U.S. Stocks Rebound, Fannie Up, Oil at $122

123jump.com Staff
06 May, 2008
New York City

U.S. stocks rebounded from the morning slump after investors focused on reduced capital requirement for Fannie Mae and a steady rise in crude oil and natural gas prices. Fannie Mae will be allowed to operate with capital control ratio of as low as 10% by the third quarter of this year. Crude oil traded above $122. NYSE Euronext Group reported a sharp rise in revenue and earnings on higher revenues in derivative products. D R Horton revenue slumped 65%.

[R]2:00PM New York – U.S. stocks traded higher from a morning slump after a steady rise in energy and financial and energy stocks. Crude reached another record high.[/R]

Losses and Fannie Mae and UBS dragged financials and broader market averages lower at the opening but by mid-day stocks recovered as investors focused on relaxed capital requirements on Fannie Mae. The government regulatory agency permitted Fannie Mae to lower its directed capital ratio to as low as 10% at the beginning of the fourth quarter.

Crude oil continued its rise for the third day in a row and traded above $122 a barrel, natural gas added 6 cents to $11.23 and gold rebounded $4.40 to $878.50.

UBS reported first quarter net loss of SFr11.54 billion compared to net income of 3.03 billion a year ago. The Swiss bank also said that it will sell $15 billion of portfolio with subprime and Alt A assets to Blackrock. UBS will also eliminate 2,600 investment bank jobs in New York and London and rest of the 5,500 jobs will be eliminated in the next twelve months.

UBS stock ((UBS)) in New York trading fell as much as $1.30 before recovering to a loss of 46 cents to $33.85. Merrill Lynch ((MER)) fell 37 cents to $51.05 after it classified more assets to level 3.

Fannie Mae stock ((FNM)) rose $1.47 to $29.79 after it reported a larger than estimated loss, eliminated dividend and a plan to raise $6 billion. Fannie Mae reported first quarter net loss of $2.2 billion or $2.57 per share compared to $961 million or 85 cents per share. The largest mortgage lender reported a loss of $3.56 billion or $3.80 per share in the fourth quarter.

The battered lender also announced plans to raise $6 billion through public offering of common and preferred stocks. Fannie Mae after the offering will be able to reduce its directed capital surplus requirement under the supervision of OFHEO to 15% and after September 2008 to 10%. Fannie will also lower its quarterly dividend from the third quarter to 25 cents and save $390 million annually.

NYSE Euronext, a holding company created by the combination of NYSE Group, Inc. and Euronext N.V. today reported revenues rose 53% to $1.29 billion (or 830 million euros) from $702 million a year earlier. Net income increased 238% to $230 million or 87 cents per diluted share compared to net income of $68 million or 43 cents per share, a year ago.

NYSE Euronext stock ((NYX)) gained 4% or $3.46 to $71.53.

Anadarko Petroleum Corporation., an oil and gas exploration and production company said revenue fell to $2.9 billion, decreased 83% or from $5.2 billion a year ago. Net income totaled $286 million, or $0.61 per share diluted, totaled $237 million, or $0.50 per share a year ago.

Anadarko Petroleum stock ((APC)) rose $5.75 to $73.86.

The St. Joe Company, a real estate developer reported first quarter 2008 total revenues increased 18.6% to $116.8 million compared to $95 million a year ago. Net Income increased to $32.1 million or $0.40 per share, compared to net income of $19.7 million or $0.27 per share, a year ago.

St Joe stock ((JOE)) fell 30 cents to $41.71.

D.R. Horton, Inc, a homebuilder today reported second quarter fiscal 2008 revenue decreased 65% to $1.6 billion compared to $2.6 billion compared to a year ago. Net loss in the quarter was $1.31 billion or $4.14 per share compared with profit of $51.7 million, or 16 cents per share in the same period a year ago.

D.R. Horton ((DHI)) increased 44 cents $16.41.