Post by Paddy by Grace on Apr 27, 2009 14:31:32 GMT -7
U.S. Stocks Fall as Swine Flu Drags Down Travel, Hotel Shares
www.bloomberg.com/apps/news?pid=20601087&sid=a5zqtzwDnzUE&refer=home
April 27 (Bloomberg) -- U.S. stocks retreated as concern the swine flu outbreak will hurt travel, energy and hotel companies overshadowed gains in health-care shares and General Motors Corp.’s plan to cut liabilities. Oil fell for the first time in a week, while Treasuries, the dollar and yen advanced.
Host Hotels & Resorts Inc., the nation’s largest lodging real estate investment trust, slid 15 percent. Delta Air Lines Inc. and Carnival Corp. lost 14 percent, while Chevron Corp. fell 1.8 percent as crude tumbled on concern the illness will curtail travel. Humana Inc., the second-biggest provider of U.S.-backed medical benefits, rose 6.9 percent as earnings more than doubled. GM, the largest automaker, rallied 21 percent.
“Concerns about how broad-based the outbreak is have grown over the course of the day,” said Douglas Cliggott, manager of the $84 million Dover Long/Short Sector Fund, which has beaten 94 percent of its peers over the last year. “The hope that a lot of travel-related industries had seen the worst has taken a severe hit today.”
The Standard & Poor’s 500 Index slid 1 percent to 857.51, dropping for the first time in three sessions. The Dow Jones Industrial Average declined 51.29 points, or 0.6 percent, to 8,025. The Russell 2000 Index slipped 1.9 percent. About three stocks fell for each that rose on the New York Stock Exchange.
U.S. stocks extended a global slump in equities after the flu outbreak spread from Mexico to as far as New Zealand and five U.S. states and Lawrence Summers, director of the White House National Economic Council, said the U.S. economy will keep contracting. The MSCI World Index of 23 developed nations lost 0.9 percent, halting a four-day advance.
Mexico Stocks, Peso Drop
In Mexico, where the swine-flu death toll has exceeded 100, the benchmark Bolsa index tumbled 3.3 percent and the peso slid 4.1 percent against the dollar, the most in six months.
The S&P 500 has rallied 27 percent since March 9 as companies from American Express Co. to Ford Motor Co. posted better-than-estimated earnings and investors speculated U.S. Treasury Secretary Timothy Geithner’s plan to finance the purchase of as much as $1 trillion in illiquid assets from banks will help to pull the global economy out of a recession.
Host Hotels slid $1.16 to $6.64. Marriott International Inc., the biggest U.S. hotel chain, lost 5.1 percent to $21.17.
Carnival, the biggest cruise-line operator, slumped $3.84 to $24.59. Las Vegas Sands Corp., the casino operator, fell 6.9 percent to $6.91.
Airlines Tumble
A gauge of U.S. airlines tumbled 11 percent after earlier losing 15 percent, the steepest intraday drop since stock trading resumed after the Sept. 11, 2001, terror attacks. The swine flu outbreak may push global airlines and commercial-plane makers to further losses and poses additional concerns for the “strugging” industries, said Deutsche Bank AG analysts.
Delta Air Lines, the world’s largest carrier, lost $1.13 to $6.75. UAL Corp., operator of United Airlines, dropped 14 percent to $5.50. US Airways Group Inc., the smallest U.S. full- fare airline, slid 17 percent to $4 for the steepest slide among 13 carriers in the Bloomberg U.S. Airlines Index.
Smithfield Foods Inc., the world’s largest pork processor, tumbled 12 percent to $9.04. Tyson Foods Inc., the largest U.S.- based meat producer, retreated 8.9 percent to $9.96.
Hog and pork-belly futures plunged the maximum allowed by the Chicago Mercantile Exchange on speculation that meat demand will shrink with the global spread of swine flu in humans. Cattle futures also dropped.
