Stock Market Wrapup Mar. 5
After a seesaw start to trading, in which the Dow Jones Industrial Average posted a 130 point turnaround in the first hour of trading, stocks closed out the day broadly lower. The drop followed a heavy sell-off overseas, and drove home the point that the jitters that formed last week haven't been eased. The 10-year Treasury finished unchanged, while crude oil declined sharply.
Technology stocks were pressured by a warning from Advanced Micro Devices (NYSE: AMD - News) that it would not meet its Q1 revenue forecast as its price war with Intel (Nasdaq: INTC - News) drags on. The company would not speculate on when it would return to profitability. Wireless handset maker Motorola (NYSE: MOT - News) was lower after urging shareholders to reject financier Carl Icahn's bid to join its board. On the positive side, Apple (Nasdaq: AAPL - News) moved higher on an upgrade from Prudential Securities. Prudential raised its view on Apple to "overweight" from "neutral" based on its outlook for sales of the new iPhone, a wide-screen iPod media player, and the Macintosh computer.
Smart-phone makers Palm (Nasdaq: PALM - News) and Research In Motion (Nasdaq: RIMM - News) were also lower in today's trading. Palm's stock soared on Friday on speculation that Nokia (NYSE: NOK - News) was close to buying the maker of the Treo handheld. Its shares dropped -10% today, however, after neither company would comment on the rumor. Nokia ended down less than -1%. The Wall Street Journal, meanwhile, reported Palm has hired Morgan Stanley to help it explore its options, including a possible sale. RIM shares shed -1% after the company said it will restate its financials from 2004 to the present and probably take a -$250 million charge related to erroneously reported stock-option grants.
Lenders suffered today on continuing fallout from investor concerns about the health of subprime originators. The problems were highlighted by the collapsing share price of the nation's #2 subprime lender, New Century Financial (NYSE: NEW - News), which plunged another -69% today. Part of the company's difficulties are due to a criminal probes into the trading of its securities and its accounting procedures, but the weakness of its loan portfolio was highlighted by a downgrade by JMP Securities today to "market underperform." The firm said it believed New Century was in danger of failure due to "severe liquidity pressure and ... worsening industry conditions." Since closing at $30.16 on February 7th, New Century's stock has lost roughly -85% of its value on its way towards today's close.
While New Century's problems represent the extreme of woes in the lending sector, big banks and other lenders have suffered as well. Since the February 7th date, when HSBC (NYSE: HBC - News) acknowledged weakness in its subprime portfolio by announcing that it was raising its allowance for loan losses, it and other large banks have largely been trending lower. Bank stocks that have weakened in the last three weeks include Citigroup (NYSE: C - News) and Bank of America (NYSE: BAC - News), as well as mortgage lender Countrywide Financial (NYSE: CFC - News). A further look into the subprime lending sector is available to subscribers in today's Bull Market Report.
Published By BullMarket.com Staff
In M&A news, the grocery chain operator Great Atlantic & Pacific Tea (NYSE: GAP - News), better known as A&P, announced it was buying the smaller Pathmark (Nasdaq: PTMK - News) for $677 million in cash and stock. The combined companies will operate 550 stores in the New York, New Jersey, and Philadelphia metro areas, and in Baltimore, Washington, D.C., Michigan, and Louisiana. The stocks ended 5% and 11% higher, respectively.
Technology stocks were pressured by a warning from Advanced Micro Devices (NYSE: AMD - News) that it would not meet its Q1 revenue forecast as its price war with Intel (Nasdaq: INTC - News) drags on. The company would not speculate on when it would return to profitability. Wireless handset maker Motorola (NYSE: MOT - News) was lower after urging shareholders to reject financier Carl Icahn's bid to join its board. On the positive side, Apple (Nasdaq: AAPL - News) moved higher on an upgrade from Prudential Securities. Prudential raised its view on Apple to "overweight" from "neutral" based on its outlook for sales of the new iPhone, a wide-screen iPod media player, and the Macintosh computer.
Smart-phone makers Palm (Nasdaq: PALM - News) and Research In Motion (Nasdaq: RIMM - News) were also lower in today's trading. Palm's stock soared on Friday on speculation that Nokia (NYSE: NOK - News) was close to buying the maker of the Treo handheld. Its shares dropped -10% today, however, after neither company would comment on the rumor. Nokia ended down less than -1%. The Wall Street Journal, meanwhile, reported Palm has hired Morgan Stanley to help it explore its options, including a possible sale. RIM shares shed -1% after the company said it will restate its financials from 2004 to the present and probably take a -$250 million charge related to erroneously reported stock-option grants.
Lenders suffered today on continuing fallout from investor concerns about the health of subprime originators. The problems were highlighted by the collapsing share price of the nation's #2 subprime lender, New Century Financial (NYSE: NEW - News), which plunged another -69% today. Part of the company's difficulties are due to a criminal probes into the trading of its securities and its accounting procedures, but the weakness of its loan portfolio was highlighted by a downgrade by JMP Securities today to "market underperform." The firm said it believed New Century was in danger of failure due to "severe liquidity pressure and ... worsening industry conditions." Since closing at $30.16 on February 7th, New Century's stock has lost roughly -85% of its value on its way towards today's close.
While New Century's problems represent the extreme of woes in the lending sector, big banks and other lenders have suffered as well. Since the February 7th date, when HSBC (NYSE: HBC - News) acknowledged weakness in its subprime portfolio by announcing that it was raising its allowance for loan losses, it and other large banks have largely been trending lower. Bank stocks that have weakened in the last three weeks include Citigroup (NYSE: C - News) and Bank of America (NYSE: BAC - News), as well as mortgage lender Countrywide Financial (NYSE: CFC - News). A further look into the subprime lending sector is available to subscribers in today's Bull Market Report.
Published By BullMarket.com Staff
In M&A news, the grocery chain operator Great Atlantic & Pacific Tea (NYSE: GAP - News), better known as A&P, announced it was buying the smaller Pathmark (Nasdaq: PTMK - News) for $677 million in cash and stock. The combined companies will operate 550 stores in the New York, New Jersey, and Philadelphia metro areas, and in Baltimore, Washington, D.C., Michigan, and Louisiana. The stocks ended 5% and 11% higher, respectively.
Labels: AAPL, AMD, BAC, C, CFC, HBC, INTC, MOT, NEW, NOK, PALM, RIMM
posted by Stock Administrator @ 9:00 PM
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