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US Stocks End 2Q With Small Drop; GM Is Best DJIA Gainer June 30, 2006

Posted by notapundit in Economic News, Main.
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NEW YORK (Dow Jones)–The turbulent second quarter ended pretty meekly, with stocks posting modest losses on Friday, and General Motors and United Technologies emerging as the Dow Jones Industrial Average’s best performers for the period, while Home Depot ended up at the bottom of the bin.

The Dow industrials lost 40.58, or 0.36%, to 11150.22 on Friday. For the second quarter, the industrials gained 0.4%, their fourth consecutive quarterly gain.

The Nasdaq Composite Index shed 2.29, or 0.11%, to 2172.09. For the quarter, it fell 7.2%, ending a streak of four straight quarterly gains.

The Standard & Poor’s 500 Index declined 2.67, or 0.21%, to 1270.20. In the second quarter it fell 1.9%, also bringing an end to four straight quarterly gains.

After opening to the upside, stock prices turned lower on Friday after the Chicago purchasing managers monthly report suggested a scenario of economic slowing along with higher prices.

The report “sent a mixed signal that left investors cautious,” said Kevin Beadles, managing director of institutional equity trading at Wedbush Morgan Securities. “But basically, there was some buying exhaustion after (Thursday’s) rally.”

General Motors rose 2.35, or 8.6%, to 29.79. Billionaire investor Kirk Kerkorian’s Tracinda Corp. urged the struggling auto maker to join the alliance between Renault SA and Nissan Motor, an agreement that would establish a link between GM and two companies that have already been through difficult turnarounds and also bring GM into the orbit of Carlos Ghosn, the chief executive of both Renault and Nissan who has a track record of fixing broken auto operations.

GM’s gain helped solidify its place as the Dow industrial average’s best percentage gainer in the second quarter, with a jump of 40.1%.

United Technologies, a defensive play, came in at number two among the industrials. Shares of the provider of products and services to the aerospace and building industries rose 9.4% for the quarter, aided by a 13 cent rise to 63.42 on Friday.

Home Depot, struggling amid signs of a slowing housing market, was the Dow industrial average’s biggest percentage decliner. The stock fell 15.4%, including 67 cents, or 1.8%, to 35.79 on Friday when the Chicago purchasing managers report raised economic concerns.

Volume on the New York Stock Exchange was 1.78 billion shares. Up volume beat down by 1.08 billion shares to 691 million, and stocks that rose in value exceeded those that fell, 2,304 to 1,074.

On the New York Stock Exchange, there were 2,323 issues advancing, 1,051 declining and 116 unchanged.

NYSE volume totaled 2,349,595,440 shares, compared with 1,891,067,250 Thursday.

The NYSE Composite Index was 8169.07, up 30.21. The average price per share rose by 31 cents.

RSA Security (Nasdaq) leapt 4.22, or 18%, to 27.10 and EMC lost 28 cents, or 2.5%, to 10.97. Computer storage-technology giant EMC plans to acquire security-software company RSA for slightly less than $2.1 billion, after accounting for RSA’s cash on hand.

Apple Computer (Nasdaq) dropped 1.70, or 2.9%, to 57.27. An internal investigation discovered irregularities related to the issuance of certain stock-option grants made between 1997 and 2001, including one – later canceled – to Chief Executive Steve Jobs.

Palm (Nasdaq) plunged 2.56, or 14%, to 16.10. The maker of handheld digital devices issued a weak fiscal first-quarter estimate as a result of its decision to discontinue selling an older smartphone to the European market.

Palm rival Research In Motion (Nasdaq) gained 3.78, or 5.7%, to 69.77. The BlackBerry maker’s solid first-quarter financial results and in-line second-quarter guidance eased concerns that growth was decelerating.

Michaels Stores rose 3.24, or 8.5%, to 41.24. The arts-and-crafts retailer could be sold for more than $5.8 billion, with its board expected to have met Friday to consider two takeover bids worth more than $44 a share each, the New York Times reported.

