| Market Summary |
Stocks ended mixed on Monday after a number of economic reports revived recession fears and oil prices backed off a record high. The Dow Jones Industrial Average finished down 38.27 points at 12,269.08. Broader stock indicators were mixed. The Standard & Poor's 500 index added 0.11 points to close at 1,360.14 and the tech heavy Nasdaq rose 20.28 points to close at 2,474.78. Earlier in the session, stocks struggled to move higher as oil prices soared to $139.89 a barrel on the New York Mercantile Exchange. The market made a slight recovery as oil prices drifted back to $134 a barrel. Investors also digested a number of worrisome economic reports. The N.Y. Empire State index, a regional manufacturing reading, fell to -8.7 from a prior reading of -3.2. Another report from the Association of Home Builders showed that the housing market index fell 1 point to a seasonally adjusted reading of 18, down from May's reading of 19. In corporate news, Lehman Brothers (LEH: Charts, News, Offers) reported a $2.8 billion quarterly loss after posting huge trading and hedging losses. Intel (INTC: Charts, News, Offers) announced it would spin off its solar energy business to form a new company called SpectraWatt. AIG (AIG: Charts, News, Offers) announced that it has removed CEO Martin Sullivan and replaced him with Bob Willumstad. In currency trading, the dollar fell versus the euro and gained against the yen.
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| Market News |
The proposed merger of the nation's two satellite radio broadcasters -- bogged down in the regulatory process for over a year -- has cleared a major hurdle: The Federal Communications Commission chief is recommending approval of the $3.8 billion deal. FCC Chairman Kevin Martin made his recommendation Sunday in exchange for a number of concessions, including turning 24 channels over to noncommercial and minority programming. That sets the stage for a final vote that could occur any time after Martin's recommendation is circulated among his fellow commissioners. The provision on noncommercial and minority programming along with several others -- including a three-year price freeze for customers -- persuaded Martin to support Sirius Satellite Radio Inc.'s (SIRI: Charts, News, Offers) buyout of rival XM Satellite Radio Holdings Inc. (XMSR: Charts, News, Offers) The deal would affect millions of subscribers who pay to hear music, news, sports and talk programming, largely free from advertising, in homes and vehicles. (Source: Yahoo! Finance) Full Story
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Lehman Brothers Holdings Inc. (LEH: Charts, News, Offers) posted a nearly $3 billion loss Monday, after the nation's fourth-largest investment bank was hurt by wrong-way hedging and trading positions. The results marked the first time that Lehman Brothers recorded a loss since going public in 1994, and confirmed what the company had forecast last week. It follows a tumultuous week in which Lehman also was forced to raise $6 billion in fresh capital, and unexpectedly demoted two of its top executives. Lehman did not announce any new plans to raise capital. However, Chief Executive Richard Fuld said the firm has already begun to take steps to "ensure that this quarter's unacceptable performance is not repeated." (Source: Forbes.com) Full Story
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General Electric (GE: Charts, News, Offers) shares fell for a fourth day Monday after J.P. Morgan cut its rating on them to "neutral" from "overweight." The shares fell 2% to $28.55, after touching a 4-1/2 year low early in the session on the New York Stock Exchange. J.P. Morgan said the second-largest U.S. company by market capitalization needed to sell off wide swaths of its operations to restore investor confidence. With operations ranging from manufacturing jet engines, to producing television shows, to making consumer loans in emerging Asian economies, the conglomerate has become too complicated for investors to understand with any degree of confidence, analyst Stephen Tusa wrote in a note to clients. GE shares have tumbled 22% since the company stunned Wall Street in April with an unexpected drop in first-quarter profit that it blamed on weakness in its financial and real estate operations. (Source: USA Today) Full Story
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| Market Analysis |
The headlines look grim for summer travel. Gasoline prices are near record highs. Airlines are cutting back and raising fares. Should you stay at home? Don't stow your luggage just yet. This is a good time to find bargains as the economy slows and tour operators discount. Some of the best ways of locating travel deals are unconventional. You may have to track down a rare beast these days: a travel agent who answers the phone. Another route is to bypass the bountiful services on the Internet and go directly to hotels to get the cheapest packages. If you are diligent, you can probably get a better summer or fall travel bargain than last year. Airlines and hotels are feeling the pinch. You may even be able to find a great deal through the art of negotiation. (Source: Bloomberg) Full Story
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If hindsight is 20-20 vision, then automotive executives must spend a lot of time looking in the rear-view window. Like many great industries, the auto sector has seen tremendous achievements, pioneered new technologies, and changed the course of history. But it has also had its share of blunders and missteps; some worse than others. What is different today is that many of these bad ideas are responsible for the woeful state in which the auto industry, Detroit in particular, currently finds itself. The biggest of these, obvious to anyone who has tried to fill up his sport-utility vehicle or pickup truck lately, is that General Motors (GM: Charts, News, Offers), Ford (F: Charts, News, Offers), Chrysler and, to lesser extents, companies such as Mercedes-Benz, Porsche, and BMW continued to make fuel-inefficient cars for the U.S. market long after concerns about America's dependence on oil, foreign or otherwise, became known. (Source: BusinessWeek) Full Story
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Saudi Arabia is set to pump at the fastest rate in decades in July as it seeks to rein in a bull market that has ignored its previous two supply increases. The highest output since 1981 from the world's biggest oil exporter comes even as Riyadh asserts that global supplies are adequate and other factors have doubled prices in the past year. But the kingdom will boost supply regardless as it looks to prevent record oil prices from further damaging the global economy and fuel demand. U.S. oil traded near $135 a barrel on Monday after hitting $139 a barrel earlier this month. Inflated fuel costs have sparked protests worldwide and renewed consumer calls for the Organization of the Petroleum Exporting Countries, and Saudi in particular, to boost output. (Source: Reuters) Full Story
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