U.S. stock futures were higher Monday morning, indicating stocks could rise at the open after China Sunday announced a $585 billion stimulus package, which includes tax cuts and infrastructure spending. This cause world markets to climb as well as commodities. Oil followed stock markets and jumped above $64 a barrel. Another boost to stocks was further aid from the government to AIG.
[Update 8:25: Circuit City Stores Inc. (NYSE: CC)filed for bankruptcy. Shares are down 52% in premarket trading to 12 cents.]
American International Group (NYSE: AIG) -- The government on Monday provided new financial assistance to the troubled insurance giant, including pouring $40 billion into the company in return for partial ownership. Altogether, AIG got around $150 billion. AIG shares are shooting up over 21% in premarket trading.
General Motors Corp. (NYSE: GM), Ford Motor Co. (NYSE: F) and Chrysler are also moving closer to a bailout as Obama's chief of staff, Rahm Emanuel, called the industry an "essential" part of the U.S. economy. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said that the administration should consider expanding the $700 billion financial industry bailout to include car companies. With this kind of support, still undecided is the size and timing of any aid. GM shares are up 2.3% (it was hit by a downgrade from Barclays) and Ford shares are up nearly 5% in premarket trade. [Update 9:10: as expected, with the GM downgrade, it is down over 10% in premarket trading, Ford is only slightly down thought]
NRG Energy Inc. (NYSE: NRG) on Sunday rejected an unsolicited $6.1 billion all-stock bid from nuclear power giant and utility operator Exelon Corp. (NYSE: EXC), calling it too low. NRG shares jumped 6.8% in premarket trading.
TheStreet.com's Jim Cramer says you can game the psychology of the market if you want, but know the rules.
I see the plan: Every day that the market looks like it is going down we give $10 billion to some bank! It is sure-fire. Did you notice the momentary weakness in France Monday? Quick, cut checks to BNP, SocGen and Agricole. Why not? When ING (NYSE: ING) (Cramer's Take) looked like it was a disaster, giving $13 billion to that one-time conservative bank turned all of Europe around!
Monday, when there was a moment that we looked weak, when it looked like we were going to go from plus 200 to below 100, Treasury let it be known that there is a whole other round of checks coming for the second-tier players. Who knows? Boom. That plus higher oil prices turned the market around in the upside-down world we are now in! No doubt soon Downey (NYSE: DSL) (Cramer's Take) and BankUnited (NASDAQ: BKUNA) (Cramer's Take) might get checks and then everything will go higher.
Oh, and on top of that, we have a new stimulus plan, one specially designed, no doubt, to move Target (NYSE: TGT) (Cramer's Take) back to its moving average and get Macy's (NYSE: M) (Cramer's Take) off the critical list.
Today was another strong day in the market, which may be mostly credited to Ben Bernanke giving a carte blanche for another economic stimulus package in his testimony this morning. We saw a rise in California home buying, but that was credited to foreclosure purchases at far lower prices.
Below are today's unofficial closing bell levels: DJIA 9,265.43 +413.21 +4.67% S&P500 985.38 +44.83 +4.77% NASDAQ 1,770.03 +58.74 +3.43% 10YR T-Bond 3.886% (-0.052%) Top ANALYST UPGRADES 52-Week Lows
Cisco Systems Inc. (NASDAQ: CSCO) traded higher by about 2% in pre-market after its rating was raised to Outperform from Market Perform at Morgan Keegan. The firm believes orders are holding up better than many suspect. Another reason for the upgrade was forward valuation levels. Shares closed up almost 6% at $18.96 today.
Exxon Mobil Corp. (NYSE: XOM) traded up 10% today to close at $74.99 as part of a broad oil-sector upgrade at Oppenheimer after recent weakness, and as oil prices recovered throughout the day.
TheStreet.com's Jim Cramer says this is the first real deal to take advantage of the new low prices of this era.
Editor's note: Jim Cramer will present his 2009 stock outlook for the first time at TheStreet.com Investment Conference on Saturday, Oct. 25. Limited seating. Act now.