Cephalon (Nasdaq) jumped 5.84, or 11%, to 60.10. Hopes rose that the drug concern could begin marketing its new treatment for cancer pain in the fourth quarter after word that the Food and Drug Administration had sent the company a so-called approvable letter, which typically means a drug might ultimately get approved, but only after the FDA reviews more data.

Computer Sciences plunged 7.32, or 13%, to 48.56. The information technology service provider’s board ended a six-month search to sell the company. Computer Sciences had disclosed it was considering a potential sale on April 4, when it announced it hired Goldman Sachs to consider buyout offers after numerous negotiations had failed to result in a deal.

Vertex Pharmaceuticals (Nasdaq) gained 4.68, or 15%, to 36.71. The drug company said it expects to receive $545 million in milestone payments, plus additional royalties, from Johnson & Johnson as part of an agreement to market and develop Vertex’s hepatitis C virus protease inhibitor, VX-950. J&J added 3 cents to 59.92.

Mittal Steel’s American depositary receipts lost 1.81, or 5.6%, to 30.51. Arcelor shareholders rejected a proposed $16 billion merger with Russian steel producer Severstal, clearing the path for Mittal’s hard-fought acquisition of the company.

Cendant gained 52 cents, or 3.3%, to 16.29. The provider of travel and real estate services agreed to sell its Travelport travel distribution services unit to an affiliate of Blackstone Group for $4.3 billion.

Hewitt Associates gained 42 cents, or 1.9%, to 22.48. Citigroup upgraded shares of the human-resource services provider to buy from hold, citing an improving macro environment for human-resources consulting and benefits outsourcing and sentiment Hewitt’s board has started taking a more active interest in the company’s performance.

Constellation Brands lost 1.24, or 4.7%, to 25. The spirits company posted a 13% rise in fiscal first-quarter profit, driven by strong sales of imported beer and branded wine, but the results missed Wall Street’s expectations.

Real estate investment trusts, whose dividends compete with interest rates, rose on hopes the Federal Reserve’s run of rate increases is winding down. General Growth Properties gained 1.09, or 2.5%, to 45.06, AMB Property rose 91 cents, or 1.8%, to 50.55, and CapitalSource advanced 63 cents, or 2.8%, to 23.46.

Manitowoc continued climbing, with a gain of 3.97, or 9.8%, to 44.50. The stock leapt 12% on Thursday when the construction-equipment maker raised its full-year earnings estimates and preannounced a second-quarter upside.

Advance Auto Parts continued its decline, dropping 1.01, or 3.4%, to 28.90. Shares plunged 17% on Thursday when the retailer said second-quarter per-share earnings and same-store sales growth would be lower than expected.

By Karen Talley, Dow Jones Newswires

Dow Jones News Top Stories Of The Day – June 30, 2006 June 30, 2006

Posted by notapundit in Economic News, Main.
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TRACINDA PUSHES GM LINKUP WITH RENAULT
Kirk Kerkorian’s Tracinda Corp. asks that GM explore joining the alliance with Renault and Nissan, a proposition the latter two say they are open to. Agreement would establish link between GM and two companies that have already been through difficult turnarounds and would bring it into the orbit of Carlos Ghosn, the CEO of both companies. GM’s board reportedly calls an emergency meeting. GM shares rise 8%.

US CONSUMER SPENDING SLOWS
Spending grows by 0.4% last month, after climbing 0.7% in April. Personal income also rises by 0.4% in May and 0.7% in April. Core PCE index up 2.1% from a year ago, slightly above Fed’s comfort zone. Separate report shows consumer sentiment brightened at end of June.

CHRYSLER UNVEILS EMPLOYEE PRICING
Chrysler Group says it’s bringing back last year’s employee pricing discount, a move that could lead to another incentive war as competitors GM and Ford will be pressured to match. Chrysler also is launching new ad campaign. Shares up 1%.

