For the week ending Friday, June 6, 2008, the markets finished in the red as the CBOE Volatility Index again crossed above the 20 threshold and oil surged. Stocks were impacted by continued economic concerns, renewed trouble in the financial sector, and a record spike in crude oil on Friday. Although it was a negative week for the markets, the Dow managed a 200+ point rally on Thursday for the first time since 4/18, after retailers posted better than expected same store sales.
Next Week: Watch for the latest CPI, Pending Home Sales, International Trade, and Retail Sales numbers. Although it will be a quiet week for earnings, some of the companies reporting will be PepBoys , Pall Corporation , and Enersys
M&A, Deals, Corp Actions:
- Verizon announced plans to buy its rival wireless carrier Alltel for $28.1 billion, creating the largest cellular phone company in the U.S. The company expects cost savings of $1 billion after the completion of the deal. Shares of Verizon advanced 3.1% for the week.
- J.M. Smucker reported that it will acquire Procter & Gamble’s Folgers’ Coffee business for $2.95 billion in order to strengthen the company’s breakfast brands.
- Staples increased its cash offer for the Dutch office products company, CorporateExpress to $2.6 billion in an attempt to broaden its European presence. Corporate Express' ADR increased 7.27% for the week.
- SmithInternational agreed to acquire W-H Energy Services , an oil field services company, for ~$3.2 billion to strengthen the company’s drilling services. Shares of WHQ advanced 11.24% for the week on the merger news.
- IntercontinentalExchange announced plans to purchase Creditex Group for $625 million with hopes to obtain a competitive edge against credit derivatives leaders. ICE shares responded negatively to the news as the stock dropped 7.3% for the week
Other Market Moving News:
- Retailers such as Walmart, Costco and teen store Buckle reported stronger-than expected same-store sales with increases of 3.9%, 7.0%, and 34.7% respectively in May sales.
- S&P cut the key AAA ratings from the bond insurance units of MBIA and Ambac on Thursday because of their constrained financial strength due to the negative impact the housing crisis had on both companies. ABK and MBI finished down 24.92% and 21.84% for the week.
- GeneralMotors announced the closing of four North American plants used for SUV and pickup truck production due to a decline in demand for these gas-guzzling vehicles. GM’s U.S. truck & SUV sales in May fell 39.2% while car sales fell 19.5%. GM’s stock declined 5.15% for the week, and has descended 34.83% year to date.
- AvantImmunotherapeutics shares jumped 28% on Monday after the company reported positive data results from its brain cancer vaccine CDX-110 which is partnered with Pfizer . Shares of AVAN were up 24.41% for the week, while PFE’s stock shed 8.04% as it was downgraded by Goldman Sachs from buy to neutral.
- Wachovia and WashingtonMutual shares dropped 15.42% and 16.52%, respectively for the week as the two companies removed their Chief Executive Officers, Ken Thomson and Kerry Killinger in an effort to attain better company guidance.
**Credit Crunch lingers as Lehman Brothers raised concern about liquidity, and the WSJ reported that Lehman may be raising $4 billion in capital to help its balance sheet. Shares of Lehman traded on Tuesday at levels not seen since 3/17, as shares slipped 12.28% for the week.