The Exelon (NYSE: EXC) (Cramer's Take) bid for NRG Energy (NYSE: NRG) (Cramer's Take) is what we need to see if we are going to find terra firma. We need to see healthy companies with good balance sheets going after other healthy companies that have balance sheets that won't let them do well.
If there were no credit crunch, NRG -- like Constellation Energy (NYSE: CEG) (Cramer's Take) before it -- would be doing just fine. In fact, you would be wondering what the heck it was doing so low. Reliant Energy (NYSE: RRI) (Cramer's Take) and Mirant (NYSE: MIR) (Cramer's Take) also fit the same pattern. These are all companies that need ready access to capital, and it doesn't exist right now.
NRG has a pro-nuke history and so does Exelon. Nuclear power has taken on an almost holy image in this country if the plants are already built because you simply can't afford to build new ones. NRG is one of the few utilities in the whole country that is trying to build plants, something that would be fabulous for Exelon and NRG's shareholders alike. It's a great match.
Exelon (NYSE: EXC) offered to buy NRG Energy (NYSE: NRG) for $6.2 billion or 0.485 of an EXC share for each NRG shares, which is worth about $26.43 for each NRG share. EXC, the biggest U.S. operator of nuclear power plants, closed at $54.50. EXC November option implied volatility of 75 is above its 26-week average of 75 according to Track Data, suggesting larger price movement.
NRG, a generation company with annual revenues of $5.9 billion, closed at $19.33. NRG November option implied volatility of 133 is above its 26-week average of 42 according to Track Data, suggesting larger price movement.
U.S. stock futures jumped higher Monday morning as investors gain more confidence in the different government actions taken to stabilize financial markets. Global shares advanced overnight following measures taken worldwide. Indeed, the three-month U.S. dollar LIBOR, a measure of the rate at which banks lend to each other, dropped to 4.06% from 4.42%.
Also, investors will be keeping an eye on Federal Reserve Chairman Ben Bernanke testimony before the House Budget Committee on the economic outlook and financial markets at 10:00 am EST, same time as the release of the September leading indicators.
As OPEC prepares for a production cut and oil rose to above $74 per barrel, earnings season on Wall Street continues in full swing this week:
Mattel Inc. (NYSE: MAT) reported third-quarter results this morning. Mattel's income rose, but not enough and it missed expectations.
Hasbro (NYSE: HAS) reported a 14% drop in third-quarter profit, but it beat expectations.
Halliburton (NYSE: HAL) swung to a loss in the third quarter, but managed to beat earnings expectations by a penny excluding charges. Revenue in the quarter rose 24%.
SanDisk (NASDAQ: SNDK), American Express (NYSE: AXP) and Texas Instruments (NYSE: TXN) report third-quarter results after the closing bell.
Wachovia upgraded shares of Exelon (NYSE: EXC) to Outperform from Market Perform to reflect the company's attractive nuclear fleets and strong operational track record.
Jesup & Lamont upgraded Ormat Technologies Inc. (NYSE: ORA) to Buy from Hold on valuation and increasing visibility on near-term Products revenue.
RBC Capital upgraded Memc Electronic (NYSE: WFR) to Outperform from Sector Perform on expectations of improved demand growth following the likely eight-year extension of the US solar tax credit program.
AmBev (NYSE: ABV) was raised to Outperform from Neutral at Credit Suisse.
AmerisourceBergen (NYSE: ABC) was upgraded at Merrill Lynch to Buy from Neutral.
"To say that alternative energies are critical is a severe understatement." asserts Stephen Leeb, who looks at three plays in the sector that earn a spot in his Growth Portfolio.
The editor of The Complete Investor explains, "Readily scalable energy sources such as solar and wind account for under 1%. It's time to get serious."
Three of the stocks he has selected are holdings in his model Growth Portfolio: FPL Group (NYSE: FPL), Exelon (NYSE: EXC), and General Electric (NYSE: GE). Here's a trio of favorites.
"We have focused on those alternative energy stocks with the strongest growth profiles. None is a pie in the sky fantasy; all provide energy in the here and now and have significant and fast-growing revenue streams.
