advertisement
Article Tools
| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.568381 |
| Euro to US Dollar | 1.375894 |
| Japanese Yen to US Dollar | 0.011152 |
| Canadian Dollar to US Dollar | 0.935716 |
Stocks closed lower today -- but well above their lows early in the afternoon -- because of a deal gone bad and the uncertainty created by rising tensions in the Middle East.
Bulls had to be cheered by the modest losses. The Dow Jones industrials were down 151 points at 1:20 p.m. ET but recovered nearly 120 points in the next two hours and 40 minutes.
The blue chips finished off 32 points, or 0.4%, to 8,484.
The Nasdaq Composite Index was down 20 points, or 1.3%, at 1,510, and the Standard & Poor's 500 Index shed 3 points, or 0.4%, to 869.
Today was the start of the last three days of 2008, a year most investors would rather forget.
The Dow, down 36% in 2008, and the S&P 500, off 41%, face their worst years since 1931. The Nasdaq, off 43% for 2008, is suffering its worst year since its inception in 1971.
While trading will be light this week because of New Year's, there are hopes stocks will firm up by Wednesday so there's momentum in the first week of January. The first full week of trading in January often signals the market's direction for the year. The Dow fell nearly 5% between Dec. 31, 2007, and Jan. 11, 2008.
Today's deal gone bad was Kuwait's decision to walk away from a joint venture with Dow Chemical (DOW, news, msgs). The state-owned Petrochemical Industries was going to pay $9 billion for a 50% ownership stake in several Dow plastics plants.
Dow was going to use the cash from the deal to finance its $15.3 billion purchase of Rohm & Haas (ROH, news, msgs), a maker of specialty coatings and electronic materials.
The big fear wasn't so much that the deal will fall apart; Dow has said it has other financing options. Rather, it's another sign that there's little or no financing for deals, John Carey of the Pioneer Fund (PIODX) told Bloomberg News.
Dow Chemical slumped 20.8% to $15.32, its worst percentage loss in 28 years; Rohm & Haas was down 16.1% to $53.34. The stocks were the worst and third-worst performers among S&P 500 stocks. Coming into today, Rohm & Haas had been up 17.7% on the year, the fifth-best S&P 500 performer. Nearly all of its gain disappeared today, and stock's rank among S&P winners fell to 15.
Meanwhile, the renewed violence between Israel and Hamas in the Gaza Strip initially pushed oil over $40 a barrel in New York. After a pullback to as low as $37.53, crude rallied to a close of $40.02, up 6.1% from Friday and its first close above $40 since Dec. 19. Gold had jumped to as much as $892 but fell back to $875.30 an ounce in New York.
Energy stocks were the market leaders. Chevron (CVX, news, msgs) was up 1.71% to $71.55, second among the 30 Dow stocks after Hewlett-Packard (HPQ, news, msgs), up 1.74% to $35.58. Exxon Mobil (XOM, news, msgs) was up 1.1% to $78.02.
Oil's early spike pushed up commodity stocks in Asia and the United Kingdom. Trading was light, however. The Nikkei 225 Index ($JP:N225) closed up a mere 0.1% at 8,747, and Hong Kong's Hang Seng Index ($HSIX) increased 1% to 14,328. The United Kingdom's FTSE 100 Index ($GB:UKX) was up 2.4% to 4,319.
"The overall tone of the market has changed for the better, in our view, as bad news is no longer met by new bear market lows," wrote analyst Mark Arbeter of Standard & Poor's Equity Research in a note to clients. "When the market can flatten out and begin rallying in the face of miserable headlines, it may be a sign the worst is over, at least for the intermediate term."
Despite the modest loss today, only five Dow stocks had gains. Walt Disney (DIS, news, msgs) was the laggard, down 3.2% to $21.47. Meanwhile, just 131 S&P 500 stocks were ahead, along with 20 stocks in the Nasdaq-100 Index ($NDX.X). The index was down 12 points, or 1%, to 1,173.
Ford Motor (F, news, msgs) shares were down 3.1% to $2.22 on news that billionaire Kirk Kerkorian completed selling all his Ford shares, a plan announced in October when the billionaire investor said he would focus his investments on energy, gambling and hotels.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
Crude oil (NYMEX) (per barrel) | $40.02 | $37.71 | $2.31 | -26.49% | -58.30% |
Heating oil (per gallon) | $1.2853 | $1.2450 | $0.0403 | -23.21% | -51.49% |
Natural gas (per million BTU) | $6.1360 | $5.8260 | $0.3100 | -5.75% | -18.00% |
Unleaded gasoline (per gallon) | $0.8745 | $0.8440 | $0.0305 | -23.70% | -64.89% |
Gold is the market winner for the decade
Today's quiz: What's been the best investment this decade: gold, oil or a stake in the Dow?Answer: Gold.
