By Rita Nazareth - Feb 10, 2012 9:41 PM GMT+0700
U.S. stocks fell, snapping a five- week-rally for the Standard & Poor’s 500 Index, amid concern plans to help Greece avoid default were unraveling.
Citigroup Inc. (C), Morgan Stanley and Bank of America Corp. (BAC) dropped more than 1.2 percent to pace losses in financial companies. Commodity producers retreated as Freeport-McMoRan Copper & Gold Inc. (FCX), Alcoa Inc. (AA) and Halliburton Co. (HAL) slid at least 1.2 percent. LinkedIn Corp., the biggest professional-networking website, jumped 10 percent after it reported sales that more than doubled and forecast higher 2012 revenue.
The S&P 500 declined 0.8 percent to 1,340.92 as of 9:39 a.m. New York time. The benchmark gauge for American equities has fallen 0.3 percent since Feb. 3, snapping the longest weekly rally since January 2011. The Dow Jones Industrial Average decreased 101.57 points, or 0.8 percent, to 12,788.89 today.
“We’ve had a flip-flop that triggered global selling,” Frederic Dickson, who helps oversee $28 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon, said in a telephone interview. “Investors are responding to the sudden change in direction or the lack of resolution of the Greek/European problem that they felt was resolved.”
Equities followed a global slump as emergency talks of euro-area finance chiefs broke up late last night with Luxembourg Prime Minister Jean-Claude Juncker saying Greece must turn its budget cuts into law, flesh out 325 million euros in spending reductions and have its major party leaders sign up to the program so they don’t retreat after upcoming elections.
No Support
George Karatzaferis, the leader of one of the three parties supporting interim Prime Minister Lucas Papademos, said he wouldn’t support austerity measures worked out for a rescue. Karatzaferis, who heads the Laos party, spoke in Athens hours after German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that Greece was missing debt-cutting targets.
Stocks rose yesterday, putting the S&P 500 less than 1 percent away from its peak nine months ago of 1,363.61, which was the highest level since June 2008. The benchmark gauge climbed 7.5 percent this year through yesterday, as companies reported earnings that beat analysts’ estimates while better- than-expected data on manufacturing and employment bolstered optimism about the world’s largest economy.
American banks slumped as a gauge of European lenders sank 2.2 percent. Citigroup retreated 1.5 percent to $33.16. Morgan Stanley (MS) declined 2.1 percent to $19.91. Bank of America lost 1.2 percent to $8.08.
Commodity Shares
Concern that Europe’s debt crisis may curb global economic growth also drove energy and raw material producers lower. Copper shipments to China fell for the first time in eight months in January, while inventories monitored by the Shanghai Futures Exchange advanced to a record after rising for a ninth straight week.
Freeport-McMoRan, the world’s largest publicly traded copper producer, sank 3.4 percent to $44.83. Alcoa erased 2.9 percent to $10.33. Halliburton fell 1.2 percent to $36.32.
Apollo Global Management LLC dropped 7.2 percent to $14.23. The private equity firm that went public last year said fourth- quarter profit fell 66 percent as market swings hurt its private equity holdings.
LinkedIn rallied 10 percent to $84. The company, which first sold shares to the public in May, said membership jumped to more than 150 million from 131.2 million in the third quarter. LinkedIn is signing up more professionals for its subscription services and luring advertisers who want to reach the growing user base.
Bearish Wagers
As short sellers push bearish wagers against RadioShack Corp. (RSH) to a four-year high, options traders are increasing bets that the cheapest U.S. specialty retailer will become a takeover target. Almost 24 percent of RadioShack’s shares are currently shorted, the most since January 2008 and four times the average of the Standard & Poor’s Midcap 400 Index, according to New York-based research firm Data Explorers.
After posting the second-steepest two-year decline in the S&P Midcap 400, Fort Worth, Texas-based RadioShack trades at 5.8 times profit, the lowest of any specialty retailer in America worth more than $500 million, data compiled by Bloomberg show.
While RadioShack’s earnings are shrinking because of stagnant consumer spending, rising dependence on mobile-phone sales and lower-than-projected revenue from Sprint Nextel Corp., it’s also one of only two companies in the industry valued at a discount to net assets.
Takeover Offer
The cost of calls to buy shares priced 10 percent above RadioShack’s stock reached a five-year high this week versus puts to sell on comparable one-month contracts, signaling some traders may now be speculating the company is cheap enough to attract a takeover offer, said Frederic Ruffy, a senior options strategist at WhatsTrading.com.
“They are in a tough situation,” Todd Lowenstein, who helps oversee about $17 billion for Highmark Capital Management Inc. in Los Angeles, said in a phone interview. “You have people who, in the current scheme, are willing to bet negatively, but ultimately there’s a price for somebody to come in and say it’s attractive. Everything has a price. There will be vultures that will circle and will be willing to step in at a price. This thing is cheap.”
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
Posts
No comments:
Post a Comment