Palm Jumps 8%

Elena
04 Jun, 2007
New York City

The U.S. market averages turned in a lackluster performance in late morning trading after posting a notable weakness at opening. The Dow traded lower, dragged by Citigroup, Merck, Coca-Cola, and Procter & Gamble, each falling about 1%. However, Wal-Mart and General Electric limited the downward trend, rising 3% and 1.3%, respectively. Airline stocks fell after Continental Airlines reported lower revenues per passenger in May. Continental shares dropped 3.6%.

[R]11:30AM U.S. market averages turned in a lackluster perfotrmance.[/R]

The U.S. market averages turned in a lackluster performance in late morning trading after posting a notable weakness at opening. The Dow traded lower, dragged by Citigroup ((C)), Merck ((MRK)), Coca-Cola ((KO)), and Procter & Gamble ((PG)), each falling about 1%. However, Wal-Mart ((WMT)) and General Electric ((GE)) limited the downward trend, rising 3% and 1.3%, respectively.

Airline stocks fell after Continental Airlines ((CAL)) reported lower revenues per passenger in May. Continental shares dropped 3.6%. UAL Corp. ((UAUA)) was the most notable decliner on the Nasdaq, falling 5.7%. The networking sector posted gains, with Avaya ((AV)) rising 4% amid reports that it is close to a deal to be acquired by two private equity firms for more than $8 billion. Some computer hardware stocks also showed strong upwards moves. Palm ((PALM)) jumped 8% after agreeing to sell 25% of the firm to a private-equity firm for $325 million

In other merger-and-acquisition news, Axa ((AXA)) agreed to sell a Dutch unit for $2.35 billion to SNS Reaal of Holland. Accredited Home Lenders Holding ((LEND)) surged 11% after the subprime mortgage firm agreed to be acquired by Lone Star Fund V L.P. for $15.10 a share in an all-cash deal.

Investors paid little attention to news that factory orders rose 0.3% in April, below the 0.8% expected by economists. The Dow Jones industrial average was down 26.33 points, or 0.19%, at 13,641.78. The Standard & Poor's 500 Index was down 1.40 points, or 0.09%, at 1,534.94. The Nasdaq Composite Index was down 5.54 points, or 0.21%, at 2,608.38. The benchmark 10-year note was yielding 4.94% on Monday, a slight dip from 4.96% on Friday.


[R]9:45AM U.S. stocks opened in the negative, pressured by Shanghai weakness.[/R]

Wall Street opened in the negative, pressured by an overnight plunge in the Chinese stock market. Merger activity continued on Monday, helping to limit the downward trend. Dominion ((D)) added 1% after it agreed to sell most of its U.S. gas and oil operations to Loews ((LTR)) and XTO Energy ((XTO)) for a total of $6.5 Billion.

Further in deal news, Avaya ((AV)) rose over 3% amid reports that it is close to a deal to be bought by TPG Capital and Silver Lake Partners for $17 a share. Digene ((DIGE)) surged 33% after Qiagen agreed to acquire the company for $1.6 billion in cash and stock. Flextronics International ((FLEX)) fell 1.6% after it said it agreed to buy electronics maker Solectron in a cash-and-stock deal worth about $3.6 billion.

Acquisition news sent Accredited Home Lenders Holding ((LEND)) 11% higher. The subprime mortgage firm agreed to be acquired by Lone Star Fund V L.P. for $15.10 a share in an all-cash deal. Among the very few companies reporting quarterly results, Krispy Kreme Doughnuts ((KKD)) said its Q1 loss widened on falling revenue. The results came in below analyst estimate, and Krispy Kreme stock dropped 4.3%.

In the first hour of trading, the Dow Jones industrial average fell 29.34, or 0.21%, to 13,638.77. The Standard & Poor''s 500 index declined 2.35, or 0.15%, to 1,533.99, and the Nasdaq composite index lost 4.07, or 0.16%, to 2,609.85. Bonds edged higher, with the yield on the benchmark 10-year Treasury note falling to 4.95% from 4.96% late Friday.


[R]9:30AM The FTSE 100 is lower in mid-afternoon trade on weak media sector.[/R]

The FTSE 100 is 0.4% lower in mid-afternoon, trading at 6,651.2, a drop of 25 points.

Advancers

Royal Bank of Scotland advanced 1% on news that it is set to sell its Southern Water unit for around 4 billion pounds. Reuters Group bucked the downtrend in the media sector and was up 0.9%, after the financial information company was taken over by Thomson Corp of Canada three weeks ago.

Decliners

After Rupert Murdoch approach for the Wall Street Journal, anticipation of a fierce competition weighed on the business publishing stock, sending them lower. Pearson lost 1% and Reed Elsevier, which owns business information services both in Europe and the U.S. dipped 1.3%.