"The fact that their growth should continue to burgeon is one of the most heartening pieces of news on the energy front. We could argue that investing in these stocks not only will be good for your portfolio but is an act of patriotism as well.
MOST NOTEWORTHY: Lloyds TSB Group, OmniVision and National Instruments were today's noteworthy downgrades:
Credit Suisse downgraded shares of Lloyds TSB Group (NYSE: LYG) to Underperform from Neutral as they see greater mortgage risk and capital issues.
Oppenheimer cut OmniVision (NASDAQ: OVTI) to Perform from Outperform to reflect challenging conditions in the low-end Chinese handset market.
Thomas Weisel downgraded shares of National Instruments (NASDAQ: NATI) to Market Weight from Overweight as they expect EPS growth as operating margins approach cyclical peaks.
OTHER DOWNGRADES:
Air France-KLM (OTC: AFLYY) was cut to Hold from Buy at Citigroup and to Neutral from Buy at Merrill.
Exelon (NYSE: EXC) and Edenor (NYSE: EDN) were both downgraded at Citigroup to Hold from Buy.
MOST NOTEWORTHY: Northrop Grumman, Groupe Danone and MercadoLibre were today's noteworthy upgrades:
Oppenheimer upgraded shares of Northrop Grumman (NYSE: NOC) to Outperform from Perform after the Pentagon selected the company over Boeing (NYSE: BA) for the newly designated KC-45A Aerial Refueling Tanker with a potential value of $35B.
Citigroup upgraded shares of Groupe Danone (OTC: GDNNY) to Buy from Hold on valuation, as they believe the sell-off on commodity cost concerns is overdone.
MercadoLibre (NASDAQ: MELI) was raised to Outperform from Sector Perform at RBC Capital, as they believe MELI's long-term thesis is more compelling now vs. six months ago and notes favorable reaction to Mercado Pago v2.0.
The market's choppy / consolidating pattern continues, suggesting the need for an additional defensive play or two (or perhaps more). Further, the utilities sector fits the bill, and in this category Exelon Corp. is worth an evaluation.
Via subsidiaries, Exelon Corporation (NYSE: EXC) distributes electricity to 5.4 million customers in Northern Illinois (including Chicago) and southeastern Pennsylvania (including Philadelphia). EXC has 25.5 million megawatts of generating capacity and is also involved in wholesale energy sales/marketing. The company also has 480,000 natural gas customers.
Further, analysts really like Exelon's non-regulated utility operations, which should boost revenue performance in the immediate years ahead. A rate compromise agreement passed by the State of Illinois also removes a potential cloud from the company's revenue picture. The Reuters FY 2007/FY 2008 EPS consensus estimates for EXC are $4.32 to $4.40.
MOST NOTEWORTHY: Barclays, Grant Prideco and Force Protection were today's noteworthy downgrades:
Goldman downgraded shares of Barclays PLC (NYSE: BCS) to Sell from Neutral and added the stock to their Conviction Sell List citing credit concerns. They believe negative headlines on writedowns will continue to weigh on shares.
Collins Stewart downgraded shares of Force Protection (NASDAQ: FRPT) to Underperform from Buy after the company did not receive MRAP vehicles ordered last night. They believe shares are likely to trade at book value of $3.58 or lower in the short term and set a target price of $2.90.
OTHER DOWNGRADES:
Keefe Bruyette removed Navigators Group (NASDAQ: NAVG) from its Best Ideas List.
Morgan Stanley downgraded Petro-Canada (NYSE: PCZ) to Underweight from Equal Weight.
Jefferies downgraded Exelon (NYSE: EXC) to Hold from Buy.
MOST NOTEWORTHY: Sierra Wireless, Navteq, Goldleaf Financial, Infineon and VeriSign were today's noteworthy downgrades:
Piper downgraded shares of Sierra Wireless (NASDAQ: SWIR) to Market Perform from Outperform to reflect increasing competition for the company's core businesses and longer term margin concerns. Based on comments from Qualcomm (NASDAQ: QCOM), Piper believes the new Gobi embedded solution is gaining more traction than previously anticipated.