APPLE DOWN AFTER STOCK-OPTION PROBE NEWS
Apple shares fall 2% a day after company says that an internal investigation discovered irregularities related to stock-option grants made between 1997 and 2001, including one, later canceled, to Chief Executive Steve Jobs.

DOJ, BOEING AGREE ON $615M SETTLEMENT
Deal between Boeing and Justice Department settles two outstanding cases, one involving rocket launch data stolen from Lockheed Martin and the other involving former Air Force weapons buyer who admitted holding illegal job talks with Boeing.

CENDANT TO SELL TRAVEL-SERVICES UNIT TO BLACKSTONE
Cendant rises 3% as firm agrees to sell its Travelport travel-services unit to a Blackstone affiliate for $4.3 billion. Move is first of a four-part spinoff plan that will include the sale of Realogy and Wyndham Worldwide.

FDA OKS FIRST GENERIC VERSIONS OF PFIZER’S ZOLOFT
FDA gives final approval to the first generic versions of Pfizer’s Zoloft antidepressant, whose patent expired Friday, making it the second big-selling drug to face cheaper competition in the past week.

FDA OKS GENENTECH EYE DISEASE DRUG
FDA approves a drug — Lucentis, by Genentech — that’s been shown to improve vision in patients with a type of age-related macular degeneration that causes blindness. Genentech shares rise 2%.

PALM DROPS ON FISCAL 1Q FORECAST
Shares slump 11% a day after the handheld device maker gives a disappointing 1Q outlook because it won’t ship its older Treo 650 to Europe after today. Palm posts 4Q net of $27.2 million, or 25c a share, as sales rise 20% to $403.1 million.

DELPHI EXPECTS TO LOSE $2B IN 2006
Auto-parts maker says it expects to incur $2 billion in operating losses in 2006, but it calls its performance “extraordinary” and says it warrants continued payments of incentives to top executives.

AON TO SELL WARRANTY BUSINESS TO ONEX
Aon agrees to sell its warranty group to Canada’s Onex for roughly $710 million as the world’s second-largest insurance broker continues to cut its exposure to underwriting. Aon shares slip 1%.

REFCO TRUSTEE AIMS TO DISBURSE $2.3B
Court-appointed trustee of Refco’s Bermuda-based unit says it has $2.3 billion in cash and securities he intends to distribute soon to creditors and customers. Bankruptcy judge approves $506 million settlement Refco’s creditors obtained from Bawag.

SEC SAYS EX-CHAIR OF PIMCO STOCK FUNDS LIABLE
Federal jury has found that the former chairman of Pimco stock funds violated securities laws, the SEC says, handing federal regulators a major victory in their pursuit of mutual-fund trading abuses.

RALPHS TO SETTLE LABOR CHARGES
Kroger unit reaches settlement with government on matters related to improper hiring of locked out Ralphs’ employees during labor dispute from 2003 to 2004. Ralphs agrees to pay $20 million fine and to create $50 million restitution fund.

CSC ENDS SEARCH TO SELL FIRM
Shares fall 11% after Computer Sciences’ board ends six-month search to sell the IT-services company. Lockheed Martin and private-equity firms were among those rumored to be potential buyers.

PAULSON’S BOUNTY INCLUDES UNVESTED STOCK, OPTIONS
Paulson, who resigned as chairman and CEO of Goldman to take Washington cabinet post, is expected to cash in hundreds of millions of dollars of the company’s shares as he clears his portfolio to avoid conflicts of interest.

GLOBAL M&A SOARS TO $1.93T IN 1H
Merger and acquisition activity worldwide is set to reach a record $1.93 trillion for the first half of the year, fuelled by cash-rich buyers and accommodating debt markets.

NYSE GROUP SETS NEW TRADING FEES
NYSE’s parent unveils package of long-awaited changes to fees it charges for trading stocks on the Big Board and options on its NYSE Arca marketplace. Move is billed as putting the NYSE in a better position to profit from trading growth.

