Market Ignores Pfizer, Google, FPL

Elena
19 Dec, 2005
New York City

Stocks traded mixed Monday morning, despite a strong initial boost from merger and corporate news. Pfizer rose 11% after exclusivity of two of its patents was upheld. FPL Group confirmed a deal to buy Constellation Energy Group for $11 billion, creating one of the nation''''s biggest energy suppliers. Google gained 3.2% on a reported 5% stake in Time Warner''''s AOL division for $1 billion, pacing out Microsoft Corp.

U.S. MARKET AVERAGES

U.S. stock futures opened in the positive but cautious trading sent market sentiment lower and the three major averages traded mixed in a narrow range. Investors expect low trading volume during the week on approaching Christmas and post-rally recovery. A lack of economic news left traders with limited guidance ahead of critical data on gross domestic product, housing and consumer spending later this week. Market was focused on interest rate amid speculations the Fed Reserve may be near the end of rate hikes.

The initial boost was provided by corporate and merger news from Pfizer Inc. which won a court victory and a major acquisition by FPL Group Inc., but later they did little to energize the market. Investors continued last week''s tech sector sell off, brushing off reports that Google Inc. is buying a 5% stake in AOL and upbeat earnings from electronics retailer Circuit City Stores Inc.

HMO and biotech stocks were among the worst performers of the day. The defense sector also showed weakness, with a loss of just under 1%. As oil prices reversed, energy stocks mnoved to the downside, showing modest losses.

Drug stocks were the most notable gainers on the session. The insurance group moved higher in morning trading with Dow component AIG ((AIG)) helping to drive gains in the sector, climbing by 2.5%.

The technology sector was divided into two groups-gainers and decliners. Disk drive and Internet stocks posted gains. The semiconductor sector came off its intraday low but remained below the unchanged mark.

Google ((GOOG)) moved to a new 52-week high on reports that it is in talks to acquire 5% of Time Warner''s ((TWX)) AOL unit. Circuit City ((CC))) broke to a fresh peak, on better-than-expected quarterly earnings and raised guidance released before the opening bell.

Symantec ((SYMC)) extended losses to set a new 52-week low. IMAX ((IMAX)) broke to a fresh low on negative analyst comments.

In late morning trading, the Dow Jones industrial average added 20.33, or 0.19% The Standard & Poor''s 500 index was up 0.57, or 0.04%, and the Nasdaq composite index slid 5.11, or 0.23%.

Bonds prices fell, with the yield on the 10-year Treasury note rising to 4.45% from 4.44%late Friday.

MOVERS AND SHAKERS

Pfizer ((PFE)) rose 11% after a federal judge upheld the exclusivity of two of Pfizer's patents related to its Lipitor cholesterol-lowering drug.

Time Warner Inc. ((TWX)) entered into talks to sell a 5% stake in its AOL unit to Google Inc. (GO0G)) for $1 billion. Time Warner’s shares gained about 1%. Google’s shares rose 2.8%.

FPL Group Inc. ((FPL)) and Constellation Energy Group Inc ((CEG)) agreed to merge, forming a company with a market capitalization of about $28 billion. The companies reported that under the deal, each Constellation Energy share will be exchanged for 1.444 common shares of the combined company, while each FPL Group share will be converted to 1 share of the combined entity. The new company formed in the merger will be called Constellation Energy. Shares of FPL Group inched up 0.3%, while shares of Constellation Energy dropped 3.8%.

Poore Brothers ((SNAK)) announced that its president and CEO, Thomas Freeze, and chief financial officer, Richard Finkbeiner, agreed to leave the company. It also said that, primarily due to severance payments associated with the above departures and professional services fees the company sees a net loss for the fourth quarter, which is below previous annual guidance of 8 cents to 10 cents a share. The stock dropped 20%.

ECONOMIC NEWS

No important economic news is due out today.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks advanced across the region with the Nikkei finishing up after three straight losing sessions. The Japanese bellwether rose 1.4% on bargain hunting and strong exporter-related issues. Among other regional markets, South Korea’s Kospi climbed 1.4%, Taipei’s Weighted index gained 1.3%, and Hong Kong’s Hang Seng was up 1%.

European stocks closed mixed, pressured by the energy sector but supported by surging drug stocks which gained after the exclusivity of two Pfizer patents was upheld. The German DAX 30 declined 0.1%, the French CAC 40 fell 0.2%, while London’s FTSE 100 advanced 0.2%.

OIL, METALS, CURRENCIES

Crude oil prices dropped to a three-month low on mixed weather forecasts. Light sweet crude for January delivery dropped 81 cents to $57.25 a barrel on the Nymex. Heating oil fell 2 cents to $1.709. Gasoline lost 3 cents to $1.5385. Natural gas declined 7 cents to $13.56 per 1,000 cubic feet.

Gold prices climbed 1.2%, following last-week sharp declines. In London spot gold rose $6.05 to $509.29 per troy ounce.

The U.S. dollar climbed the most in three weeks against the yen, recovering from recent losses. The dollar bought 116.19 yen, up from 115.67.

EARNINGS NEWS

Circuit City Stores ((CC)), consumer electronics retailer, reported Q3 earnings from continuing operations of 6 cents a share, up from an equivalent loss of 3 cents a share a year-earlier. Sales advanced 14% and same-store sales advanced 13.1%. The company topped analyst estimate for a profit of 4 cents a share.