U.S. Stocks Drop; Auto Sales Rise

Arthi Gupta
04 Oct, 2010
New York City

U.S. stocks traded lower in the early trading and automakers report rising sales. Two airlines, United and Continental finalized merger to form the largest airline in the world. Agrium received Australian approval to acquire AWB. Microsemi agreed to acquire Actel for $430 million.

[R]9:35 AM New York – U.S. stocks traded lower in the early trading and automakers report rising sales. Two airlines, United and Continental finalized merger to form the largest airline in the world. Agrium received Australian approval to acquire AWB. Microsemi agreed to acquire Actel for $430 million.[/R]

Asian markets closed higher but markets in Japan declined and European markets opened lower in early trading. Microsoft filed patent infringement lawsuit against Motorola and Coca-Cola Enterprises completed transaction with the Coca-Cola Company.

The Swiss Financial Market Supervisory Authority said that UBS and Credit Suisse must hold significantly more capital than stipulated by the new Basel banking reforms. The government commission noted the stricter rules were needed as Switzerland is at a greater risk to a major banking collapse than other nations.

The International Monetary Fund said that governments were still well away from building a comprehensive financial reform and regulatory system to prevent a repeat of the global financial crisis.

The fund said in a report titled ‘Shaping the New Financial System’ that policies need to address not just the risks posed by individual banks, but also the risks from non-banks and the financial system as a whole.

New York Fed President William Dudley said to the Society of American Business Editors and Writers in New York that the current economic situation is ""wholly unsatisfactory.""

According to him, the Federal Reserve can provide more stimulus to bolster the sluggish economy, and should make a clearer commitment to keep rates low for an extended period.

A report released by the Institute for Supply Management showed a notable slowdown in the pace of growth in the manufacturing sector in the month of September, although activity in the sector still expanded for the fourteenth consecutive month.

The Institute for Supply Management said its index of activity in the manufacturing sector fell to 54.4 in September from 56.3 in August.

Major automakers reported solid growths in U.S. vehicle sales in September as compared to a year ago sales, when sales dropped as the U.S. government''s Cash for Clunkers program ended.

For September, General Motors Co. reported a 10.5% rise to 173,155 units, while Ford Motor Co. reported a 46.3% increase to 160,870 units and Chrysler reported a 61% jump in U.S. vehicle sales to 100,077. Japanese automaker Toyota Motor Corp.''s U.S. sales grew 16.8% to 147,162 units from a year earlier.

China''s Premier Wen Jiabao said the nation will address ""structural problems"" and stabilize its economy by increasing domestic demand.

Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group plc said that it will pay up to $90 million in refunds to 15 million cell phone customers who were incorrectly billed for data sessions or Internet use they did not initiate.

The company said that while reviewing customer accounts, it discovered that over the past several years customers who did not have data plans were billed for data sessions on their phones that they did not initiate.

United Air Lines Inc. and Continental Airlines Inc. finalized a merger to form United Continental Holdings, Inc., the world''s largest airline. Continental shareholders will receive 1.05 shares of United Continental Holdings Inc. common stock for each share of Continental common stock previously held.

United expects the merger will deliver $1.0 billion to $1.2 billion in net annual synergies by 2013, including between $800 million and $900 million of incremental annual revenue, from expanded customer options resulting from the greater scope and scale of the network, fleet optimization and expanded service enabled by the broader network of the combined carrier.

Microsoft Corp. filed a patent infringement lawsuit against Mobile phone maker Motorola Inc. in the International Trade Commission and in the U.S. District Court claiming that Motorola''s Android-based smartphones are infringing its patented technologies.

According to Microsoft, the patents at issue relate to a range of functionality embodied in Motorola''s Android smartphone devices that are essential to the smartphone user experience, including synchronizing email, calendars and contacts, scheduling meetings, and notifying applications of changes in signal strength and battery power.

Agrium Inc. received clearance from Australia''s Foreign Investment Review Board regarding Agrium’s proposed acquisition of AWB Limited under the previously announced scheme of arrangement at a price of A$1.50 per share. FIRB notified Agrium that there are no objections to the proposed acquisition in terms of the Australian Government’s foreign investment policy.

Coca-Cola Enterprises, Inc. completed its transaction with The Coca-Cola Company. CCE will retain its name and operate as a new public company consisting of its existing European territories, as well as the bottling operations in Norway and Sweden acquired from The Coca-Cola Company.

Microsemi Corp., a manufacturer of analog mixed-signal integrated circuits, entered into an agreement to acquire Actel Corp. for $20.88 per share through a cash tender offer. The total transaction value is around $430 million, net of Actel''s projected cash balance at closing.

Sanofi-Aventis SA, the pharmaceutical company commenced a tender offer for all outstanding shares of common stock of Genzyme Corp. for $69 per share, net to the seller in cash, without interest and less any required withholding taxes. The transaction is valued at around $18.5 billion.

New American Therapeutics, Inc. acquired all U.S. rights to manufacture, market and sell the antiviral topical drug Denavir owned by Novartis.

Facebook Inc., the private online social networking firm said it will split every share into five in order to enable it to give larger stock grants to its employees. The company spokesman Larry Yu did not reveal how much each Facebook share was worth after the stock split. Also is not known the number of shares that were outstanding after the split.

Visa Inc. and MasterCard Inc. are close to settling Justice Department antitrust probe, according to media reports. The settlement is most likely to be announced early this week. The Justice Department investigation involves card-company policies that prevent merchants from encouraging customers to use cards that have lower processing fees.