Closing Update for Wednesday, Sept. 30: September Gains, Quarter Surges

4:20 PM, Sep 30, 2009 --

• NYSE down 15.9 (0.23%) to 6,910.88.
• DJIA down 29.9 (0.3%) to 9,712.
• S&P 500 down 3.54 (0.3%) to 1,057.
• Nasdaq down 1.62 (0.1%) to 2,122.

GLOBAL SENTIMENT

• Hang Seng down 0.28%
• Nikkei up 0.33%
• FTSE down 0.87%

UPSIDE MOVERS

(+) DSCO establishes path with FDA for potential Surfaxin OK.

(+) TSTR inks distribution pact with AT&T.

(+) NKE continues evening gain that followed earnings beat.

(+) XOMA reports new data on antibody drug candidate.

(+) HBAN gets analyst upgrade.

(+) ACLS inks mutliple orders.

DOWNSIDE MOVERS

(-) CIT slides as report says lender about to be handed over to bondholders.

(-) TGT gets analyst downgrade.

MARKET DIRECTION

Stocks end in the red, but finish well off session lows. The Dow Jones Industrial Average is up 2.3% for the month of September and up around 15% for the third quarter. The S&P 500 is up 3.6% for the month, up 15% for the quarter. The Nasdaq ends September up 5.6% for the month and gains 15.7% for the quarter.

The major averages were jostled in two-sided trading in the wake of mixed economic data, including a much weaker-than-expected regional manufacturing gauge.

The DJIA initially fell more than 100 points after the Chicago Purchasing Managers Index came in at 46.1 not the 52 that Wall Street economists expected. But by early afternoon, buyers emerged and lifted stocks, sending the Dow up around 15 points before it resumed shallower negative trading once again.

Earlier, the government said GDP, the broadest measure of the economy, contracted at a smaller rate of 0.7% in the spring. The new reading was better than the annualized 1.1% drop that economists were predicting.

The ADP National Employment Report found that private sector employment fell by 254,000 in September following a revised loss of 277,000 jobs in August. It was the fewest jobs lost since July 2008.

The DJIA is on track to record about a 15% quarterly gain, its best three-month performance since a 17% surge in the final quarter of 1998, when the tech bubble was still intact.

The S&P 500 is down 6.6 points, or 0.7%, at 1,053, after ranging between 1,046 and 1,063. The Nasdaq Composite is down 8 points, or 0.4%, at 2,116, after ranging between 2,092 and 2,138.

Crude oil closes up 5.8% at $70.61 a barrel.

In company news, one of the most active upside movers is Discovery Laboratories (DSCO). It said it held a teleconference with the FDA and established an approach to potentially resolve the remaining primary issue that Discovery Labs must address to gain U.S. marketing approval of Surfaxin (lucinactant) to prevent Respiratory Distress Syndrome (RDS) in premature infants.

TerreStar Networks, a majority-owned subsidiary of TerreStar Corporation (TSTR), announced an agreement between TerreStar and AT&T (T) to bring to market the first fully integrated satellite cellular smartphone.

Volume leader CIT Group (CIT) is leading the downside. It is reportedly trying to swap debt for equity with its bondholders, a move that could wipe out shareholders. Citigroup (C) and Barclays Capital, the investment banking division of Barclays Bank (BCS) are offering to provide financing to the commercial lender, Bloomberg reported late Tuesday, citing people familiar with the situation. CIT's sweeping exchange offer would eliminate 30% to 40% of its more than $30 billion in debt outstanding, said people familiar with the matter, according to The Wall Street Journal.

Iconix Brand (ICON) continues to hold losses after the company lowered its FY and Q3 outlooks below Street views.

In deal news, Cano Petroleum (CFW) rallies on news it will merge with Resaca Exploitation in a stock swap deal.

Ameriprise (AMP) gains after the company says it will acquire the long-term asset management business of Columbia Management from Bank of America (BAC) for approximately $1 billion in cash. The transaction is expected to be accretive to AMP earnings and return on equity within one year, excluding one-time integration costs. The deal is seen closing in Spring 2010.

Among leading analyst changes, Huntington Bancshares (HBAN) jumps nearly 8% on an upgrade to buy from hold at Deutsche Bank. The broker also raised its price goal to $5.50 from $4. It says HBAN is "well positioned" for the longer term.

Target (TGT) was soft on a downgrade to "neutral" from "buy" at UBS.

Comments

[marketman54:]

The reality of MAIN STREET will soon hit the fantasy world of WALL STREET!

