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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.667222 |
| Euro to US Dollar | 1.489203 |
| Japanese Yen to US Dollar | 0.011120 |
| Canadian Dollar to US Dollar | 0.932227 |
Stocks finished mostly lower today as the price of oil rose and financial and technology stocks weakened.
General Motors (GM, news, msgs) hit a 33-year low.
Crude closed at $136.74 a barrel, up $1.38 from Friday in the aftermath of Saudi Arabia's decision to try to cut prices with a production boost. The Saudi decision, announced Sunday at a summit in Jeddah, had no effect on the markets because of supply disruptions in Nigeria and elsewhere.
The Dow Jones industrials, meanwhile, finished basically even on the day at 11,842, but 18 of the 30 stocks in the blue-chip index were lower.
The Standard & Poor's 500 Index was also unchanged at 1,318, but 301 of the stocks in the index were lower.
The Nasdaq Composite Index was down 20 points to 2,386 on weakness in Qualcomm (QCOM, news, msgs), Comcast (CMCSA, news, msgs), Apple (AAPL, news, msgs), Starbucks (SBUX, news, msgs) and Microsoft (MSFT, news, msgs).
After the bell, package company United Parcel Service (UPS, news, msgs) warned that its second-quarter earnings would be below expectations due to a sluggish domestic economy and soaring fuel costs. UPS, which reports on July 22, expects 83 cents to 88 cents a share in earnings, down from a prior view of 97 cents to $1.04.
UPS shares fell 4.1% to $63.55 in after-hours trading after slipping 0.2% to $66.26 in regular trading.
Stocks were limited today in part because traders are hesitant to make big bets ahead of a Federal Reserve meeting. The central bank starts a two-day meeting Tuesday and is expected to announce Wednesday that it is leaving its key federal funds rate unchanged at 2%.
While some bulls were cheered that the market held up reasonably in the aftermath of a nonevent in Saudi Arabia, strengths and weaknesses in the market were stark.
Nine of 10 gainers in the S&P 500 today were energy-related stocks, led by oil-and-gas producer Noble Energy (NBL, news, msgs) and oil-and-gas equipment supplier National Oilwell Varco (NOV, news, msgs), up 8.4% to $103.23 and $91.55, respectively.
The Select Sector SPDR-Energy (XLE, news, msgs) exchange-traded fund, which mirrors the energy sector of the S&P 500, was up 4% to $89.14.
Seven of 10 losers in the index were financials, with mortgage insurer MGIC Investment (MTG, news, msgs) the worst performer, down 16% to $7.72.
The Select Sector SPDR-Financial (XLF, news, msgs) exchange-traded fund, which mirrors the S&P's financial sector, was down 3.2% to $21.48.
General Motors, the weak link in the Dow today, was off 6.4% to $12.91, its lowest close since December 1974. The shares fell after the auto giant said it would offer 0% financing for 72 months (yes, that's six years) on selected gas-guzzling trucks and SUVs or $6,000 to $7,000 in cash incentives. The company expects to cut truck and SUV production by 170,000 units in the second half of the year but boost auto production by 47,000 units. GM will temporarily idle several North American truck plants starting next month and schedule overtime for workers at plants that build cars, crossovers and vans through the second half of the year. It also said it has hired Citigroup to look at a possible sale of its Hummer business.
"This is a shift in response to consumer demand," GM spokesman Tony Sapienza said.
GM also said it will raise prices on its 2009 models by 3.5% -- equal to about $1,000 per vehicle -- to help cover increased commodity costs, fuel-economy technology and other costs.
Ford Motor (F, news, msgs) fell 9.1% to $5.28. Toyota Motor (TM, news, msgs)was up slightly at $97.85 in New York; Honda Motor (HMC, news, msgs) was up 0.8% to $33.93 in New York as buyers continue to favor low-mileage cars.
ExxonMobil's (XOM, news, msgs) 3.3% gain to $87.70 and a 2.5% gain to $99.06 for Chevron (CVX, news, msgs) added 32 points to the Dow.
