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  • Markets get clobbered. U.S. stocks experienced heavy losses yesterday, with the major indices all closing down at least 2% (Dow -2%, S&P -2.4%, Nasdaq -3%) in the worst session in three months. The sell-off followed heightened concerns about a possible European debt contagion (more details below). Along with the stock declines, VIX, the volatility index, closed up 18.2% after climbing higher intraday. "This is much more of a macro event in front of us," said one strategist. "It's not like earnings season... We’re now talking about sovereign risk and systemic risk."
  • ABB buys software firm. ABB (ABB) agreed to buy software maker Ventyx for more than $1B in cash from private equity firm Vista Equity Partners. This is ABB's first major acquisition in more than a decade, and analysts suggested that while Ventyx is a strong fit for ABB, the deal is far from cheap. ABB, which didn't disclose the exact price of the deal, said the purchase will triple the company’s potential client base for energy management software. Premarket: ABB +0.5% (7:00 ET).
  • Eurozone raises growth forecasts. The European Commission raised its growth forecast for the eurozone this morning, and now expects eurozone GDP to grow 0.9% this year vs. an earlier forecast of 0.7% growth. The commission maintained its 2011 forecast of 1.5% growth. However, officials warned the outlook is still surrounded by "high uncertainty" as illustrated by "recent tensions in sovereign-bond markets."
  • Spain fights debt contagion fears. Even as eurozone officials raise their growth forecasts, European countries are still fighting to avoid a Greek debt contagion. Spain, in particular, has been the subject of various rumors, including that it plans to ask for €280B ($363.5B) in aid. Prime Minister Zapatero called the speculation "complete madness," and ratings agencies Fitch and Moody's said yesterday that they're maintaining Spain's maximum triple-A rating with stable outlooks, but many investors are still skeptical. The spread on Spain's credit default swaps jumped to 210 basis points from 163, and with a giant debt, 20% jobless rate and troubled real estate sector, "even the bears aren't bearish enough on Spain," said one analyst.
  • Strikes paralyze Greece. Greece has come to a standstill in the face of a nationwide general strike today. Millions of Greek workers are participating in the strike, shutting down or severely limiting services in public offices, hospitals, shops, schools, banks, courts, airports, and rail and ferry operations. Union officials have called on Greek citizens to vigorously resist the "harsh and antisocial measures" of the proposed austerity package, and are scheduling rallies in Athens that they hope will draw more than 100,000 protesters. Even so, the demonstrations and the strikes are unlikely to deter the government from its austerity push, and most Greeks realize the government has little choice but to push ahead with the reforms.
  • Goldman boosts legal team amid SEC talks. Goldman Sachs (GS) is reportedly in preliminary talks with the SEC over the agency's fraud charges, though it's too early to talk about a settlement. Sources said that any settlement would require structural changes at Goldman. The firm is preparing to bolster its legal team as the talks continue, and amid a slew of shareholder lawsuits and a separate case in which Goldman was censured and fined $450,000 for violations connected to short sales.
  • Nissan recalls. Nissan (OTCPK:NSANY) is recalling nearly 135,000 Infiniti G35 sedans because of a glitch that could prevent air bags from activating in a crash. A Nissan spokesman said there have been no injuries reported. According to the National Highway Traffic Safety Administration, Nissan has not yet provided the agency with a plan to fix the vehicles.
  • Calpers' ratings suit moves forward. The California Public Employees' Retirement System won court approval to move forward with a lawsuit against ratings agencies Moody's, Fitch and Standard & Poor's over negligent misrepresentation. Calpers, the largest state pension fund in the U.S., claims that it lost around $1B on its investments because of inaccurate ratings. The ratings agencies called the court decision a victory as well, since the judge granted their request to dismiss Calpers' claim of negligent interference with prospective economic advantage.
  • Prudential hits snag in AIG deal. U.K. insurer Prudential (PUK) delayed a planned $20B rights issue today which was meant to help fund the purchase of AIG's (AIG) Asian unit. Prudential said the pricing and launch will be postponed while the company tries to win approval from U.K. regulators over its financial health. In particular, regulators are examining whether the combined company will have enough capital. Prudential insisted the delay won't affect the completion of the deal.
  • Bear Stearns execs call firm's collapse unavoidable. In a hearing later this morning, former executives from Bear Stearns will testify that they did everything they could to keep the firm going but its collapse was unavoidable because of "overwhelming market forces that Bear Stearns... could not resist." According to James Cayne, who was Bear Stearns' CEO until January 2008, "the market's loss of confidence, even though it was unjustified and irrational, became a self-fulfilling prophecy." Lawmakers are looking into Bear Stearns as a case study of the 'shadow banking system,' the network of financial firms that seem to operate outside of the regulatory structure.
  • BP tries to contain leak, political fallout. BP (BP) CEO Tony Hayward met with lawmakers yesterday as he tries to contain the political fallout from the ongoing Gulf of Mexico oil spill. It was his third visit to the capital since the Deepwater Horizon rig exploded on April 20. BP is in the process of trying to cover the oil leaks with giant containment domes, but warned that the procedure has never been tried before at a depth of 5,000 feet. If it backfires, the 125-ton dome may end up crushing other pipes, potentially worsening the leak. BP is already paying around $7M a day on containment and clean-up efforts, and has wired an initial $25M each to Louisiana, Mississippi, Alabama and Florida to help pay for their response plans. Premarket: BP +0.7% (7:00 ET).
  • Google enters e-book market. Google (GOOG) plans to start selling digital books sometime in the next two months through "Google Editions." There are few details available so far, but some analysts are already concerned that Google will have a difficult time gaining traction in a market crowded by heavyweight Amazon (AMZN), as well as Barnes & Noble (BKS), Apple (AAPL) and others. Google hopes to differentiate itself by allowing users to read the books on a broad array of devices and to access the books through multiple websites. In yesterday's trading, Google closed -4.6%.