The firm also downgraded Navteq (NYSE: NVT) to Market Perform from Outperform as they believe the Nokia (NYSE: NOK) acquisition will close.
Credit Suisse lowered its rating on Goldleaf Financial (NASDAQ: GFSI) to Market Perform from Outperform following its weak Q3 report and guidance.
ABN Amro downgraded shares of Infineon (NYSE: IFX) to Hold from Buy as they believe the strength of the euro will hurt margins.
VeriSign (NASDAQ: VRSN) was downgraded to Hold from Buy at Hambrecht to reflect the uncertainty surrounding the company's numerous divestitures as well as the execution risk.
Security guards at an Exelon Corp. (NYSE: EXC) nuclear power plant in Pennsylvania were found sleeping on the job, according to media reports. The Chicago-based utility company said it dropped Wackenhut as security contractor for its Peach Bottom plant and is reviewing the security firm's work at other company reactors, according to The Philadelphia Inquirer,
This couldn't have come at a worst time for the nuclear power industry whose reputation has improved over the past few years as a lesser evil to global warming-causing coal-fired power plants. NRG Energy Inc. (NYSE: NRG) is even proposing to build its first nuclear power plant in almost 30 years. But every time the nuclear power industry takes one step forward, it takes two steps back.
In Exelon's case, the embarrassment was captured on video by another security guard over several months and sent to New York television station WCBS-TV, The Inquirer said. The incident, involving fewer than 10 workers, is investigated by the company and the Nuclear Regulatory Commission, the paper said.
Exelon, of course, was mortified by the video.
"This is not acceptable and we will not tolerate it," said Exelon Generation Chief Operating Officer Chris Crane in a press release. "I want to be clear that nothing has happened at Peach Bottom that represents a security or safety threat to the public. We are dealing with unacceptable behavior, and we will fix it."
What's scary is that it's happened before. Workers were caught napping at the control room of the same nuclear power plant in the late 1980s, according to the New York Times.
Those that don't learn from history are doomed to repeat it.
Whenever I hear some market pundit who sounds like they've got all of the answers behind the current crisis in the world's financial markets, the classic Frank Zappa line "Look here brother, who you jivin' with your cozmic debris" echos in my head. Zappa's point that people should avoid simple answers to complicated questions is especially relevant today.
The world's major central banks today added more than $137 billion into the banking system, keeping today's loss in the Dow Jones Industrial Average to 31.14 points following a turbulent trading session. This seems like a temporary, albeit expensive, Band-Aid on a very large wound. The bad news is far from over.
For example, Goldman Sachs Group Inc.'s (NYSE: GS) Alpha Fund may be the next hedge fund to implode. So far this year, it has dropped 26%, according to Bloomberg News. The Wall Street Journal (subscription required) points out that many hedge funds will see increased redemptions during August. Bloomberg also reported that many of the big buyout deals that have been announced over the past few months including TXU Corp. (NYSE: TXU) and First Data Corp. (NYSE: FDC) will have to be renegotiated.
Are there bargains to be had? Of course, markets act on irrational fear and irrational exuberance. But be careful, sometimes stocks are cheap for very good reason, such as exposure to subprime mortgage securities. It will pay to be selective in your bargain hunting.
Some investors also might want to consider shifting some of their assets into more conservative investments such as municipal bonds, utility stocks such as Exelon Corp. (NYSE: EXC) and defense companies such as Lockheed Martin Corp. (NYSE: LMT).
Don't overdo it, though. Over time, the market will right itself.
Meanwhile, people need to take a deep breath and exhale.
U.S. stock futures were higher Monday morning, indicating stocks could rise at the open after China Sunday announced a $585 billion stimulus package, which includes tax cuts and infrastructure spending. This cause world markets to climb as well as commodities. Oil followed stock markets and jumped above $64 a barrel. Another boost to stocks was further aid from the government to AIG.
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Whenever I hear some market pundit who sounds like they've got all of the answers behind the current crisis in the world's financial markets, the classic 
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