Declines in JPMorgan Chase (JPM, news, msgs), General Motors, Bank of America (BAC, news, msgs), Home Depot (HD, news, msgs) and American International Group (AIG, news, msgs) subtracted nearly 50 points from the blue-chip index.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $136.74 | $135.36 | $1.38 | 7.37% | 42.47% |
| Heating oil (per gallon) | $3.7964 | $3.7717 | $0.0247 | 3.54% | 43.29% |
| Natural gas (per million BTU) | $13.2030 | $12.9940 | $0.2090 | 12.82% | 76.44% |
| Unleaded gasoline (per gallon) | $3.4551 | $3.4392 | $0.0159 | 3.19% | 38.71% |
Nigeria loses 40% of its production
Crude moved higher despite the Saudi announcement that it will add 200,000 barrels a day to its daily production. Saudi oil minister Ali al-Naimi said the country will be producing 9.7 million barrels a day by July, the highest production rate since 1981. Naimi also said that Saudi Arabia is willing to boost production even more if necessary."Any increase in production in today's oil market is welcome," White House Deputy Press Secretary Tony Fratto told CNN. "It is important that we also take steps to increase domestic production and our refining capacity."
A big problem, however, is that production in Nigeria has been cut substantially because of a strike against Chevron and an attack on a Royal Dutch Shell (RDS.A, news, msgs) platform. More than 300,000 barrels a day of crude has been pulled from the market, about 40% of Nigeria's daily production.
Crude's rise came as Congress held hearings today on the impact of speculators on energy markets. Speculators now control about 70% of contracts for energy futures, up from 37% in 2000. Many critics have charged that the low margin levels required on many contracts has pulled in investors who otherwise might be shut out of the market.
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If Congress limited the speculation, four energy analysts told lawmakers, the price of gasoline would drop to $2 a gallon in 30 days. AAA's daily survey put the national retail price of gasoline at $4.07 a gallon; the Lundberg Survey put the price at $4.10 a gallon, up 10 cents from two weeks earlier.
The rise in crude hit airlines stocks; United Airlines parent UAL (UAUA, news, msgs) fell 14% to $6.09 and said it would furlough 950 of its 6,500 pilots.
The Amex Airlines Index ($XAL.X) was off 7% to 16.79, and the Dow Jones Transportation Average ($DJT) fell nearly 2% to 5,093.
Financials weaken; job losses ahead
General Motors notwithstanding, financial stocks were easily the weakest sector of the stock market.Part of the concern was what the Fed will say Wednesday after its Federal Open Market Committee meeting concludes. The worry is that the Fed will warn that inflation fears may force it to boost rates.
At the same time, the ongoing credit crunch and slowing economy is forcing many big companies to cut jobs as they worry about deteriorating investment portfolios.
Citigroup (C, news, msgs) will lay off 10% of its investment-banking work force, or about 6,500 people, according to The Wall Street Journal, after suffering $15 billion in losses in the past two quarters.
The first layoff notices were to be given out today, the paper reported. Citigroup didn't confirm the cuts.
Citigroup shares were down 3.9% to $18.55. The stock has plunged more than 60% over the past year.
Goldman Sachs (GS, news, msgs) is also planning to trim 10% of the jobs in its investment-banking division, The Financial Times reported. The cuts are in addition to those in its annual performance review.
Goldman shares fell 2.8% to $178.59.
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"We boosted our consumer discretionary and financials weights in May on the belief the sectors would benefit from bank recapitalization and fiscal stimulus,'' New York-based analyst David J. Kostin wrote in a note to clients today. "Our thesis was clearly wrong in hindsight."
Kostin said raising capital will continue to weigh on financials.
Goldman also lowered the consumer discretionary sector to "underweight" from "overweight," citing the same concerns.
Merrill Lynch (MER, news, msgs) shares fell 3.9% to $34.54 after Banc of America Securities lowered its second-quarter earnings estimates on the company.
Banc of America said Merrill will lose $1 per share in the quarter, down from a previous forecast of 21 cents in profit per share. Banc of America also said Merrill will likely write down $3.5 billion in the quarter.
Bunge to buy Corn Products
Wall Street is watching two big mergers today.Stock Charts (Year)
Bunge
Corn Products Intl
The $56-per-share offer represents a 31% premium to Corn Products' closing price of $42.90 on Friday.
The deal will give Bunge access to Corn Products' corn syrup and sweetener products, used by companies including Coca-Cola (KO, news, msgs) and Kellogg (K, news, msgs). The global market for products like corn syrup and sweeteners is growing at about 5% annually, according to The Associated Press.
