Fed Endorses Stimulus, Exelon Bids for NRG

123jump.com Staff
20 Oct, 2008
New York City

U.S. stocks rose after interbank lending rates dropped. Quarterly earnings from Halliburton and Eaton rose. Crude oil edged above $74 a barrel. Financial stocks rose after Fed chairman Bernanke endorsed a second stimulus package. NRG surged after Exelon offered 37% premium.

[R]11:28AM New York – U.S. stocks gained after the interbank lending rates fell and Fed chairman endorsed a second stimulus plan.[/R]

The price action in crude oil futures and interbank lending dominated the trading sentiment in trading in New York and in Europe. Stocks moved higher in both regions.

Crude oil jumped 3.5% to $74 a barrel and interbank lending for dollar deposits dropped 34 basis points to 4.08%. The decline in rates was welcomed by traders but rates are still at a premium to the U.S. Treasury bonds. Investors are hoping that stimulus packages in Europe and US will restore in interbank lending.

The Fed Chairman Bernanke endorsed government stimulus package in his prepared testimony for the House Committee on Budget. While he noted that the outlook for the economy is “weak” and possibilities for “protracted slowdown” but also stressed that the any future stimulus should be directed at consumer, home buyers and businesses.

He further added, “The extraordinary tightening in credit conditions has played a central role in the slowdown thus far and could be an important factor delaying the recovery. If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, homebuyers, businesses, and other borrowers.”

Exelon Corp made an unsolicited offer to the nuclear powered utility company NRG of $6.2 billion. The offer values the company at 37% premium from Friday’s close. Exelon, the largest utility company operating in Pennsylvania and Illinois is looking to expand into the nuclear power based power plants.

The deal offers NRG shareholders 0.485 stock of Exelon valuing the company at $26.43 a share according to the information on the company Web site.

NRG emerged from bankruptcy in December 2003 rejected $7.2 billion offer from Mirant in 2006.

U.S. Stock Movers

Eaton Corporation ((ETN)) added 7.25% or $3.22 to $47.64 after the diversified industrial manufacturer reported third quarter sales increased 25% to $4.114 billion from $3.298 billion a year ago. Net income in the quarter rose 22% to $315 million or $1.87 per diluted share compared to net income of $258 million or $1.71 per share, a year ago.

Hasbro, Inc ((HAS)) fell 3.39% or $1.02 to $29.10 after a toy maker reported third quarter sales gained 7% to $1.30 billion from $1.22 billion a year ago. Net income in the quarter fell 14% to $138.2 million or $89 cents per diluted share compared to net income of $161 million or 95 cents per share, a year ago.

Mattel, Inc ((MAT)) lost 3.25% or 47 cents to $13.98 after the toy maker reported third quarter sales rose 6% to $1.95 billion from $1.84 billion a year ago. Net income in the quarter rose 0.54% to $238.1 million or $66 cents per diluted share compared to net income of $236.8 million or 61 cents per share, a year ago.

Weatherford International Ltd ((WFT)) gained 7.9% or $1.16 to $15.85 after the world’s largest diversified upstream oilfield service companies reported third quarter sales rose 29% to $2.54 billion from $1.97 billion a year ago. Net income in the quarter rose 27% to $370.6 million or $53 cents per diluted share compared to net income of $292.7 million or 42 cents per share, a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 311.77 or 3.59% to 9,005.59, Hang Seng index in Hong Kong increased 768.80 or 5.28% closed to 15,323.01. CSI 300 index in China higher 63.47 or 3.46% closed to 1,896.73. ASX 200 index in Australia increased 171.50 or 4.32% to close 4,142.30. The KL Composite index in Malaysia higher 4.28 or 0.47% closed to 909.51.

The Kospi Index in South Korea increased 26.96 or 2.28% to close at 1,207.63. SET index in Thailand closed higher 5.64 or 1.20% to 476.95, and JSE Index in Indonesia increased 27.51 or 1.97% to 1,426.94. The Sensex index in India increased 247.74 or 2.48% closed to 10,223.09.

Europe Markets Review

In London FTSE 100 Index traded higher 86.32 or 2.12% to 4,149.33, in Paris CAC 40 Index increased 44.92 or 1.35% to 3,374.84 and in Frankfurt DAX index traded higher 70.56 or 1.48% to 4,851.89. In Zurich trading SMI increased 21.00 or 0.34% to 6,120.62.