April is the best month to be in blue chips, if history is a guide.» Read More
JP Morgan's $2 per share take over of Bear Stearns is a 93% discount from Bear's closing price of $30 on Friday and 99% of its 52 week high. On the open, Bear is down 87%. Prior to today, the biggest one day loss of current S&P members was 75% for Sealed Air Corp in 1989.
Here are the biggest 1 day percentage drops of the S&P 500 constituents.
Would you rather receive a 0.2% annual interest rate from a Bank of America regular savings account or instead pull in a whopping 7.2% annual dividend through investing in Bank of America stock?
Dow Industrials newcomer Bank of America leads the list as the highest current yielder of all 30 Dow stocks. Chevron , the other recent Dow addition enters the list with a 2.7% yield (just slightly above the median). Hewlett-Packard's 0.7% yield came in at the lowest level (although it's still a more attractive return than that Bank of America regular savings account mentioned above).
Here's a look at the entire list from top to bottom:
For the week ending Friday, March 14, 2008 the US Markets ended mixed. Market moving events include the Fed's $200B expansion of its securities lending program and the Bear Stearns bailout, amongst others leading to extreme market volatility. The Dow gained 417 points on Tuesday, only to lose the majority of its gains to close up only 0.48% for the week. The VIX crossed 30 for the first time since January.
Next week, the markets will watch for the the FOMC announcementon interest rates Tuesday, the Visa IPO on Wednesday, and a slew of brokerage earnings including Goldman Sachs , Lehman Brothers , Morgan Stanley and possibly Bear Stearns .
- On Friday the CBOE Volatility Index crossed over the 30-value mark to hit a high of 32.89 signaling investor uncertainty and high volatility. The last time the VIX closed above 30 was on January 22, 2008.
- The Dow, S&P and Nasdaq all gained over 3.5% on Tuesday on the news of the Fed's liquidity injection
- Markets rallied back from big losses Thursday on news from S&P that the end of write-offs could be in sight
- Consumer prices were unchanged in February for both the CPI and Core CPI, which excludes food and energy. The actual reading was nowhere near as hot as economists expected with a forecast of 0.3% for CPI and a 0.2% rise in the core.
- The Reuters/University of Michigan one-year inflation forecast in contrast to the soft CPI data jumped steeply to 4.5% in March compared to 3.6% the prior month.
- The Michigan Consumer Sentiment Index pointed to a slight drop to 70.5 in March compared to 70.8 in February, but sentiment was still at a 16-year low. Economists had expected a much lower reading of 68.5.
- Weekly jobless claims were better than expected coming in at 353,000 unchanged from the previous week.
- The Treasury Budget hit record levels with the Budget’s deficit for the month of February totaling $175.6 billion, making for a fiscal year-to-date deficit of $263.3 billion, up 62% from this time last year.
- Retail Sales were weak falling -0.6% in February compared to a prior month gain of 0.4%.
Housing and Mortgage Data:
- Foreclosure filings for February rose 60% on the year \(223,651\), with the state of California having the highest foreclosure total.
- Countrywide reported that its loan delinquencies nearly doubled from a year earlier from 4.48% to 7.44%, and the FBI started a probe into CFC for security fraud.
Sectors & Indexes:
- Bear Stearns received emergency financing help from JP Morgan Chase and the Federal Reserve Bank of NY to overcome its liquidity problems.
*Bear Stearns suffered its biggest one-day drop in history on Friday, is 83% off its record close of $171.51 set on January 12, 2007, and has lost roughly 6.8B in market capitalization in 2008, or 66% of its value \(WSJ\)
- Lehman Brothers announced that it will lay-off about 5% of its work force due to difficult market conditions.
- The Carlyle Fund, a mortgage fund ran by Carlyle Group, collapsed after being loaded with bad mortgage debt.
*Standard and Poor’s estimated that subprime write-downs could total $285 billion, or $20 billion more than what it was estimated six months ago. They believe the end of subprime write-downs is in sight.
- Google won unconditional approval from the European Commission to buy rival Web advertiser DoubleClick for $3.1billion.
- Microsoft and Yahoo sat down to discuss the hostile bid launched by Microsoft.
- Electronic Arts began a $2 billion hostile bid for Take-Two Interactive, after the rival videogame company rejected the unsolicited bid last month.
Healthcare: Humana, Wellpoint and UnitedHealth shares tumble on profit warnings dragging down HMOs.
- Crude Oil for April delivery continued to hit record highs with 4 consecutive days of record closes beginning 3/10. Pit session closes were $107.90, $108.75, $109.92, and $110.33. Oil reached an all time high of $111 a barrel on Thursday.