GlaxoSmithKline declined 1.1% as there are still concerns over possible health risks in its Avandia diabetes drug. Whitbread, another decliner, was 0.4% lower despite unveiling the sale of its David Lloyd health club chain to the London & Regional property company.

Segro, known before as Slough Estates, erased early morning gains and was trading down 0.1% after it confirmed the 1.5 billion pounds disposal of its US property concerns. It promised to return 250 million pounds of the proceeds to investors through a special dividend.


[R]9:00AM U.S. stock futures pointed lower amid steep Shanghai drop.[/R]

U.S. stock futures pointed lower on Monday as investors digested another steep decline in Chinese stock prices. Although Shanghai plunged 8%, global markets were not seriously hurt.

In corporate news, a number of merger deals were announced early Monday. Real-estate investment trust Health Care Property Investors ((HCP)) agreed Monday to buy Slough Estates USA from the U.K.''s Segro Plc for $2.9 billion, including the assumption of about $1.2 billion in debt.

In another deal, contract electronics manufacturer Flextronics International ((FLEX)) said it will buy contract electronics maker Solectron ((SLR)) in a cash-and-stock deal worth about $3.6 billion. Solectron will become a subsidiary of Flextronics, with Solectron shareholders holding a stake of between 20% to 26%. Flextronics expects the deal to add at least 15% to its earnings. The deal is expected to close by the end of the year with the approval of shareholders and regulators.

Among other companies in focus, Wal-Mart ((WMT)) rose 2% in pre-open trading, following upgrades from J.P. Morgan and Morgan Stanley. Onyx ((ONXX)) climbed 9% amid reports of improved survival from patients taking a liver cancer drug. Dow Jones industrial futures expiring in June fell 36, or 0.26%, to 13,653. Standard & Poor''s 500 index futures fell 5.60, or 0.36%, to 1,534.00. Nasdaq 100 index futures declined 9.00, or 0.47%, to 1,923.25.


[R]8:30AM Asian markets mostly rise Monday with China bucking the uptrend and declining.[/R]

Asian markets mostly advanced on Monday. The Shanghai Composite Index plunged for a second session, off 8.3% to 3,670.40. The Chinese government last week lifted a tax on stock trading trying to restrict a market boom that is thought it could create a dangerous price bubble. In Japan, Nikkei 225 index advanced 14.54 points, or 0.08%, to settle at 17,973.42, the highest finish since Feb. 27. Toyota was among the gainers, advancing 1.21%.

Elsewhere around the region, the benchmark in Hong Kong, the Hang Seng Index gained 0.62% to settle at 20,729.59, while the Korea Composite Stock Price Index, or Kospi, added 1.2% to 1,737.59, which is a record high. The Weighted Price Index of the Taiwan Stock Exchange advanced 0.5% to end at 8,294.79 and the Australian benchmark S&P/ASX 200 index finished up 0.9% at 6,392.9, after striking a record intraday high of 6,409.2 in early session.


[R]8:00AM Dominion agreed to sell most of its natural gas and oil exploration and production operations for $6.5 B.[/R]

Energy and power producer Dominion ((D)) announced Monday an agreement to sell the biggest part of its U.S. onshore natural gas and oil exploration and production operations in two separate transactions for a total of about $6.5 billion.

Dominion''s Permian Basin operations will be bought by Loews Corp. ((LTR)) for $4.025 billion, while Dominion''s operations in the Rocky Mountains will be taken over by XTO Energy ((XTO)) for $2.5 billion.

The operations include 3.51 trillion cubic feet equivalent of proved natural gas and oil reserves as of Dec. 31, 2006. XTO said in a statement that it is planning to set up a $500 million limited partnership.


[R]7:30AM NY-6:30PM Mumbai Sensex finishes lower on selling pressure in late trading.[/R]

The Sensex on BSE ended Monday 74.98 points, or 0.51%, lower at 14,495.77.

The market-breadth turned negative in late session. As 1,182 stocks advanced, 1,388 declined and 84 were unchanged. Of the 30 stocks in the Sensex, 10 advanced, while all the rest declined. The turnover on BSE was Rs 3,745 crore, compared with Rs 4,709 crore on Friday. On NSE, the turnover was Rs 8,543 crore, lower than Rs 9,872 crore on Friday.

Economic news

Indian companies reported the best net earnings results in fiscal 2007 in three years on mostly higher sales. Almost 1,700 companies have reported their results so far with an earnings increase of 47% over the same period a year earlier.

The President of Brazil, Luiz Inacio Lula da Silva is visiting India to strengthen and expand economic ties. Two nations are working to expand economic relationship and have formed a common position on major global issues, as part of the G20 group of developing countries.

