Wall St. Breakfast's (Related) Pre-Market Snapshot:
U.S. Futures As of 8:47 AM EST
S&P 500 : +2.70; 1,516.30
NASDAQ 100 : +3.00; 1,944.00
Dow : +16.00; 13,495.00
International Indexes
Asia
NIKKEI 225 : -0.12%; 18,066.11 (-21.37)
HANG SENG : -0.09%; 21,803.57 (-18.78)
S&P/ASX 200 : -0.33%; 6,308.60 (-21.20)
BSE SENSEX 30 : +0.09%; 14,501.08 (+13.36)
Europe
FTSE 100 : -0.11%; 6,581.30 (-7.10)
CAC 40 : -0.45%; 5,975.81 (-27.04)
XETRA-DAX : -0.70%; 7,874.77 (-55.84)
Commodity Futures (Reuters/Jefferies CRB (Related) )
Oil : -0.55%; $68.80 (-$0.38)
Gold : -0.44%; $651.80 (-$2.90)
Natural Gas : +0.35%; $6.96 (+$0.02)
Silver : -0.75%; $12.78 (-$0.097)
U.S. Breaking News — see today's Wall Street Breakfast (Related) for earlier news
Lennar Posts Worse-Than-Expected Q2 Loss, Says Q3 May Be Worse
Lennar Corp. posted a $1.55/share ($244 million) Q2 net loss, reversing last year's $2/share ($325 million) gain. After write-offs on option deposits and other items, its loss was $0.22. Revenue plunged 37% from $4.58 billion to $2.88 billion. Analysts were calling for earnings of $0.05/share on revenue of $2.58 billion. New orders were down 31% to 8,056, homes delivered dropped 29% to 9,568, and its average home price fell 7.5% to $298,000 from $322,000 -- mainly due to a 77% jump in sales incentives to $43,700 per home. The number-one U.S. homebuilder (by revenue) said the market "has continued to deteriorate throughout the second quarter," and foresees "weak and perhaps deteriorating market conditions" ahead in Q3. CEO Stuart Miller said the company has been forced to revalue its properties based on current market conditions. Morningstar Analyst Eric Landry notes that Lennar cut its land inventory before other builders, has reduced its debt, and has an impressive management. "They are positioned to exit this downturn, whenever it comes, as a stronger company than when they entered it," he said. New-home sales come out at 10 a.m. ET. The average 30-year mortgage is 6.60 percent, their highest in almost one year.
Sources: Press release (Related) , MarketWatch (Related) , Bloomberg (Related)
Commentary: Homebuilders Sinking Into the Subprime Mess (Related) • Housing Double Dips Offer Short Opportunities (Related) • Jim Cramer's Take on LEN (Related)
Stocks/ETFs to watch: Lennar Corp. (LEN (Related) ). Competitors: D.R. Horton Inc. (DHI (Related) ), Pulte Homes Inc. (PHM (Related) ), Centex Corp. (CTX (Related) ), Toll Brothers Inc. (TOL (Related) ), Beazer Homes USA Inc. (BZH (Related) ). ETFs: streetTRACKS SPDR Homebuilders ETF (XHB (Related) ), iShares Dow Jones U.S. Home Construction (ITB (Related) ), PowerShares Dynamic Building & Construction (PKB (Related) )
Altria to Close NC Plant, Shift Production to Europe
Altria has announced the closing of its Cabarrus, NC manufacturing facility, consolidation of U.S. production at its Richmond, VA facility and a planned increase in production at European facilities. Annual pre-tax savings are expected to total $335 million by 2011. Altria will take a $325m, or $0.10/share initial pre-tax charge in Q2. Altria cited declining U.S. cigarette volume and a decision to re-source production of 57 billion cigarettes (including those for Japan and the Middle East) from Cabarrus to Europe (from Q3 2008). Philip Morris Int'l will realize 53% of the $335m in savings, while PM USA will realize 47%. The 2,500 employees at the Cabarrus facility will be offered positions in Richmond or separation benefits for those who cannot relocate. Shares of Altria rose 0.8% to $68.75 on Monday.
