Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:16 AM ET
S&P 500: -4.50; 1,566.20
NASDAQ 100: -4.75; 2,166.00
Dow: -12; 14,144
NIKKEI 225: 17,065.04 [10/05]
HANG SENG: -0.22%; 27,770.29 (-61.23)
SHANGHAI SE COMPOSITE: +2.53%; 5,692.76 (+140.45)
BSE SENSEX 30: -1.59%; 17,491.39 (-281.97)
FTSE 100: -0.42%; 6,568.40 (-27.40)
CAC 40: -0.20%; 5,831.71 (-11.53)
XETRA-DAX: -0.17%; 7,988.52 (-13.66)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.71%; $80.64 (-$0.58)
Gold: -0.84%; $740.90 (-$6.30)
Natural Gas: -2.18%; $6.92 (-$0.15)
Silver: -0.67%; $13.40 (-$0.09)
U.S. Breaking Newssee today's Wall Street Breakfast for earlier news
Textron Snaps Up Unmanned-Aircraft Maker UIC For $1.1B
Textron Inc. announced Monday morning it will acquire aeronautics and defense company United Industrial Corp. [UIC] for approximately $1.1 billion. The offer is for $81 per UIC share, a roughly 7% premium to Friday's closing price of $75.62. The $1.1 billion deal for the unmanned-aircraft manufacturer includes a tender offer for 10 million common shares, due to begin around October 16, as well as additional UIC shares Textron plans to offer UIC bondholders. Textron, which makes Bell Helicopters and Cessna aircraft, believes UIC is a "superb strategic fit...in perfect alignment with our strategy" to widen defense operations. The deal marks Textron's first foray into the unmanned-aircraft business. Shares of Textron are up nearly 45% over the recent 52-week period; UIC shares are up more than 41% over the same time frame.
Sources: Press Release, Wall Street Journal, MarketWatch, AP, Reuters
Commentary: On United Industrial Corp.'s Tender Offer: I'd Pass • United Industrial Going the Slow-Motion Self-LBO Route With Latest Buyback • Textron: Flying Higher and Higher
Stocks/ETFs to watch: UIC, TXT
Bristol-Myers, GE Face FDA Warning
A spokeswoman for the U.S. Food and Drug Administration says the agency "has been investigating reports of deaths and serious cardiopulmonary reactions" in patients using drugs made by Bristol-Myers Squibb and General Electric for enhancing heart ultrasound imaging. Definity, made by Bristol-Myers, is said to be the main drug at issue, but Optison, made by GE, is also expected to receive a heightened risk warning from the FDA. The WSJ reports the warnings could come this week. Sources say the drugs are expected to have a black-box warning, the strictest level. Bristol-Myers confirmed it is talking with the FDA and will make an announcement when talks have finalized. Definity recorded $65M of sales in 2006, compared to total revenue of $17.9B for Bristol-Myers. GE's Optison has been off the market since late 2005 due to a manufacturing-related recall, but was expected to relaunch in Sept. or Oct., according to a notice posted on the company's website last month. Shares of Bristol-Myers Squibb gained 1.2% to $30.09 on Friday. GE rose 0.2% to $41.77.
Sources: Wall Street Journal
Commentary: GE Reiterates Earnings Guidance • Bristol-Myers Settles Probe for $515 Million • Bristol-Myers Shares Look Good Despite Analyst Skepticism -- Bloomberg
Stocks/ETFs to watch: BMY, GE. ETFs: PPH
Earnings call transcript: Bristol-Myers Squibb Q2 2007, General Electric Q2 2007
Berkshire Hathaway Further Trims PetroChina Stake
Berkshire Hathaway has trimmed its holding in PetroChina to 6.97% from 7.29%, selling 66.6M of the company's "H" shares at an average price of HK$11.99 each, or a total of HK$798.7M (US$102M), on September 21 (ADR chart included). The sale was disclosed in a filing with the Hong Kong Stock Exchange. It was the fifth time billionaire investor Warren Buffett's holding company has sold shares in Asia's top oil and gas producer since July 12. Since then, PetroChina shares, which closed down 3.4% at HK$14.10 on Monday after hitting a record high of HK$15.28, had risen some 15% as investors snap up the shares on strong oil prices. Buffett is still the company's second-largest shareholder behind China National Petroleum Corp., the company's state-owned parent, which holds 88.21% of the company. Some Berkshire investors have called on Buffett to sell the entire stake because of China National's operations in Sudan, which has been accused of Genocide (full story). The company's ADR shares are up 80% over the recent 52-week period; shares are down 4.4% in pre-market action as of 7:40 a.m. ET on the news.
Sources: MarketWatch, Reuters
Commentary: Going Long China: Seeing Is Believing • PetroChina Gains From Easing of Petroleum Price Controls • Berkshire Hathaway: Barron’s Most Respected Company
Stocks/ETFs to watch: BRK, PTR
GlaxoSmithKline Appoints New CEO
GlaxoSmithKline has appointed Andrew Witty as CEO Designate, effective June 2008, when current CEO Dr. Jean-Pierre Garnier is scheduled to retire. Mr. Witty, 43, is a 22-year veteran of GSK and is currently president of GSK's European pharmaceutical division. "Andrew’s appointment follows a rigorous selection process by the Board of Directors. The fact that we have been able to select a successor to JP from three strong internal candidates is a testament to the quality of management at GSK," said Chairman Sir Christopher Gent. Mr. Witty was chosen over Chris Viehbacher, head of GSK's U.S. unit, and COO David Stout. Shares of GSK are down over 1% for the year, lagging the FTSE 100 benchmark's 6% gain. An Evolution Securities analyst, who rates GSK shares a "buy", commented on Witty's youth, saying, "Time is on his side. He's going to be in the job for a while, and he'll have time to do a full review of the business." ADRs of GlaxoSmithKline lost 0.1% to $54.07 on Friday. GSK shares are down 0.4% to 1,325 pence in afternoon trading in London.