The precious metal is up 202% since the end of 1999. Crude oil is up 49%, and the Dow is down roughly 25%.
We should note that if oil had held at its high of $147.27 this summer, it would be up 475%. But crude's close of $40.02 is a drop of nearly 73% since July 11.
| Year | Gold | Year chg. | Crude oil | Year chg. | Dow Jones Industrials | Year chg. |
|---|---|---|---|---|---|---|
2000 | $273.60 | -5.52% | $26.80 | 4.69% | 10,786.85 | -6.18% |
2001 | $279.00 | 1.97% | $19.84 | -25.97% | 10,021.50 | -7.10% |
2002 | $348.20 | 24.80% | $31.20 | 57.26% | 8,341.63 | -16.76% |
2003 | $416.10 | 19.50% | $32.52 | 4.23% | 10,453.92 | 25.32% |
2004 | $438.40 | 5.36% | $43.45 | 33.61% | 10,783.01 | 3.15% |
2005 | $518.90 | 18.36% | $61.04 | 40.48% | 10,717.50 | -0.61% |
2006 | $638.00 | 22.95% | $61.05 | 0.02% | 12,463.15 | 16.29% |
2007 | $838.00 | 31.35% | $95.98 | 57.22% | 13,264.82 | 6.43% |
2008 | $875.30 | 4.45% | $40.02 | -58.30% | 8,483.93 | -36.04% |
Total chg. | 202.24% | 56.33% | -26.21% |
Data as of 4:20 p.m. ET.
Kuwait sees too much risk in Dow deal
Late today, Dow Chemical's corporate credit rating was cut to BBB, the second-lowest investment grade, by Standard & Poor's after Kuwait canceled the purchase of a $9 billion stake in its plastics unit. Kuwait's decision to end its deal to invest in Dow Chemical came because the nation's money managers concluded the proposed partnership was "very risky" in light of the global financial crisis and low oil prices.Stock Charts (Year)
Dow Chemical
Rohm & Haas
In addition, the Kuwaiti government has been under pressure from opposition lawmakers to scrap its deal with Dow, which they said was overpriced.
Dow said it was "extremely disappointed" with the Persian Gulf country's decision and was evaluating its options under the joint-venture agreement.
At the very least, Bloomberg said late today, Dow's lenders, which include Bank of America (BAC, news, msgs), Citigroup (C, news, msgs) and Morgan Stanley (MS, news, msgs), may press Dow to renegotiate the terms of its Rohm & Haas deal.
The banks lead an 18-member group that agreed in September to a one-year bridge loan for Dow’s acquisition of Rohm & Haas. The loan may be worth 80 cents on the dollar if Dow can’t count on $6 billion from a partnership in Kuwait that was canceled yesterday, said Icap Plc analyst Sachin Shah. That would leave the group with a potential $2.6 billion loss.
Dow earlier this month said it would close 20 plants, sell off several businesses and eliminate 5,000 jobs, or 11% of its work force. The company will also shutter 180 plants for short periods during the coming year.
More from MSN Money
Wal-Mart begins selling Apple's iPhone
Wal-Mart Stores (WMT, news, msgs) this weekend started selling Apple's iPhone at 2,500 outlets, becoming the second independent retailer, after Best Buy (BBY, news, msgs), to offer the Web-enabled device. Most are sold through Apple retail outlets and AT&T (T, news, msgs), the exclusive carrier in the U.S.The Wal-Mart deal should accelerate the transition of the iPhone from a high-end luxury item to a mass-market mobile-computing gadget.
Earlier this year, Apple altered its iPhone business model, betting there was more to gain from increased iPhone sales at discounted prices than to lose by forfeiting a share of the recurring user fees customers pay to phone companies.
Stock Chart (Year)
Apple
That changed last summer, when Apple started selling iPhones to carriers, which subsidize the cost to consumers in order to offer the 8-gigabyte version for $199 and a 16-gigabyte model for $299, in exchange for a two-year service agreement. The carriers were free to increase monthly usage fees, and keep those revenues to themselves.
