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Oct.27

9:12 AM ET

Monday, 27 Oct 2008

Banks Seeking—And Getting—Capital Infusion

Posted By:Bob Pisani

Topics:Earnings | Europe | Investment Strategy | Stock Market

Sectors:Banks

Hong Kong dropped 12 percent to its lowest level in 5 years, S&P futures have swung in a 60 point range this morning, though they are well off their lows.

Metal and energy commodities are again down 2 to 5 percent, as are many commodity stocks like BHP Billiton[BHP Loading... () ], Total[TSS Loading... () ], and British Petroleum[BP Loading... () ]. European bank stocks like Deutsche Bank[DB Loading... () ], AXA[AXA Loading... () ], HBC [HBC Loading... () ]are down about 10 percent pre-open.

The Commercial Paper Funding Facility (CPFF) kicks in today. That, combined with announcements of capital infusions, means that programs are finally starting to kick in.

In fact, Assistant Treasury Secretary David Nason said on our air that $125 billion in stock purchases will occur this week after the signing of bank deals.

Elsewhere:

1) Announcements regarding capital infusions are coming fast and furious now. SunTrust Bank[STI Loading... () ] cut its dividend to $0.54 from $0.77, and will be selling $3.58 billion in preferred stock and warrants to the Treasury.

Fifth Third [FITB Loading... () ]is trading up as they announced last night they too plan to seek a $3.4 b capital injection from Treasury.

It appears that about 20 regional banks will be getting capital infusions from the Treasury Department, on top of the nine large banks that will receive about $125 billion.

2) Earnings:

Arch Coal,[ACI Loading... () ] like many companies, reported earnings above expectations but has guided lower for the rest of the year, to $2.30-2.50 versus prior guidance $2.50-2.85 (estimates $2.69).

Verizon [VZ Loading... () ] beat estimates by a small amount thanks to strong wireless sales, despite worries that a slower U.S. economy would hurt spending by consumers and business customers.

3) CenturyTel Inc.[CTL Loading... () ] agreed to buy bigger local-telephone operator Embarq for $5.82 billion. Embarq shareholders will get 1.37 CenturyTel share for each Embarq common share they own, valuing Embarq at $40.42 a share based on Friday's closing prices, a 36% premium. Embarq, you might recall, was a SprintNextel spin-off.