FINANCIALS - still have toxic assets, dirivitive swaps, more foreclosures, credit card and auto loan defaults, commercial real estate defaults, ARM home mortgage loans coming due to refinance...THERE IS STILL NO CLARITY IN THE FINANCIAL MARKETS. CAN CITIBANK AND BANK OF AMERICA FAIL, THEY MAY FAIL IF UNCLE SAM DOESN'T COME UP WITH THE REALLY BIG BUCKS!

RETAIL - nobody is buying anything unless the government subsidizes the purchase. Houses, cars... Big ticket items such as appliances are not moving at all, either are clothes, electronics, or any other sector of the retail market.

HOUSING - Nothing is selling except foreclosures or homes below $200,000 and it appears that a slew of foreclosures will still be flooding the market. Home prices will continue to fall as their is no stabilization in the housing market. No one can sell their home to move up or down size!

UNEMPLOYMENT - Continues to rise and become less bad! Whoopee, only 26 million out of work not including part time people and small business self-employed people. Many people have run out of their benefits and we will have to print money to continue to pay benefits. It may be years before any of the unemployed get a job!!!

DOLLAR - Weak and will continue to get weaker as we stagger along and we will probably have to print more money to bail us out of this mess. This will give us a better chance at some big Jimmy Carter inflation.

GDP - Still contracting, but at a slower pace, of course. With more people losing their jobs, more people spending less and buying less, more people traveling less, more people using less, there is NO POSSIBLE WAY THAT IF 70% OF OUR GDP WAS PREVIOUSLY BASED ON CONSUMER SPENDING THAT WE CAN GROW AT 4% to 7% LIKE THE ANALYST TELL US - CAN'T HAPPEN WITH 26 MILLION LESS CONSUMERS!!!!!!!!!!!

GOVERNMENT BALLOONS - They blew up the financials, the insurance companies, GE, the auto industry, the housing industry. Now that they are out of money and the training wheels will have to come off all of these industries WATCH OUT FOR THE BALLOONS TO POP!!! And with these pops will come the second huge dip in the market, I'm guessing 2,500 pts.

There are absolutely no fundamentals to support this market and we will be lucky not to suffer a huge drop and not have hyper inflation on top of all this beautiful mess.

When all the kings horses and all the kings men can't put HUMPTY back together again, I CAN'T WAIT FOR THEM TO TELL ME ONCE MORE HOW GREAT THINGS ARE FOR US!

Sep 30 06:52 PM

[David White:]

If CIT goes the way of other problem companies, it may have trouble getting bond holders to agree to the deal (even though it's the stock holders that are getting shafted the most). The Fed says we have only seen the tip of the iceberg when it comes to bad commercial mortgages. For this reason. some bond holders may want to close the company up now, so they can get some of their money back in cash from the break up. Other bond holders may also be holders of CDS's on CIT. They may wish to force CIT into bankruptcy so they can get money from their CDS's. Then too, the stock holders may object to losing virtually all of their equity.

However, sensible this deal is fiscally, there will be a lot of resistance to it. It probably will not go through.

Sep 30 10:55 PM

[rick12345:]

Wall street was severely smacked on the head today by a better than expected GDP figure and job losses which are quickly waning their way down. I think they were expecting a more dire result, hoping to cash in on their September (short) position; I love it when idiots get burned. Manufacturing results were merely a reflection of an August lull, nothing more, nothing less.
The recession in America is acting stubbornly to say the least. Nonetheless, like all previous recessions it will break, and contrary to popular belief, the US will experience strong growth. The government know this but are more worried about the inflationary effect it may have on the US economy.
LOL 2500. I hope your seriously not thinking about taking a position on that figure.

Sep 30 11:06 PM

[Bill L.:]

But Cramer said to buy CIT... stock must be fine... right?

Sep 30 11:48 PM

[Bill L.:]

lakeweb.com/money/Tota...

Yea everything is fine. Except for the ongoing credit inflation cycle. The last economic expansion was credit inflating with a vengeance, not economic growth in real terms.


On Sep 30 11:06 PM rick12345 wrote:

> Wall street was severely smacked on the head today by a better than
> expected GDP figure and job losses which are quickly waning their
> way down. I think they were expecting a more dire result, hoping
> to cash in on their September (short) position; I love it when idiots
> get burned. Manufacturing results were merely a reflection of an
> August lull, nothing more, nothing less.
> The recession in America is acting stubbornly to say the least. Nonetheless,
> like all previous recessions it will break, and contrary to popular
> belief, the US will experience strong growth. The government know
> this but are more worried about the inflationary effect it may have
> on the US economy.
> LOL 2500. I hope your seriously not thinking about taking a position
> on that figure.

Sep 30 11:53 PM