Skeptics have suggested that Apple is paying too high a price for this transition. Worries about the effect of lower prices on profits were underscored in July when Peter Oppenheimer, Apple's chief financial officer, said the company expects its gross margins to fall to 30% in fiscal 2009, down from 35%.
Thinning profit margins would make it tougher for Apple to rekindle the unbridled enthusiasm investors once had for its shares, which shot from under $10 when the iPod was launched in late 2001 to briefly above $200 about a year ago.
Wal-Mart shares were down 0.4% to $55.11 this afternoon. Apple was up 0.9% to $86.61. The stock is down nearly 57% this year.
Johnson & Johnson completes tender offer
Johnson & Johnson (JNJ, news, msgs) on Saturday said it completed its tender offer for shares of Omrix Biopharmaceuticals (OMRI, news, msgs), a maker of liquid sealants used to control bleeding during surgery.Johnson & Johnson is one of the nation's most diversified makers of health-care products. It makes Tylenol pain-relief medicine, Band-Aids, baby products, prescription drugs and medical devices.
Medical devices and diagnostics accounted for 35% of Johnson & Johnson's sales last year. Pharmaceuticals accounted for 41%. Eight of the company's drugs generated at least $1 billion in sales in 2007.
Johnson & Johnson said it expects to close the Omrix deal as soon as possible. Omrix will then operate as a stand-alone entity connected to J&J's Ethicon surgical products unit.
Johnson & Johnson shares were down 0.7% at $58.15.
GMAC struggles to swap debt
General Motors (GM, news, msgs) fell 1.6% to $3.60 today on news that GMAC, which finances many sales of GM vehicles and finances dealer inventories, has been delayed in completing a $38 billion debt restructuring. It has not yet come to agreement with its creditors.GMAC, which is partly owned by Cerberus Capital Management, which owns Chrysler, said Sunday that the restructuring would be completed "in the near term."
The Federal Reserve last week approved GMAC's application to become a bank holding company. While the restructuring does not have to be completed before GMAC makes that transition, the restructuring is necessary for the company to maintain the capital reserve levels required of bank holding companies.
And GMAC does need to become a bank holding company if it expects to obtain access to the $6.8 billion in rescue funding that it requires to stay afloat.
GM and Chrysler are getting a combined $13.4 billion in rescue funds from the government, but the transformation of GMAC is one of the conditions under which that bailout is being provided. In other words, should GMAC fail, the parent companies could lose the rescue funds and go down as well.
Andrew Rosenbaum contributed to this report.
| Mon. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
Treasurys | |||||
13-week Treasury bill | 0.010% | 0.005% | 0.005 | -50.00% | -99.68% |
5-year Treasury note yield | 1.454% | 1.497% | -0.043 | -25.21% | -57.92% |
10-year Treasury note yield | 2.096% | 2.137% | -0.041 | -29.12% | -48.05% |
30-year Treasury bond yield | 2.625% | 2.613% | 0.012 | -24.72% | -41.13% |
Currencies | |||||
U.S. Dollar Index | 81.525 | 81.690 | -0.165 | -5.97% | 6.30% |
British pound in dollars | $1.4579 | $1.4665 | -0.0086 | -5.23% | -26.71% |
Dollar in British pounds | £0.6859 | £0.6819 | 0.0040 | 5.52% | 36.44% |
Euro in dollars | $1.4243 | $1.4083 | 0.0160 | 12.21% | -2.55% |
Dollar in euros | € 0.7021 | € 0.7101 | -0.0080 | -10.88% | 2.62% |
Dollar in yen | 90.09 | 90.65 | -0.56 | -5.75% | -19.45% |
Canadian dollar in U.S. dollars | $0.822 | $0.819 | $0.0027 | 1.76% | -17.20% |
U.S. dollar in Canadian dollars | $1.220 | $1.220 | $0.0001 | -1.46% | 21.10% |
Commodities | |||||
Gold | $875.30 | $871.20 | $4.10 | 6.87% | 4.45% |
Copper | $1.3115 | $1.3035 | $0.01 | -20.49% | -56.87% |
Silver | $10.8100 | $10.5300 | $0.28 | 5.67% | -27.55% |
Corn | $3.9250 | $4.1225 | -$0.20 | 12.30% | -13.83% |
Crude oil (NYMEX) (per barrel) | $40.02 | $37.71 | $2.31 | -26.49% | -58.30% |
Rate this Article
High