Earnings: Wednesday Before Open

  • Petrohawk Energy (HK): Q1 EPS of $0.13 in-line. Revenue of $440M (+67.1%) vs. $395M. (PR)
  • Pulte Homes (PHM): Q1 EPS of -$0.03 beats by $0.19. Revenue of $1B (+74.7%) vs. $1.2B. (PR)
  • Quanta Services (PWR): Q1 EPS of $0.11 beats by $0.03. Revenue of $748M (+1.3%) vs. $747M. (PR)
  • R.R. Donnelley & Sons Company (RRD): Q1 EPS of $0.33 beats by $0.03. Revenue of $2.4B (-1.6%) in-line. (PR)
  • Talisman Energy (TLM): Q1 EPS of $0.12 beats by $0.02. Revenue of $1.8B (+22%) vs. $1.9B. (PR)
  • Time Warner (TWX): Q1 EPS of $0.61 beats by $0.13. Revenue of $6.3B (+5.4%) in-line. (PR)

Earnings: Tuesday After Close

  • American Capital (ACAS): Q1 EPS of $0.17 beats by $0.09. NAV $8.98 vs. $8.29 year-over-year. Shares +4.8% AH. (PR)
  • Atmel (ATML): Q1 EPS of $0.05 beats by $0.04. Revenue of $349M (+1.5%) vs. $341M. (PR)
  • BRE Properties (BRE): Q1 EPS of $0.52 beats by $0.01. Revenue of $85M (-0.2%) vs. $82M. (PR)
  • Cephalon (CEPH): Q1 EPS of $1.92 beats by $0.36. Revenue of $596M (+14.6%) vs. $586M. Shares +0.1% AH. (PR)
  • Chesapeake Energy (CHK): Q1 EPS of $0.82 beats by $0.12. Revenue of $2.8B (+40.4%) vs. $2.4B. Shares +2..4% AH. (PR)
  • Diamondrock Hospitality Company (DRH): Q1 EPS of $0.09 beats by $0.01. Revenue of $113M (-4.8%) in-line. (PR)
  • Evergreen Solar (ESLR): Q1 EPS of -$0.12 misses by $0.03. Revenue of $79M (+40.7%) vs. $75M. Shares -1.8% AH. (PR)
  • Exco Resources (XCO): Q1 EPS of $0.25 beats by $0.06. Revenue of $131M (-30.8%) vs. $168M. Shares -1.5% AH. (PR)
  • HealthSouth (HLS): Q1 EPS of $0.48 beats by $0.05. Revenue of $491M (+3.8%) vs. $498M. (PR)
  • Integrated Device Technology (IDTI): Q4 EPS of $0.09 beats by $0.01. Revenue of $138M (+28.5%) vs. $136M. (PR)
  • Intrepid Potash (IPI): Q1 EPS of $0.16 beats by $0.01. Revenue of $107M (+20.8%) vs. $76M. Shares +2.7% AH. (PR)
  • Kinross Gold (KGC): Q1 EPS of $0.14 in-line. Revenue of $658M (+23.4%) vs. $645M. Shares -0.2% AH. (PR)
  • Myriad Genetics (MYGN): Q3 EPS of $0.33 misses by $0.06. Revenue of $91M (+5%) vs. $98M. Shares -13% premarket (5:20 AM). (PR)
  • Pioneer Natural Resources Company (PXD): Q1 EPS of $0.48 beats by $0.05. Shares -9.6% AH. (PR)
  • SBA Communications (SBAC): Q1 EPS of -$0.32 misses by $0.08. Revenue of $148M (+9.5%) vs. $147M. (PR)
  • TECO Energy (TE): Q1 EPS of $0.26 beats by $0.01. Revenue of $912M (+10.7%) vs. $831M. (PR)
  • Unum Provident (UNM): Q1 EPS of $0.67 beats by $0.01. Revenue of $2.6B (+4.6%) vs. $2.5B. (PR)
  • XL Capital (XL): Q1 EPS of $0.37 beats by $0.18. Shares +4% AH. (PR)

Today's Markets

  • In Asia, Japan closed. Hong Kong -2.1% to 20328. China +0.8% to 2857. India -0.3% to 17088.
  • In Europe, at midday, London -0.2%. Paris +0.3%. Frankfurt -0.2%.
  • Futures: Dow -0.15%. S&P -0.1%. Nasdaq -0.4%. Crude -0.8% to $82.10. Gold +0.1% to $1170.30.

Wednesday's Economic Calendar

Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.


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