Today started out looking like a great Monday after the Chinese announced a $586 billion stimulus package. Unfortunately, some of this was already in the works and many doubt its projected 8% to 9% growth for 2009 can stave off a recessionary environment ahead. Bonds closed early ahead of Veteran's Day, and are not trading Tuesday.
American Capital, Ltd. (NASDAQ: ACAS) got killed after three major announcements: -$2.63 EPS, a $158 million acquisition, suspension of its dividend. Shares were down over 43% at $7.75 to a new multi-year low right before the close.
American International Group (NYSE: AIG) got a larger lifeline as the old $85 billion package grew to $120+ billion and then to $150+ billion, with some $40 billion coming from the TARP funds at better terms. Shares came off with the market at the end of the day, but were still up 9% at $2.30 right before the close.
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.
Once again world markets sank on recession fears, and once again U.S. stock futures plunged, indicating the session may start on a considerable down note. But if Friday futures reached limit-down to stop trading and many feared the worse, that didn't materialized and the Dow fell "only" 3.6%. Today, oil dropped below $62 a barrel as the G7 expressed concern over the yen and the IMF announced rescue plans for Hungary and Ukraine.
A little after the market opens, investors will look at data on September's new home sales. On Tuesday, a two-day meeting of the Federal Reserve begins, and many expect another coordinated rate cut from the world's major central banks. The Fed is expected to lower its fed funds rate by a half-point to 1 percent on Wednesday.
Goldman Sachs (NYSE: GS) -- the Financial Times reported Goldman's CEO Blankfein called Citigroup (NYSE: C)'s CEO Pandit last month to discuss a merger. While Pandit immediately turned down the suggestion and any further discussion on the matter, the news is making investors realize the severity of the financial crisis that Goldman was willing to lose its independence.
Stock futures dropped sharply Monday morning after the bailout plan was revealed Sunday and several banks in Europe were bailed out. U.S. investors are expected to react similar to stock markets around the word, which tumbled Monday following Washington's $700 billion bank bailout deal. The bailout may not be enough, and it will take a while to clean up the mess and restore confidence to financial markets. The economic reading due to be released today, August personal income and spending is not expected to affect markets much.
Three major banking bailouts were announced in Europe. 1) The Dutch-Belgian bank and insurance giant Fortis failed and was provided with a $16.4 billion lifeline by the governments of Belgium, the Netherlands and Luxembourg. 2) The British government nationalized mortgage lender Bradford & Bingley -- the second British bank to be taken under government control this year. 3) A consortium of German banks and regulators bailed out Hypo Real Estate Holding AG, in a deal worth billions of dollars.
Wachovia Corp. (NYSE: WB) - after WaMu's failure, the focus has shifted to Wachovia and at least two major banks, Citigroup Inc. (NYSE: C) and Wells Fargo & Co. (NYSE: WFC), were reportedly in talks Sunday to buy it. Wachovia shares are trading down 60% to $4 in pre-market action. C and WFC shares are down over 6.5% and 3.5% respectively in pre-market trade.
Baird upgraded Adtran (NASDAQ: ADTN) to Outperform from Neutral based on valuation, new product cycles, and confidence in 2H08 results.
Morgan Stanley upgraded shares of Repsol (NYSE: REP) to Overweight from Equal Weight as they believe the potential sale to Sacyr Vallehermoso SA could lead to a restructuring.
Stanford lifted National Oilwell Varco (NYSE: NOV) to Buy from Hold citing valuation. In addition, the firm, which set a target of $70, thinks most of the drop in commodity prices is now over.
Ryanair (NASDAQ: RYAAY) was raised to Hold from Sell at Societe Generale.
Ann Taylor (NYSE: ANN) was upgraded at Piper to Neutral from Sell.
Argus downgraded shares of Constellation Energy (NYSE: CEG) to Hold from Buy post-close given the volatility in the stock as they can no longer recommend CEG until concerns over its capital and liquidity are resolved. Shares were also downgraded to Hold from Buy at Citigroup.
Collins Stewart downgraded Lloyds TSB Group (NYSE: LYG) to Hold from Buy following the acquisition of HBOS (OTC: HBOOY) as they expect short-term weakness in the stock.
Carnage. Mayhem. BS. Rumors. It was and remains ugly and the fears are only growing. You should see the credit spreads of the credit default swaps. Some of them have never traded at these levels -- even on the good solid companies. Trying to get new, fresh angles to cover the markets right now is becoming a challenge. It's just ugly. I didn't even feel like writing a Closing Bell post today. Gold, oil and metals rallied sharply as investors fled to save havens.
Here are today's unofficial closing bell levels: Dow 10,610.80 -448.22 -4.05% S&P 500 1,156.21 -57.38 -4.73% NASDAQ 2,098.85 -109.05 -4.94% 10YR T-Bond 3.41% -0.081% 52-week lows Top Analyst Upgrades Top Analyst Downgrades
Nortel Networks Corp. (NYSE: NT) needs to change its name to "NO TELL" in a hurry. This stock was down 50% at $2.64 right before the close. You know why: slowing telecom and communication equipment orders. Yep, another warning.
Morgan Stanley (NYSE: MS) was the worst financial cohort today. The stock was crushed on rumors, widening credit spreads specific to it, and just overall fears that it is next on the Bataan Death March. Right before the close the stock was down 30% to $20.00, but shares hit lows of $16.08 at the worst level today.