Sources: Press release (Related) , Associated Press (Related) , Bloomberg (Related)
Commentary: Will The FDA End Up Endorsing A Safer Cigarette? (Related) • Supreme Court Rules Against Philip Morris (Related) • Altria: Q1 Earnings Miss; '07 EPS Forecast Raised (Related)
Stocks/ETFs to watch: Altria Group, Inc. (MO (Related) ). Competitors: British American Tobacco plc (BTI (Related) ), Reynolds American Inc. (RAI (Related) ), Altadis, S.A. [MCE:ALT]. ETFs: DIAMONDS Trust, Series 1 (DIA (Related) ), iShares Dow Jones US Consumer Goods (IYK (Related) ), First Trust Morningstar Div Leaders Idx (FDL (Related) )
ITT to Buy International Motion Control for $395M
ITT Corp. announced it has executed an agreement to acquire privately held International Motion Control [IMC] for $395 million. ITT said it projects the acquisition to be "slightly dilutive" to EPS in '07, but maintained its EPS guidance of $3.44 - $3.50, and expects it to be accretive to earnings in '08. The transaction is subject to normal closing conditions and expected to close in Q3. IMC had revenues of about $200m in '06, with nearly half coming from outside the U.S. IMC has 1,000 employees in 11 global facilities. "IMC adds a complementary mix of highly engineered, mission-critical products to expand our core capabilities in specialty energy absorption and motion control applications," said ITT's chairman and CEO. ITT will host an investor conference call regarding the transaction Tuesday morning. Shares of ITT fell 0.9% to $68.35 on Monday, but gained 0.6% to $68.76 in thin after-hours trading.
Sources: Press release (Related) ,
Commentary: Water: How to Quench Your Investor Thirst (Related) • ITT Corporation Is Making the Most of Its Market (Related) • ITT to Pay U.S. Gov't $100 Million, Plead Guilty of Illegal Military Exports (Related)
Stocks/ETFs to watch: ITT Corporation (ITT (Related) ). Competitors: Raytheon Company (RTN (Related) ), Honeywell International Inc. (HON (Related) ). ETFs: PowerShares Water Resources (PHO (Related) ), PowerShares Aerospace & Defense (PPA (Related) )
Related: ITT-IMC acquisition presentation (Related) [pdf]
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast . Get Wall Street Breakfast by email (Related) Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.
Today's Market (via Sam Collins, ChangeWave.com (Related) )
Recap of Yesterday's Action
The stock market opened on a positive note yesterday and was up more than 125 points by noon.
After Friday's 186 point sell-off and the increased volatility of recent sessions, it seemed almost normal to get that kind of a bounce -- especially after a 10 a.m. announcement that May existing home sales were flat but still better-than-expected.
Even though home sales were at their lowest since June 2003, it appears that the decline is not accelerating, and that gave some credibility to comments made by the Commerce Department last week that we are "at the bottom or near the bottom" of the housing sell-off. It also provided some hope to the bond crowd that interest rates would stay put, since the housing sales were still down and so bonds rallied, too.
Later in the afternoon, however, things all came unwound as more concerns over the subprime-mortgage market and its impact on hedge funds again took center stage. And this time, two other Wall Street names were rumored as having some possible difficulties -- Lehman Bros. (LEH (Related) ) and Goldman Sachs (GS (Related) ). By 2:30 p.m., the day's entire advance had been erased, and despite a late but timid rally, the averages closed lower.
At the closing bell, the Dow Industrials were down eight points at 13,352, the S&P 500 lost five at 1,498, and the Nasdaq dropped 12 points to close at 2,577. The NYSE traded 1.7 billion shares and the Nasdaq did 2.1 billion; advances exceeded declines by about 2-to-1 on both exchanges.
Crude oil (August contract) was up by 4 cents to close at $69.18 a barrel, but the Amex Energy SPDR (XLE (Related) ) fell by 44 cents, ending at $59.31. The XLE is still in a powerful uptrend with the closest support area at around $66.80. August gold fell $2.30 at $654.70 per troy ounce, and the Philly Gold and Silver Index [XAU] fell $2.92 to $132.24 -- still well within the trading range that began early last year.
