Iron and Steel Price Moves: What They Mean
Futures, which had been trading down all morning, got a small boost when personal spending for July came in a big stronger than expected (0.4 percent vs. 0.3 percent consensus), but then resumed their downward move and are now at the lows for the session.
1) Hewlett-Packard rises 3 percent after announcing a $10 billion addition to its stock buyback program. The tech company expects to repurchase at least $3 billion of its shares in the current quarter alone. This comes as H-P's share price is hovering right near a new 52-week low, having fallen 18 percent since the abrupt resignation of CEO Mark Hurd earlier this month.
Gap, Ann Taylor, Nordstrom, Dillard's and Intuit have announced buybacks recently.
2) Intel announced it is buying a wireless unit from German chipmaker Infineon for $1.4 billion in cash. The acquisition would give Intel access to wireless technology it could implement in its processors used in portable devices like laptops, tablet PCs, and smartphones. The deal is expected to close in the first quarter of next year.
3) Biotech firm Genzyme raises 4 percent after it rejected an $18.5 billion bid by French pharmaceutical giant Sanofi-Aventis . Genzyme's CEO Henri Termeer declared "this is not the right time to sell the company" and that the bid "dramatically undervalues our company."
Rumors of a potential deal have been circulating for about a month, but over the weekend, Sanofi-Aventis went public with its $69/share cash offer for the biotech firm. Since the rumors began, shares of Genzyme are up nearly 30 percent.
4) The Semiconductor Industry Association (SIA) reported a 1.2 percent sequential rise and a 37 percent year-over-year gain in chip sales last month. Despite recent warnings from companies like Intel on 2nd half sales, the SIA reaffirms its 2010 forecast for industry growth (28.4 percent).
5) The Financial Times reports that iron ore miners like BHP Billiton and Rio Tinto will see a drop in iron ore prices during the 4th quarter — the first quarterly decline in a year. Although the price declines, which will likely to be made official tomorrow, are a negative for mining companies, they will be welcomed news to steelmakers, which have been up against lower steel demand in recent months. As a result, steelmakers have seen their steel prices drop and have been reducing their production outputs appropriately.
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