*Next week the April contract rolls to May and with the anticipation of the summer driving season, traders believe oil could spike to $115 or $120 per barrel
*Gas prices set a new record with the national average price hitting $3.28 per gallon, with the possibility of $4.00 per gallon average, according to AAA and the Oil Price Information Services.
*Soaring oil prices are taking their toll on jet fuel and the consumer causing United Airlines and Continental Airlines to raise round-trip fares by up to $50 depending on the length of the trip.
**According to IATA and Platts, jet fuel is up over 68% from a year ago
- Natural Gas for April delivery hit a new record intraday high of $10.294 and settled at $9.868, gaining 1.01% for week.
- Heating Oil for April delivery hit an intraday high of $3.222, and new record close of $3.1465, gaining 6.77% for week
- Gold for April delivery continued its record setting pace. After hitting an intraday high of $1009, it settled at $999.50, as investors look to gold as a defensive play in a weakening economy.
- Platinum closed down $21.50 at $2076 an ounce, but it is up 1.68% for the week
- Wheat for May delivery closed down at $11.91 1/2 per bushel, but it is up 7.83% for the week.
Dollar Woes:The Dollar continues to hit lows against major currencies, with record lows against the euro more than 12-year lows against the yen. Over the last twelve months, the US dollar has fallen against every major Asian currency except for the Pakistani rupee.
- The US dollar sank to new lows against the Euro, Yen, New Zealand Dollar, and Swiss franc; though it rallied off its lows by Friday afternoon
- Today one euro cost as much as $1.5687 setting a new record, and the euro is now up 7.1% against the dollar year-to-date.
- The dollar/yen fell below 99 yen per dollar at more than 12-year lows. The purchasing power of one dollar hit lows of 98.88 yen on Friday. The Japanese Yen has appreciated 11.34% against the US dollar in 2008.
- The struggling greenback is at an all-time low against the New Zealand dollar with one dollar purchasing .8137 New Zealand dollars. The New Zealand dollar has gained 6.31% YTD against the US dollar.
- The British pound rose modestly for the week to $2.0256 per pound on Friday with a 1.99% gain against the US dollar in 2008.
- The US dollar has lost 11.67% year-to-date against the Swiss Franc, with the US dollar only purchasing .9969 Swiss Francs at its lowest point on Friday.
Market Stats:The Dow ended up 57.40 or 0.48% for the week and negative on Friday
-The Dow is Negative YTD down - 9.90%
-The Dow is off by -2,213.44 or -15.63% from the market peak on October 9th of 14,164.53
The NASDAQ ended unchanged for the week and negative on Friday
-The NASDAQ is Negative YTD down -16.58%
-The NASDAQ is off by -646.63 or -22.62% from the market peak on October 31 of 2,859.12
The S&P 500 ended down -5.23 or -0.40% for the week
-The S&P is Negative YTD down -12.27%
-The S&P is off by -277.01 or -17.70% from the market peak on October 9th of 1,565.15
S&P Sector Performance for the week ending Friday, March 14, 2008:
S&P 500 Materials Sector \(.GSPM\) Up 7.94 or 3.23%
S&P 500 Energy Sector \(.GSPE\) Up 8.26 or 1.49%
S&P 500 Industrials Sector \(.GSPI\) Up 4.07 or 1.27%
S&P 500 Utilities Sector \(.GSPU\) Up 0.78 or 0.41%
S&P 500 Information Technology Sector \(.GSPT\) Up 0.18 or 0.05%
S&P 500 Consumer Staples Sector \(.GSPS\) Down -1.59 or -0.57%
S&P 500 Consumer Discretionary Sector \(.GSPD\) Down -1.63 or -0.69%
S&P 500 Financials Sector \(.GSPF\) Down -6.10 or -1.88%
S&P 500 Telecomm Services Sector \(.GSPTS\) Down -2.68 or -1.98%
S&P 500 Health Care Sector \(.GSPHC\) Down -11.98 or -3.26%
S&P Top 10 Performers for the week ending Friday, March 14, 2008:
Gamestop Corp \(GME\) Up 6.37 or 14.93%
Apollo Group Inc \(APOL\) Up 6.10 or 11.40%