In separate news, Bunge raised 2008 guidance to between $9.35 and $9.65 per share, up from a previous forecast of $7.10 to $7.40 per share. The company is benefiting from strong customer demand, despite rising commodity prices, Bunge said.
Shares of Corn Products surged 18.3% to $50.75; Bunge shares fell 9.4% to $110.70.
Billion-dollar trash deal
In other big merger news, Republic Services (RSG, news, msgs) will buy Allied Waste (AW, news, msgs) for $6.24 billion, or $14.04 per share, in a deal that would combine the second- and third-biggest trash haulers in the country to create a $12 billion waste and environmental-services company. The merged company would also create a bigger rival to No. 1 trash hauler, Waste Management (WMI, news, msgs).The companies said the deal would result in savings of $150 million a year after it is expected to close in the fourth quarter of this year.
Allied Waste fell 2% to $13.29; Republic Services lost 0.7% to $30.98. Waste Management shares rose 0.7% to $38.58.
What's on tap this week
Inflation will likely be a key issue at this week's Federal Open Market Committee meeting, as food and energy prices continue to climb to record highs. Still, most economists believe the Federal Reserve will keep interest rates at 2%.The Fed has lowered rates seven times since September in an effort to counter the slowing economy. Although the Fed moved rapidly to lower rates in recent months, some believe the Fed didn't do enough last year. "If policymakers had been more aggressive back in the fourth quarter, the financial system and the economy would not have gotten to this point, and the Fed would not have had to respond in such an aggressive way," Mark Zandi, chief economist of Moody's Economy.com, told CNNMoney.com.
Other economic reports on tap include two reports on the troubled housing market. The S&P/Case-Shiller index of home prices is expected to show a 15.9% decline in April from last year. The report will be released on Tuesday.
On Wednesday, a report on new-home sales from the Commerce Department is expected to show a decline of 5% in May to a seasonally adjusted annual rate of 510,000.
The Commerce Department will also release a report on consumer spending for May on Friday. Economists expect spending to have risen by 1.7% last month, thanks to the economic stimulus checks many U.S. households received in May.
Still, some economists are concerned about coming months. "After the rebate impact fades, we expect weak consumer fundamentals to cause spending to soften significantly," Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities, told Bloomberg News.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 1.850% | 1.800% | 0.050 | 0.00% | -41.08% |
| 5-year Treasury note yield | 3.620% | 3.548% | 0.072 | 6.25% | 4.78% |
| 10-year Treasury note yield | 4.168% | 4.137% | 0.031 | 3.02% | 3.30% |
| 30-year Treasury bond yield | 4.710% | 4.702% | 0.008 | 0.06% | 5.63% |
| Currencies | |||||
| U.S. Dollar Index | 73.820 | 73.380 | 0.440 | 1.19% | -3.75% |
| British pound in dollars | $1.9670 | $1.9759 | -0.0089 | -0.82% | -1.12% |
| Dollar in British pounds | £0.5084 | £0.5061 | 0.0023 | 0.83% | 1.13% |
| Euro in dollars | $1.5530 | $1.5637 | -0.0107 | -0.18% | 6.26% |
| Dollar in euros | € 0.6439 | € 0.6395 | 0.0044 | 0.18% | -5.89% |
| Dollar in yen | 107.79 | 107.19 | 0.60 | 1.32% | -3.63% |
| Canadian dollar in U.S. dollars | $0.985 | $0.984 | $0.0009 | -2.18% | -0.79% |
| U.S. dollar in Canadian dollars | $1.016 | $1.016 | -$0.0002 | 2.24% | 0.80% |
| Commodities | |||||
| Gold | $887.20 | $903.70 | -$16.50 | -0.01% | 5.87% |
| Copper | $3.8080 | $3.8305 | -$0.02 | 5.60% | 25.22% |
| Silver | $16.7900 | $17.3970 | -$0.61 | -0.44% | 12.53% |
| Corn | $7.2425 | $7.2125 | $0.03 | 20.86% | 59.00% |
| Crude oil (NYMEX) (per barrel) | $136.74 | $135.36 | $1.38 | 7.37% | 42.47% |
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