 1.13% to 19,857.07 and CSI 300 index in China higher 17.58 or 0.69% to 2,580.48. ASX 200 index in Australia decreased 21.50 or 0.50% to 4,254.60. The FTSE Bursa KL Composite index in Malaysia closed higher 4.67 or 0.36% to 1,311.75.

The Kospi Index in South Korea decreased 9.29 or 0.55% to close at 1,675.65. SET index in Thailand closed lower 0.84 or 0.10% to 814.68 and JSE Index in Indonesia decreased 8.60 or 0.30% to 2,902.04. The Sensex index in India decreased 143.45 or 0.81% to 17,471.03.

Europe Markets Review

In London FTSE 100 Index closed lower 55.81 or 1.12% to 4,909.19, in Paris CAC 40 Index decreased 52.84 or 1.54% to 3,370.52 and in Frankfurt DAX index traded lower 71.92 or 1.21% to 5,936.83. In Zurich trading SMI decreased 48.66 or 0.80% to 6,014.46.