RESEARCH IN MOTION UP ON STRONG 1Q RESULTS
Shares add 4% after RIM posts 1Q revenue of $613.1 million, well above analysts’ expectations of $602 million. Net income comes in at 68c a share, up from 10c a year earlier. On an adjusted basis, share earnings were 70c versus 56c.

NALBANDIAN, BLAKE LOSE AT WIMBLEDON
No. 4 seed David Nalbandian and No. 8 seed James Blake of the U.S. both get defeated in the third round, the first big upsets of the tournament. Henin-Hardenne wins on the women’s side.

======= DOW JONES NEWSWIRES ANALYSIS AND COMMENTARIES =======

COMPLIANCE WATCH
Handle Complaints, But Play By Rules
Industry experts say financial advisers should get help with seemingly minor complaints before they reach compliance level. Smaller snags, such as botched trades and unreturned calls, often escalate into regulatory concerns, writes Jaime Levy Pessin.

IN THE MONEY
Pension-Measurement Debate Has A Big Impact
Dozens of companies are pushing for a change in how accounting rulemakers plan to measure pension-plan obligations, a seemingly arcane issue that could have a big impact on companies’ balance sheets.

============ U.S. MARKETS ACTION ===========
DJIA down 40.58 points to 11150.22 at close.
NASDAQ down 2.29 points to 2172.09 at close.
S&P 500 down 2.67 points to 1270.20 at close.
10-year T-note up 14/32 at 99 28/32 yield 5.140
NYMEX Spot Crude up $0.04 at $73.99/bbl
Dollar/Euro up 0.0128 at 1.2791

OIL FUTURES: Crude Tops $74; Gasoline Falls On Expiry June 30, 2006

Posted by notapundit in Economic News, Main.
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NEW YORK (Dow Jones)–Oil prices briefly topped $74 a barrel Friday in an extension of gains that have seen futures jump more than 7% over the past two weeks.

The August crude contract on the New York Mercantile Exchange rose 41 cents to $73.93 a barrel. It was the ninth straight gain for crude futures. During the past two weeks crude futures have advanced nearly $5, or 7.2%.

The August Brent contract on London’s ICE Futures went up 63 cents to $73.51 a barrel.

Front-month July gasoline futures, which gained nearly 30 cents over the past two weeks, tumbled 9.27 cents to settle at $2.2021 a gallon as traders liquidated long positions ahead of the contract’s expiration.

“You can never predict expiration days,” said Tom Bentz, an analyst at brokerage BNP Paribas Futures in New York. “I guess longs overstayed their welcome.”

July heating oil ended 2.34 cents lower at $1.9642 a gallon.

The exchange closed early, at 1 p.m. EDT, and will remain shut Monday and Tuesday in observance of U.S. Independence Day.

The gains were fueled by concern about gasoline supplies going into the long Fourth of July holiday, which is expected to see a record 34 million travelers hit the road.

Gasoline inventories fell last week for the first time in more than two months and are expected to shrink further over the summer as refiners grapple to meet rising summer demand.

U.S. refiners have faced an unusually high number of snags this year. Last week, a key ship channel in Louisiana was shut by an oil spill, cutting the crude supply to four area refineries and forcing them to cut production.

“The market is totally focused on refinery and gasoline problems and the problems in the Middle East,” said Chris McCormack, an analyst at ABN Amro in New York.

The gains in crude futures came as commodity traders breathed a sigh of relief after the Federal Reserve signaled Thursday that it might pause its 2 1/2-year interest-rate hike campaign. Fear of an economic slowdown triggered by rising interest rates had weighed on commodities earlier in the month.

“The risk capital that went to sidelines are finding their way back to the market,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

The return of speculative money to the market could mean record highs of more than $75.00 a barrel as early as next week, said Mike Guido, director of commodity strategy for Societe Generale in New York.

But Flynn said he’d not be surprised to first see a correction when markets open Wednesday, “even though longer term we’ll go to (a record) $78.00.