Trading highlights

Reliance Capital was the most-active stock with a turnover of Rs 143.80 crore followed by MIC Electronics and Indiabulls Real.

Advancers

Following robust global copper prices, Hindalco rallied to a high of Rs 156 also on takeover specualtion. The stock eventually pared gains and finished 4% higher at Rs 147. Hindalco is holding talks with Sterlite Industries to offer separate bids for Alcan of Canada.

SBI and ITC surged 2% each to Rs 1,407 and Rs 165, respectively. SBI rallied on a likely government decision to buy from RBI 59.7% stake of the Reserve Bank in SBI in a deal worth Rs 40,000 crore.

Other banks also advanced in sympathy. ICICI Bank finished 0.6% higher at Rs 933 and HDFC bank ended over 1% higher at Rs 1,165. NTPC and Dr.Reddy''s gained 1% each at Rs 160 and Rs 655, respectively.

Decliners

Tata Motors lost nearly 5% to Rs 711.The company announced that May month sales were down 4% to 42,558 units and commercial vehicle sales dipped to 20,675 units in May 2007 from 21,903 units in May 2006. Passenger vehicle sales declined 3% at 17,580 units in May 2007. Grasim lost 3.2% to Rs 2,440 and BHEL shed 3% to Rs 1,372.

IT stocks dipped on the sustained rupee appreciation. Satyam lost 2.3% to Rs 467, TCS was down 1.2% to Rs 1,204 and Infosys was off 1% to Rs 1,916. Index heavy Reliance Industries lost 0.6% to Rs 1,750.


[R]6:30AM European markets are higher Monday on Segro and Vodafone.[/R]

European markets are higher on Monday. By mid-day, the German DAX Xetra traded up 0.2% at 8,005.18, a high not reached since March 2000, the French CAC-40 index lost 0.2% at 6,158.41 and the U.K. FTSE 100 index added 0.1% at 6,684.20.

Advancers

U.K. real estate investment company Segro, known before as Slough Estates, supported the U.K. index with a 1.1% share increase, after it said that it is selling Slough Estates USA, a life sciences real estate business, to Health Care Property Investors.

Vodafone Group, the world largest mobile-phone company, climbed 0.5% also helping the market. The German group ThyssenKrupp rose 2% and helped German XetraDax to rise.

Decliners

Insurance company AXA lost 0.1% after it said that it intends to withdraw form the Netherlands market by selling its operations there to SNS Reaal for 1.75 billion euros, or $2.35 billion.

J.P. Morgan downgraded the European investment banking sector to underweight from neutral and also reduced Deutsche Bank to underweight from neutral and BNP Paribas to neutral from overweight. Deutsche Bank shares shed 0.6%, while BNP Paribas lost 0.7%.

Commodites

Crude oil fell in New York, breaking three days of gains, on speculation the U.S. will have enough gasoline to meet summer demand. Crude oil for July delivery fell 55 cents, or 0.9%, to $64.53 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude for July settlement fell 18 cents to $68.89 a barrel on the ICE Futures Exchange.

Gold for immediate delivery dropped $1, or 0.2%, to $670.75 an ounce. Silver fell 2.5 cents, or 0.2%, to $13.675 an ounce after advancing 52.5 cents the two previous trading sessions.

Currencies

The dollar fell slightly against the euro Monday, with traders looking to interest rate decisions in Frankfurt and London. The euro bought $1.3447 in morning trading compared with $1.3443 in New York late Friday. The British pound rose to $1.9835 from $1.9821 with sentiment gaining that the Bank of England would keep its rate unchanged from 5.25% when it meets Thursday. In Japan, the dollar fell to 122 Japanese yen from 122.06 late Friday.


[R]5:30AM NY-4:30PM Mumbai Sensex trades in the red on Monday on selling pressure.[/R]

In early afternoon deals, the Sensex on BSE is trading 28 points down at 14,543.

Advancers

Hindalco has soared 5% to Rs 148, following robust global copper prices. SBI has surged 2.6% to Rs 1,414. ITC has surged over 2% to Rs 165, and Dr.Reddy''s has advanced 1.5% at Rs 658. Reliance Comms has rallied over 1% to Rs 512, while HDFC is also 1% higher to Rs 1,884.

Decliners

Tata Motors is the worst performing stock in the Sensex and has plummeted 4.6% to Rs 713. Tata Motors sales fell 4% to 42,558 units May 2007. BHEL has shed 2.5% to Rs 1,380. Satyam and Cipla have lost around 2% each toRs 469 and Rs 220, respectively. Wipro has lost around 1.4% to Rs 536. Infosys was down 0.8% to Rs 1,925.