Capital One Financial Corp \(COF\) Up 4.50 or 10.38%
Limited Brands Inc \(LTD\) Up 1.50 or 10.34%
MEMC Electronic Materials Inc \(WFR\) Up 6.94 or 9.36%
Discover Financial Services \(DFS\) Up 1.32 or 9.33%
Dynegy Inc \(DYN\) Up 0.66 or 8.86%
Cameron International Corp \(CAM\) Up 3.47 or 8.84%
EOG Resources Inc \(EOG\) Up 9.64 or 8.28%
Newmont Mining Corp \(NEM\) Up 4.06 or 8.19%
S&P 10 Worst Performers for the week ending Friday, March 14, 2008:
The Bear Stearns Companies Inc \(BSC\) Down -40.08 or -57.19%
Ambac Financial Group Inc \(ABK\) Down -3.28 or -34.53%
Humana Inc \(HUM\) Down -19.54 or -30.76%
Wellpoint Inc \(WLP\) Down -20.03 or -29.84%
UnitedHealth Group Inc \(UNH\) Down -8.02 or -17.74%
Titanium Metals Corp \(TIE\) Down -2.91 or -16.22%
Lehman Brothers Holdings Inc \(LEH\) Down -7.10 or -15.31%
Sprint Nextel Corp \(S\) Down -0.99 or -14.12%
KLA-Tencor Corp \(KLAC\) Down -5.60 or -13.40%
Coventry Health Care Inc \(CVH\) Down -6.50 or -13.20%
Dow Top Performers for the week ending Friday, March 14, 2008:
Caterpillar Inc \(CAT\) Up 4.95 or 7.09%
General Electric Co \(GE\) Up 1.59 or 4.93%
ALCOA Inc \(AA\) Up 1.79 or 4.89%
McDonald's Corporation \(MCD\) Up 2.51 or 4.80%
E I du Pont de Nemours and Co \(DD\) Up 1.98 or 4.41%
Exxon Mobil Corp \(XOM\) Up 3.42 or 4.15%
Intel Corp \(INTC\) Up 0.59 or 2.94%
Johnson and Johnson \(JNJ\) Up 1.14 or 1.85%
Procter & Gamble Co \(PG\) Up 0.94 or 1.43%
3M Company \(MMM\) Up 1.02 or 1.33%
Dow Worst Performers for the week ending Friday, March 14, 2008:
General Motors Corp \(GM\) Down -2.74 or -12.48%
Citigroup Inc \(C\) Down -1.13 or -5.40%
American International Group Inc \(AIG\) Down -1.70 or -3.96%
Verizon Communications \(VZ\) Down -1.26 or -3.59%
Pfizer Inc \(PFE\) Down -0.71 or -3.33%
Hewlett-Packard Co \(HPQ\) Down -1.39 or -2.94%
Bank of America \(BAC\) Down -1.05 or -2.86%
JPMorgan Chase and Co \(JPM\) Down -1.02 or -2.72%
The Coca Cola Co \(KO\) Down -1.32 or -2.24%
Merck & Co Inc \(MRK\) Down -0.78 or -1.87%
Key Earnings next week:
Monday: Bear Stearns \(BSC\), Conseco\(CNO\), PMI Group \(PMI\)
Tuesday: Goldman Sachs \(GS\), Lehman Brothers \(LEH\), Adobe Systems \(ADBE\)
Wednesday: General Mills \(GIS\), Morgan Stanley \(MS\), NIKE \(NKE\)
Thursday: Barnes & Noble \(BKS\), FedEx \(FDX\),Palm \(PALM\)
Economic Data next week:
Monday: Industrial Production, Net Foreign Purchases, Capacity Utilization
Tuesday: Housing Starts, Building Permits, PPI, Core PPI, FOMC Announcement
Wednesday: EIA Crude Inventories
Thursday: Leading Indicators, Jobless Claims \(Initial\), Philadelphia Fed
The major US indexes were a mixed bag this week, all close to flat, while commodities continue their record setting pace, and the US dollar falls to new lows.
The Dow is now down over 200 points for the day. Without a big rally, this will be the 30th triple digit move of the Dow this year. The prior record over the same period was 24 triple digit moves, set in 2000.
Volatility continues to play as the CBOE Volatility Index , also known as the "Investor Fear Gauge" is again over 30. Values above 30 represent high volatility and investor uncertainty.
Volatility between New Years - March 14:
It is also the 25th daily move of +/- 1% of the Dow.
Helping pull the Dow down today are:
Talk about the "Road Less Traveled". With the dollar at all-time lows against major currencies and the continued rise of crude oil prices, many Americans may be rethinking the summer vacations they have been planning. Domestically, we are only two months away from the start of the summer driving season where rising gasoline prices will take its toll. The weak dollar makes international travels much more costly too. As Maria Bartiromo pointed out this morning on Squawk Box, groceries alone cost 25% more in London than they do in New York.