Sources: Press release, Bloomberg, MarketWatch
Commentary: Seven Weight Loss Stocks To Beef Up Your Portfolio • New Studies: Actos Lowers Heart Risk; Avandia Increases It • Glaxo's Q2 Earnings Miss, But Stock Higher In London on Expanded Buyback
Stocks/ETFs to watch: GSK. Competitors: MRK, SNY, NVS, PFE. ETFs: IXJ, EWU
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.
Today's Market (via Sam Collins, ChangeWave.com)
Recap of Last Week's Action
Friday was all about jobs, as the much-heralded Labor Department's September jobs report showed that non-farm jobs grew by 110,000 compared with an expectation of 98,000. That was good news for the economy and thus the stock market.
However, an adjustment to the August numbers (which showed a gain of 89,000 jobs instead of a previously reported loss of 400) left the Street wondering how so many could have been missed. Nevertheless, both were treated as good news and the S&P 500 and the NYSE Composite Index broke into new high ground.
Still, talk of a better economy and less pressure on the Fed to lower rates again late this month led to a sharp sell-off in bonds.
Reports that Merrill Lynch (MER) and Washington Mutual (NYSE:WM) would take big hits as a result of the subprime mess were almost ignored in the euphoria regarding the job data. Merrill later reported that it will write off $5 billion in losses on mortgages and other investments.
At Friday's close, the Dow Jones Industrial Average gained 92 points at 14,066. The S&P 500 gained 15 points to close at a new all-time high of 1,558, and the Nasdaq gained 47 at 2,780. Volume on the New York Stock Exchange totaled 1.2 billion shares and 2 billion shares traded on the Nasdaq. Breadth was strong on both exchanges, with advancing issues outnumbering decliners by more than 3-to-1.
For the week, the Dow Industrials gained 1.2%, the S&P 500 was up 2.0%, and the Nasdaq gained 2.9%. For the year, the Dow has climbed 12.9%, the S&P 500 has increased 9.8%, and the Nasdaq has gained 15.1%.
On Friday, the November crude oil contract fell by 22 cents to $81.22. The Amex Energy SPDR (NYSEARCA:XLE) gained 31 cents, closing at $75.11. The December gold contract gained $3.40 at $747.20, and the Philadelphia Gold/Silver Index [XAU] rose by $2.86 to $171.28, just below the high of $173.06 made on Oct. 1.
What the Markets Are Saying
With the two broader-based indexes -- the S&P 500 and the NYSE Composite [NYA] -- breaking to new closing highs, both the near-term and intermediate-term trends are confirmed as "up." Even though the volume and sentiment may not be to my liking and the internal indicators are at very overbought numbers, momentum could take prices even higher.
As "cautious bulls," we should remain invested, taking profits when stocks reach objectives or fail to participate in the rally. But unless we have extraordinary opportunities (and there are some), most investors would be wise to put a modest amount of cash aside to take advantage of opportunities that may surface ahead.
Today's Trading Landscape
No economic reports are due today, and the bond markets are closed for Columbus Day. Merger news from Germany is in focus this morning, as business software maker SAP (NYSE:SAP) has said it would take over Business Objects (BOBJ) in a deal worth 4.8 billion euros. SAP is down on the news, which could have an impact on other technology prices today.
Asian Headlines (via Bloomberg.com)
• Asian Stocks Rise to a New High on U.S. Jobs Report; BHP, Hon Hai Advance Asian stocks rose to a record after a pickup in U.S. hiring stoked optimism the world's biggest economy will avoid a recession.
• Dollar Rises Against Euro; Ministers May Voice Concern on Currency's Gain The dollar extended gains against the euro on speculation European finance ministers meeting today will discuss ways to curb the advance of the single currency.
• Symbion Agrees to Healthscope-Led Proposal for $2.8 Billion Sale, Breakup Symbion Health Ltd., Australia's biggest health-care company, agreed to be broken up and sold to Healthscope Ltd. and two buyout companies for as much as A$3.1 billion ($2.8 billion), reviving a plan blocked by its biggest shareholder a month ago.
• Nippon Steel May Lift Auto Steel Output in China, Using Baosteel Alliance Nippon Steel Corp., the world's second-largest steelmaker, may expand production of automotive steel in China with a unit of Baosteel Group Corp. as demand for cars accelerates.
• AU Optronics Leads LCD Stocks Higher on Record Sales Gain, Panel Outlook AU Optronics Corp. (NYSE:AUO) led shares of liquid-crystal display makers higher after reporting record monthly sales, fueling optimism that rising panel prices will boost industry earnings.
European Headlines (via Bloomberg.com)
• European Stocks Decline; Credit Agricole, HSBC, Anglo American, SAP Drop European stocks fell, led by banks and mining companies, as investors speculated that last week's gains were exaggerated and copper sank the most in a month.
• Gazprom Profit Rises 14 Percent as Pension Assets Excluded From Statements OAO Gazprom, the world's biggest supplier of natural gas, said first-quarter profit unexpectedly rose 14 percent to a record, boosted by an accounting gain related to pensions and by higher energy prices.