What the Markets Are Saying
Yesterday's failure to hold on to an early gain following Friday's sell-off had to be a disappointment to the bulls, since it indicates that the underlying support that has halted the market's minor corrections this year may be dropping to a lower level.
Even though the financial stocks led the decline, eight of 10 major sectors showed losses yesterday, indicating that there was broad selling. But despite that, the major averages managed to hold just above their near-term support, and the group that is most critical at this time, the utilities, had a plus day, with the Dow Utility Average closing higher by 3.12 at 488.49.
This was no doubt due to a plus day for bonds, with the 10-year Treasury note up 13/32, dropping its yield to 5.078%. One successful money manager reminded me that the Utility Average may not have the predictive value for interest rates that it used to have. He pointed out that utilities have been priced as growth stocks now and leveraged to natural gas, etc. He may be right, but interest rates will probably remain the key factor to stock performance this summer.
Today's Trading Landscape
Earnings will be reported today from Oracle (ORCL (Related) ), Kroger (KR (Related) ), Lennar (LEN (Related) ) ( read above ), Nike (NKE (Related) ), Spectrum Control (SPEC (Related) ), Steelcase (SCS (Related) ), Stride Rite (SRR (Related) ) and Unify (UFYC (Related) ).
It's also going to be a pretty heavy day for economic reports. Look for the April S&P/Case-Shiller Composite, May new home sales, June Richmond Fed Manufacturing Index, and consumer confidence -- all today.
Asian Headlines (via Bloomberg.com (Related) )
• Saudi Telecom Pays $3 Billion for a 25 Percent Stake in Malaysia's Maxis (Related) Saudi Telecom Co., the largest phone company in Saudi Arabia, bought a 25 percent stake in Malaysia's Maxis Communications Bhd. for 11.4 billion riyals ($3 billion) to tap growth in developing markets such as India.
• TPG, Affinity Planning $1.5 Billion Takeover of Singaporean Chip Tester (Related) TPG Inc. and Affinity Equity Partners Ltd. offered to buy United Test & Assembly Center Ltd. for about $1.5 billion in the third takeover of a Singapore technology company this year, people involved in the plan said.
• Yen Advances as Japan's Omi Emphasizes Risks of Betting Against Currency (Related) The yen gained the most in two months against the dollar after Japan's Finance Minister Koji Omi said investors are taking risks in one-way bets against the currency.
• China to Inspect Banks' Foreign Debt to Curb `Hot Money' Flows Into Stocks (Related) China's currency regulator plans to start a nationwide inspection of banks' foreign loans to curb illegal inflows that have helped to inflate the country's surging stock and property markets.
• Morgan Stanley May Buy Daewoo's Seoul Building for $1 Billion, People Say (Related) Morgan Stanley (MS (Related) ), investing a record $8 billion fund in real estate outside the U.S., is in talks to buy the Seoul headquarters of Daewoo Engineering & Construction Co. for about $1 billion, said two people with knowledge of the matter.
European Headlines (via Bloomberg.com (Related) )
• European Stocks Drop for Fourth Day, Led by Banks; BNP, Allianz, BAE Fall (Related) European stocks dropped for a fourth day on speculation central banks will keep raising interest rates. BNP Paribas SA and Allianz SE (AZ (Related) ) paced a decline by banks and insurers.
• BAE Says U.S. Justice Department Starts Corruption Probe Into Saudi Deals (Related) BAE Systems Plc (BAESY.PK (Related) ), Europe's biggest weapons maker, said the U.S. Justice Department started a probe of the company's compliance with anti-corruption laws in connection with its arms business in Saudi Arabia.
• Porsche Full-Year Earnings to Rise `Significantly' on New Cayenne Model (Related) Porsche AG, the carmaker with the highest profit margins, said full-year earnings will jump ``significantly'' as a new Cayenne sport-utility vehicle goes on sale and a stake in Volkswagen AG contributes more profit.
No comments:
Post a Comment