CIBC initiated Nortel Networks (NYSE: NT) with a Sector Performer rating based on what they see as the company's limited growth and margin prospects.
Needham initiated Juniper (NASDAQ: JNPR) with a Hold rating, citing valuation.
Blockbuster (NYSE: BBI) was initiated with a Hold by Needham, which would like to see if the company's turnaround is sustainable before becoming more constructive on the shares.
Jefferies upgraded shares of Akamai (NASDAQ: AKAM) to Buy from Hold on valuation, as they see a long-term buying opportunity following the recent correction. The firm maintains a $29 target.
Moody's (NYSE: MCO) was upgraded to Overweight from Underweight at Lehman.
Boyd Gaming (NYSE: BYD) was upgraded to Neutral from Underperform at Merrill Lynch.
Analyst downgrades:
Jefferies downgraded shares of Nortel Networks (NYSE: NT) to Hold from Buy on concerns about the company's ability to hit expectations and drive margin expansion in the face of an eroding CDMA revenue stream. The firm lowered their target to $7.25 from $11.
B. Riley cut Charlotte Russe (NASDAQ: CHIC) to Neutral from Buy on concerns about how well the company can perform with the interim management team, especially in light of the current retail environment. The firm lowered their target to $14 from $17. Roth Capital downgraded shares to Sell from Hold to reflect the management uncertainty and lowered their target to $9 from $14.
Goldman cut Warner Music (NYSE: WMG) to Sell from Neutral and Deere (NYSE: DE) to Neutral from Buy.
Analyst initiations:
Banc of America expects top-line growth at Amgen (NASDAQ: AMGN) to be driven by Denosumab and for investors to look to the stock for biotech exposure following the potential acquisition of Genentech (NYSE: DNA). The firm started shares with a Buy rating and $70 target.
Sirius Satellite (NASDAQ: SIRI) was initiated at JP Morgan with a Neutral rating.
Today was yet another day where Joe Public felt like he spent a round in the ring with Joe Lewis. It's getting that way again, and now the only real positive is that contrarians may start to get happy.
Oil jumped back up another $5.00 per barrel on inventory numbers reported this morning. The continued weak environment sent financials and airlines into the dirt again. PIMCO's McCulley said he believes that the Fed is understating inflation and the Fed's Beige Book hinted that some higher costs are beginning to be passed down to consumers.
Here are the unofficial closes of major US index levels: DJIA 12082.14 (-207.62) S&P500 1335.56 (-22.88) NASDAQ 2394.01 (-54.93) 10YR T-NOTE 4.07% (-0.026%) Top 10 Analyst Calls Anheuser-Busch Companies Inc. (NYSE: BUD) saw another big pickup in its call options activity today and then CNBC's David Faber said that InBev in Europe may be close to making an unsolicited bid for the company. Shares were up about 2.3% at $58.45 in the final minutes of the day.
Alcoa Inc. (NYSE: AA) said its Australian operations declared force majeure under supply contracts because an explosion at a gas supplier slowed production. Alcoa said the disruption will likely lower second-quarter earnings by 2 cents to 3 cents a share. Also, JP Morgan downgraded Alcoa from Overweight to Neutral, saying the company will not be a takeover target.
Bloggers, investors and Apple Inc. (NASDAQ: AAPL) weren't just interested in the new 3G iPhone unveiled Monday. Many of them commented on the appearance of CEO Steve Jobs and voiced concerns for his health, saying he was gaunt-looking. While a spokeswoman said Jobs was hit with a common bug, many are worried since Jobs was diagnosed with a rare form of pancreatic cancer four years ago, for which he underwent surgery that Apple said was successful.
Caterpillar (NYSE: CAT) was awarded a $397.1 million contract from the U.S. Army for two types of dozers with armor kits. The contract has one five-year option. Work is expected to be completed by 2018. Caterpillar is also holding its annual meeting today.
MOST NOTEWORTHY: Seagate, Nortel Networks and Ann Taylor were today's noteworthy downgrades:
Thomas Weisel downgraded Seagate (NYSE: STX) to Market Weight from Overweight as they believe the company's growth will be more muted given high existing market share and overall industry growth.
Baird downgraded Nortel (NYSE: NT) to Neutral from Outperform citing checks that indicate deteriorating US Enterprise sales in the last few weeks of Q1. The firm now expects companies to guide flat QoQ instead of up and to make cautious 2H08 comments.
Ann Taylor (NYSE: ANN) was cut to Neutral from Buy at Piper to reflect concerns over the LOFT division as well as consumer spending.
OTHER DOWNGRADES:
Citigroup lowered TJX Cos (NYSE: TJX) to Hold from Buy.
WestLB downgraded to Hold from Add Novartis (NYSE: NVS).
Today started out looking like a great Monday after the Chinese announced a $586 billion stimulus package. Unfortunately, some of this was already in the works and many doubt its projected 8% to 9% growth for 2009 can stave off a recessionary environment ahead. Bonds closed early ahead of Veteran's Day, and are not trading Tuesday. 
U.S. stock futures were higher Monday morning, indicating stocks could rise at the open after China Sunday announced a $585 billion 
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