CNBC's Domm: Today's Agenda in the Markets
An explosive bid for Canada's Alcan is giving a positive psychological lift to stocks as traders watch a flood of monthly sales reports from retailers.
So far, June sales for Wal-Mart were better than expected at 2.4%. Costco was in line with expectations with a 6% rise, in line with expectations. Department stores did not fare as well. JC Penney was down a surprising 1.5% , and Macy's reported a 2% decline.
Shiny New Deal
Rio Tinto topped Alcoa's offer for Alcan with a whopping $38.1 billion bid. Alcan's board recommended the offer. So far, no word from Alcoa on whether it has plans to raise its $28 billion bid.
Stocks are heading toward a positive open this morning, and European markets are higher. Asian stocks mostly closed higher overnight.
Stocks ended higher after a tentative start yesterday. CNBC's Larry Kudlow called the market's tone "indecisive."
"This always happens at the start of earnings season. They wiggle and wobble around" until the street can determine the trend, he said.
The Dow closed up 76 points. The Nasdaq was up 12 and the S&P rose 8 points.
The 10-year had an up and down day. The yield ended at 5.08% after dipping down to 5% in early trading. It is at about the same level this morning. Oil is above $73 per barrel this morning and moving higher.
Earnings Blow Up
One need not look far to see why stocks can wobble ahead of earnings news. Motorola is a prime example. Late yesterday, the company slid out a disappointing forecast after the closing bell. It said it would miss its already lowered revenue forecast and said its mobile devices unit will not be profitable for the full year.
Interesting coincidence that Motorola stock rose yesterday on rumors that CEO Ed Zander is on his way out. We are waiting to hear what investor Carl Icahn has to say about the miss, and we will look at the new pressure on Zander.
If the subprime worries are not top of mind for stock traders this morning, they continue to plague the currency market. Worries the trouble could spread has weighed on an already weakening dollar. This morning, it sunk to yet another low against the euro.
Deal or No Deal?
News the Sallie Mae buyout could be in jeopardy hit that stock hard yesterday and raises the bigger question of whether deals will get harder to complete. The private-equity buyers bidding for the company told SLM Corp that current legislative proposals could threaten the $25 billion deal. Adding to the speculation about deal activity was the unwinding of a deal between GE and Abbott on GE's plan to buy two Abbott medical devices units. Adding to the concern is a widening of spreads in credit markets, but as Rio Tinto shows, there are big buyers with lots of cash to buy strategic assets.
In a most incredible story, the Wall Street Journal reports that Whole Foods CEO John Mackey went online using a nom de plume "rahodeb" to say nasty things about competitor Wild Oats and great things about himself. He pointed out Whole Foods would definitely not want to buy the company at its then January, 2005 value and added "Oats has no value and no future." This little tidbit came from the Federal Trade Commission in a filing made in its lawsuit seeking to block Whole Foods acquisition of Wild Oats. "I think it's bizarre," former SEC chairman Harvey Pitt old CNBC's Brian Shactman. Not illegal, but bizarre.
We Don't Really Stalk Him
But you know when Warren Buffett gets near our cameras, we make sure we get him to talk. CNBC's Julia Boorstin yesterday ran into Buffett at the Allen and Co. media conference in Sun Valley. Buffett says he just goes to that conference of media wheeler dealers for the "freeloading." Conference participants get free room and board. Not surprising to see how Buffett has managed to get all those billions.