“The market is going to move higher basically on strong fundamentals and a strong economic outlook,” he said.

Following are prices for selected Nymex and ICE contracts and their comparison to values at the prior day’s settlement. Highs and lows include levels hit in overnight trade.

Prices for crude oil are in dollars a barrel and the change is in cents; prices for Nymex products are in cents a gallon and the changes are in points; prices for ICE gasoil are in dollars a ton and the change is in cents.

Nymex Prices:
Contract Settle Change Vs Low High
Thursday
Aug crude oil 73.93 +41 73.35 74.15
Sep crude oil 74.81 +30 74.39 75.10
Jul heating oil 196.42 -234 194.00 199.95
Aug heating oil 202.86 -218 202.00 206.36
Jul gasoline 220.21 -927 216.00 229.65
Aug gasoline 221.88 -128 220.50 224.00
Jul RBOB 239.31 +266 234.50 242.00
Aug RBOB 238.46 +331 234.80 239.00

ICE Prices:
Contract Settle Change Vs Low High
Thursday
Aug ICE Brent 73.51 +63 72.61 73.69
Jul ICE Brent 74.11 +80 73.16 74.30
Jul gasoil 643.75 +50 641.00 646.50
Aug gasoil 649.75 +25 646.75 653.00

By Masood Farivar, Dow Jones Newswires

US Military Seized Letters To Guantanamo Detainees June 30, 2006

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SAN JUAN, Puerto Rico (AP)–Attorneys for detainees at the U.S. prison at Guantanamo Bay said Friday the military has confiscated letters they have written to prisoners and other legal papers as part of an investigation into three apparent suicides earlier this month at the detention center.

The military hasn’t disclosed the reason for taking the papers, but attorneys said at least one detainee claimed it is because prison officials suspect the lawyers may have had advance knowledge of suicide attempts, or even encouraged them as a form of protest – an allegation they deny.

“They think that they are going to find letters from us suggesting suicide. It’s ludicrous,” said Clive Stafford Smith, legal director for Reprieve, a U.K. human rights group that has filed legal challenges on behalf of about 35 detainees.

The Center for Constitutional Rights, which has filed legal challenges on behalf of about 200 detainees, plans to have one of its attorneys look into the seizure of the legal papers and press for their return during a visit to Guantanamo next week, said Bill Goodman, the group’s legal director.

“This is a huge breach of attorney-client privilege,” Goodman said.

The papers deal mostly with the legal challenges filed on behalf of the detainees in civilian courts in the U.S. On Thursday, the U.S. Supreme Court ruled these lawsuits could go forward even though the U.S. Congress had stripped detainees of the right to file the petitions in December 2005. The court ruled the law couldn’t apply to legal challenges begun before then.
The court also ruled that plans to hold military war crimes trials for detainees violate both U.S. and international law. The administration of U.S. President George W. Bush now is looking to Congress for authority to deal with suspected terror detainees.

The military confiscated the letters and other legal papers shortly after three detainees, two from Saudi Arabia and one from Yemen, hanged themselves inside their cells on June 10 – the first deaths reported at the prison since it opened in January 2002.

A Guantanamo Bay spokesman, Navy Cmdr. Robert Durand, referred questions about the legal papers to the Naval Criminal Investigative Service, which is handling the probe into the deaths.

“The NCIS has the authority to collect whatever evidence it deems relevant,” Durand said in an e-mail from Guantanamo.

A spokesman for the Navy’s investigative service declined to comment.

A military legal official told defense attorney Richard Wilson that investigators had seized all personal papers from every detainee as part of the investigation into the suicides, according to an affidavit filed this month.

Wilson, who represents Canadian detainee Omar Khadr, said in his affidavit that the military official told him he “did not believe that there is any investigation of attorneys themselves as to involvement or encouragement of the deaths.”

