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 the sellers are in control, and without dividend protection, we have no floor.
The bad stuff is in the market. It just has to get more in. That's all. That's the conclusion you have to reach when you see companies like Terex (NYSE: TEX) (Cramer's Take), which is valued at only a billion and a half dollars, or Joy Global (NASDAQ: JOYG) (Cramer's Take) at $2 billion and change or McDermott (NYSE: MDR) (Cramer's Take) at $3 billion.
In other words, forget about the stock prices. They are almost all absurd unless we are headed into a recession of such magnitude that companies start showing severe losses in the first quarter. Think about the market cap size. If Terex, which is actually a pretty good machinery company, can sell at a billion and a half dollars -- about the price that some acquisitive company might have paid for a division of Terex a year ago -- why can't it sell at $1 billion? How about $800 million? What's to stop it? The sellers at this point obviously don't even care about it, not one bit. They just want money. The buyers have had their heads twisted off and don't want anything more to do with it. No one wants to recommend it because the estimates are too high. And without a dividend, it has no protection; besides, people might perceive that the dividend can't be paid -- a la Freeport (NYSE: FCX) (Cramer's Take) -- and sell it anyway.
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.
Merrill upgraded shares of General Motors (NYSE: GM) and Ford (NYSE: F) to Neutral from Underperform on expectations for fundamentals to improve in 2009.
Citigroup upgraded Chubb (NYSE: CB) and Travelers Group (NYSE: TRV) to Buy from Hold as they expect the company to benefit from the AIG (NYSE: AIG) fallout. The firm raised Chubb's target to $57 from $56 and Travelers Group's target to $51.50 from $49.50.
Credit Suisse upgraded shares of SAP AG (NYSE: SAP) to Outperform from Neutral as they believe margin expansion can drive higher profitability.
JetBlue (NASDAQ: JBLU) was upgraded to Buy from Hold at Argus.
NetLogic (NASDAQ: NETL) was upgraded to Buy from Neutral at Piper.
Analyst downgrades:
JP Morgan downgraded Eli Lilly (NYSE: LLY) to Underweight from Neutral citing the company's early stage pipeline and generic competition.
Merrill downgraded Unilever (NYSE: UL) to Neutral from Buy as they believe the incoming CEO is unlikely to bring a major restructuring or split up the company.
Another low volume August trading day is behind us. Markets in the US responded rather well to economic data but falling oil prices and gold prices are beginning to take over in importance. Oil was down again and gold followed suit. There was generally still a mixed market most of the day. After what we have been seeing for longer than many care to remember we'd consider a mixed day a partial win. Here are today's unofficial closing bell levels:
U.S. stock futures were higher Friday morning, indicating stock markets could possibly extend Thursday's rally as the dollar rose and oil prices fell further. The dollar continues to make gains on the back of growing evidence of global economic softness. Still, several economic readings are due out today, including the New York Empire State manufacturing index , capacity utilization and industrial production -- all before the opening bell.
Kohl's Corp shares could start higher as premarket indication has them trading 2.3% higher, while Nordstrom's are trading 4% lower in premarket action. Kohl's quarterly profit fell 12% from a year ago, but the retailer lifted its fiscal year profit forecast. Meanwhile, upper scale Nordstrom, reported a 21% drop in second-quarter profits and cut full year outlook.
ANF said second-quarter profit fell on lower sales of jeans and T-shirts and forecast full-year earnings per share that trailed some analysts' estimates. JCP also saw profit decline but beat estimates and issued lower guidance.
Autodesk (NASDAQ: ADSK) shares are trading 10% higher in premarket action after the design software maker reported stronger-than-forecast second-quarter earnings Thursday after the close.
Calpine (NYSE: CPN), which is a major power company, has experienced lots of drama over the years. However, the company has been able to stabilize things – and has recently come out of bankruptcy.
But suddenly the drama has returned: NRG Energy (NYSE: NRG), a rival, has made a $11 billion hostile bid for Calpine (it's a stock-for-stock transaction).
And there's lots of momentum for the deal. Keep in mind that Harbinger Capital Partners, which is a major hedge fund, owns 24% of Calpine's shares and is pushing for a combination.
No doubt, NRG-Calpine would be a powerhouse, amounting to roughly 45,000 megawatts. It will also expand NRG's presence in the valuable California market.
True, the valuation for the transactions looks meager. But, I suspect we'll ultimately see a higher bid. According to Harbinger's letter to Calpine:
"We believe this offer represents a good starting point and that the Board should immediately engage with NRG concerning the terms."
Stock futures were a little higher early Thursday morning as stocks seemed poised for a rebound after plunging the last two straight sessions and as oil crossed $135 per barrel.
On Wednesday, U.S. stocks dropped sharply, again, as oil continued to rally, breaking new highs throughout the day and as the FOMC minutes indicated the Federal Reserve expects higher inflation and slower economic growth. The Dow industrials finished the day down 227 points, or 1.77%, the same as the Nasdaq Composite which lost 43 points, and the S&P 500 declined 22 points, or 1.61%.
Not much economic news today except for weekly jobless claims, but no doubt investors will continue to focus on the surging price of oil, now blamed also on Wall Street as traders are scrambling to cover bets. Oil prices rose above $135 to $135.09 a barrel for the first time Thursday, as supply concerns continued increased with reports that the International Energy Agency would cut its supply predictions. Even with assumption that global demand possibly weakening, the weakening U.S dollar drove crude futures up. Still, some blame the oil's rally due to traders covering wrong-way bets that prices would decline and buying crude, according to data from the New York Mercantile Exchange.
Deutsche Bank upgrades Wachovia (NYSE:WB) to "buy" from "hold" according toBriefing.com. The news service also reports that Thomas Weisel initiated VMWare (NYSE:VMW) with a "market weight" rating.
Citigroup downgraded CB Richard Ellis Group (NYSE:CBG) to "hold" from "buy" according to the AP. The news service also writes that Moody's raised it outlook on NRG Energy (NYSE:NRG) to "stable" from "negative."
Ford (NYSE:F) was raised to "hold" from "sell "at Citigroup according to24/7 Wall St.
A year or so ago, a 10% total annual return on equity would have been unsatisfactory for many investors.
My, how the U.S. financial landscape has changed from April 2007! A 10% return today doesn't look so bad, and a company that can achieve that and more is utility NRG Energy.
NRG Energy Inc. (NYSE: NRG) is a wholesale power generating company that owns and operates power plants with a net capacity of 22,880 megawatts.
The majority of NRG's revenue is from base load power. The significance? A stable cash flow. Further NRG's power source is largely natural gas-based, which is preferred, given likely additional regulations moving forward for coal-fired plants, as nations address climate change. NRG's power source mix is 45% natural gas, 34% coal, 16% oil, 5% nuclear. NRG's stable includes 175 power generation units at 49 power plants.
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.
Exelon.gif){kind=logo}
and 
. He also operates 
Stock picks and pans for troubled times: RIMM, ED, ISRG, GLW, LEA, SLB, GOOG ...
Is Berkshire Hathaway better than S&P Index?
Closing Bell: Torch Passing on a Friday Rally