Offsetting this, of course, will be foreigners choosing to visit the USA at what they see to be bargain basement prices. According to the US Department of Commerce, 2007 set an all time record for international visitors. A record of 56.7 million international visitors traveled to the United States in 2007, an increase of 11% over 2006. International visitors also spent a record breaking $122 billion on travel and tourist related activities within the US.
Top countries with international visitors traveling to the United States in 2007 were:
Canada - 17,735,000
Mexico – 15,089,00
United Kingdom – 4,497,858
Japan – 3,531,489
Germany – 1,524,151
France – 997,506
South Korea – 806,175
Australia – 669,536
Brazil – 639,431
Italy – 634,152
While we welcome our foreign guests, the markets are not sure that the inflow will offset American declines in travel. In the last month and as oil prices shattered records, the Dow Jones Travel & Tourism Index turned negative.
As Visa’s expected public offering approaches, will the company’s IPO draw the attention that was anticipated? Visa’s initial public offering could potentially be the biggest IPO in the history of the US. Visa plans to offer 406 million Class A shares with a price target between $37 and $42 / share which could value the IPO at approximately $16 billion. The offer is expected to take place next week on March 19th under the ticker symbol V, and could surpass AT&T Wireless’ $10.6B IPO in 2000, and Kraft’s $8.7B IPO in 2001.
Visa’s IPO comes at a time of economic uncertainty. The Renaissance IPO Index which reflects IPO’s activity and their performance for two-years from their first day of trading is down 21% year-to-date. So will the IPO be successful?
Visa’s business model relies on its strong brand recognition and its reputation for the world’s largest payment network, handling $1.8 trillion in total volume of goods, services, and cash access transactions in the United States. According to its SEC S-1 filing , 99% of Visa’s revenue comes from card service and processing fees making it less sensitive to the defaults in payments that rise during economic downturns. It largely acts as a liaison between the banks issuing the credit and merchants without taking on risk itself.
Federal Reserve data also shows that consumer revolving credit continued to grow even during the last recession, albeit at a slower rate. Visa's S-1 shows operating revenues for the 9 month period ending June 2007 were $2.6 billion. Year over year revenues for the same period grew by 18%. According to Visa, card purchases in the United States have increased at an annual compound growth rate of 12% from 2000 to 2006 as this trend is expected to continue at an annual compound growth rate of 8% through 2012.
Governments, corporations, and merchants continue to incorporate electronic payment systems in order to increase efficiency, security, and control. Jupiter Research predicts that online retail spending, as a portion of total retail sales will increase to over 50% by 2010, which could potentially lead to greater profits for Visa through more transaction fees.
Visa is the market leader in card transactions, with close to double its next closest competitor, MasterCard . MasterCard had a successful IPO in 2006, valuing the company at $2.4 billion. Since the IPO, MA shares have risen over 300% in nearly two years and it now has a Market Cap of $25 billion.
The markets continue to rally after yesterday's huge gains. As of 11:30, the Dow is up ~530 points or 4.5% in the past two days. The last time the Dow had a 2 day move like this was nearly 6 years ago in 2002.
Leading the Dow today are:
With Oil touching a new intraday record high price of $109.72 a barrel yesterday, which are the companies with the highest percentage gain year-to-date (YTD) in the S&P 500 Energy Sector?
Although the S&P 500 Energy Sector is down 5% YTD, the Oil & Gas Exploration and Production sub-sector has advanced 14% in the same period. The biggest winner in the Energy Sector and the S&P 500 Index has been EOG Resources . Six of the seven leading companies for the S&P 500 Energy Sector with the highest percentage gains in 2008 are part of the Oil & Gas Exploration and Production classification, except for Nabors Industries , which is part of the Oil & Gas Drilling category.
The Fast Money traders suggest considering XTO Energy and Chesapeake Energy as two interesting plays for the bullish trend in crude oil.
Beware the Ides of March? Not if the Markets say so. With the markets soaring today, I looked up some of the biggest gains ever. Interestingly, the Dow and S&P have had their best days in points and percentage in mid-March. The NASDAQ had its best day ever in January 2001.
The last time all three major indices were all up over 3.5% in one day was March 17, 2003.
Historically, on the Ides of March itself (March 15), the Dow has been up 56% of the time and has had an average percent gain of 0.3%. Within 6 months of March 15, the Dow has gained an average of 4.2% and has been up 68% of the time.
Even in years when the markets are down from the start of the year through March 15, the markets historically have rebounded. In those down starts to the year and within 6 months of March 15 of those years, the Dow has gained an average of 4.2% and has been up 67% of the time.
The Dow has gained 400+ points in a single day five times in its history, two of them in March.