However, that contradicts what at least one detainee, Binyam Muhammad, an alleged al-Qaida member from Ethiopia, told his military appointed-counsel, Air Force Maj. Yvonne Bradley: that guards told him they seized all his legal materials as part of an investigation into “whether lawyers had actively encouraged detainees to commit suicide,” Wilson wrote.

The U.S. holds about 450 men at Guantanamo on suspicion of links to al-Qaida or the Taliban.

New Jersey Now One Day Away From Government Shutdown June 30, 2006

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TRENTON, N.J. (AP)–New Jersey lawmakers neared the brink of a financial crisis Friday, just hours before the state’s constitutional deadline to adopt a budget that has been stalled by a dispute over the governor’s plan to increase the sales tax.

The state constitution requires a balanced budget by midnight, but with budget legislation far from law, Democratic Gov. Jon S. Corzine and legislators were expected to miss that deadline for the fourth time in five years.

Nothing has happened when deadlines were missed before, but the state never went past the morning of July 2 without an adopted budget.

If no agreement seems imminent, Corzine’s administration said he plans Saturday to sign an executive order that will begin a state government shutdown, with services such as the lottery the first to close and parks and beaches taking several days to completely shutter.

Casinos, which require monitoring by state gambling regulators to operate, lost a motion in Superior Court in Atlantic City on Friday that asked the court to instruct the governor to consider the monitors “essential employees” who could keep working during a shutdown.

Judge Steven Perskie said that while he thought the casinos should remain open, he didn’t have the authority to tell the governor what to do. He said a higher court would have to make that ruling.

“It’s very hard for me to attempt to find the words to express how irreparable, how damaging, how catastrophic this would be for the people of this state – not just the licensees – but the people,” Perskie said.

Joseph A. Corbo Jr., a vice president at the Borgata Hotel Casino & Spa and head of the state casino association, said if casinos were forced to close for the five-day holiday weekend, it would cost the state a total of about $10 million in casino tax revenue and cost casino workers about $3 million per day in wages and tips.

“We believe that it would be counterproductive for the state, which is in a budget crisis, to close businesses that generate millions of tax revenues, particularly since we directly pay for the state employees who regulate our casinos,” Corbo said.

State Sen. Bill Gormley, R-Atlantic, met with Corzine’s staff and said it was his impression casinos wouldn’t immediately close if state services begin shutting down.

“I think they’re fine through the weekend, through the Fourth,” Gormley said.

Meanwhile, a budget hearing led by Assembly Democrats opposed to Corzine’s plan to boost the sales tax from 6% to 7% resulted in no apparent progress Friday. The hearing with Treasurer Bradley Abelow recessed less than an hour after it started and both sides went into private talks that ended several hours later without agreement.

“It is obvious it is not going to solve anything for us to sit here and do this,” said Assemblyman Joseph Malone, R-Burlington.

Abelow said both sides remained about $1 billion apart, about the same amount that would be raised by a sales tax increase.

Corzine proposed the sales tax increase to help overcome a $4.5 billion budget deficit for the fiscal year that starts Saturday. It’s a key part of his $31 billion budget plan, and Corzine has threatened to veto any budget that doesn’t include it.

Assembly Speaker Joseph Roberts Jr., D-Camden, is leading opposition to the sales tax increase, questioning whether it’s needed, fearing voter backlash against lawmakers who would approve it and demanding any increase be reserved for property tax reform talks later this year.

Senate President Richard J. Codey, D-Essex, has tried to broker a compromise in which at least half the revenue that would be raised by the sales tax hike would be used to relieve the state’s highest-in-the-nation property taxes. Corzine has praised the plan, but Roberts has rejected it.

While the casinos go to court to fight any bid to close, the state Casino Control Commission was scheduled to meet at 5 p.m. Friday to consider when and how gambling might be halted. A 2003 appellate court ruling gave the state authority to suspend casino operations.

Meanwhile, four Democratic senators revived a proposal Friday to put video lottery terminals at the Meadowlands and said their plan would net the state $300 million a year. Casino operators have opposed the plan in the past, and it has gone nowhere when discussed previously.