Chevron, the second-biggest oil producer, fell $1.19 to $65.41. Oil slid 2.7 percent to $50.14 a barrel in New York.
Swine Flu
The outbreak in the U.S. grew to 40 confirmed cases, the World Health Organization said. Six people in Canada contracted swine flu and more cases are likely, government officials said. New Zealand said as many as 13 students who recently visited Mexico may have swine flu.
A flu pandemic capable of killing more than 70 million people worldwide would push the world economy into a “major global recession” costing more than $3 trillion, the World Bank said in October in a revised estimate of a worst-case scenario.
Stocks battered by the swine flu outbreak may represent bargains for long-term investors, said JPMorgan Chase & Co.’s Chief U.S. Equity Strategist Thomas Lee. The decline in global equities following the outbreak of Severe Acute Respiratory Syndrome in February 2003 proved to be an “excellent” opportunity to pick up shares, Lee said. This is probably a similar situation, the New York-based strategist wrote in a research report today.
“Nothing about swine flu seems thesis changing,” said Lee. He reiterated his forecast for the S&P 500 to climb to 1,100 by year-end, representing a 27 percent surge from the April 24 close.
Banks Retreat
Bank shares slumped on concern government stress tests will force some lenders to raise more capital, possibly by converting preferred stock held by the government’s Troubled Asset Relief Program into common shares. Banks received preliminary results of the tests last week. A final report will be published May 4.
SunTrust Banks Inc., KeyCorp and Regions Financial Corp., pegged by Morgan Stanley last week as the “most likely” to need capital, each dropped at least 8.5 percent today.
Humana rallied $1.89 to $29.24. The provider of medical benefits said 2009 earnings excluding some items will be at least $6.10 a share, beating the average analyst estimate of $5.92. Humana also said that first-quarter profit more than doubled as it raised prices and had fewer elderly customers whose prescriptions dragged down earnings last year.
GM Rallies
GM’s plans to cut liabilities helped the market rise briefly in midday trading, and helped limit its eventual slide.
GM surged 35 cents to $2.04. The automaker working to stave off a June 1 U.S.-backed bankruptcy stepped up dealer shutdowns and job cuts and offered equity to bondholders under a plan to reduce liabilities by $44 billion.
“The GM announcement about cutting jobs has given some positive bias to the market,” said Rob Morgan, who helps oversee $6 billion as the market strategist at Clermont Wealth Strategies in Lancaster, Pennsylvania. “People are happy to hear news like that from GM instead of that they’re just going to file for bankruptcy.”
Whirlpool Corp., the world’s largest appliance maker, climbed 7.3 percent to $43.69 after reporting first-quarter profit that exceeded analysts’ estimates. Net income fell 28 percent to $68 million, or 91 cents a share, from a year earlier. Analysts had anticipated a loss of 18 cents, the average of four estimates compiled by Bloomberg.
Earnings Watch
Qualcomm Inc. gained 4.4 percent to $43.17. The world’s biggest maker of mobile-phone chips said third quarter sales will be at least $2.4 billion, beating the average analyst estimate of $2.35 billion.
Earnings have slumped 32 percent on average for the 186 companies in the S&P 500 that released first-quarter results since April 7, data compiled by Bloomberg shows. Still, profits have topped analysts’ estimates by an average 16 percent. The January-to-March period is projected to be the seventh straight quarter of declining earnings, the longest stretch on record.
Treasuries gained, sending the benchmark two-year note’s yield down seven basis points, or 0.07 percentage point, to 0.89 percent. The 10-year bond’s yields slipped eight basis points to 2.92 percent.
www.bloomberg.com/apps/news?pid=20601087&sid=a5zqtzwDnzUE&refer=home
April 27 (Bloomberg) -- U.S. stocks retreated as concern the swine flu outbreak will hurt travel, energy and hotel companies overshadowed gains in health-care shares and General Motors Corp.’s plan to cut liabilities. Oil fell for the first time in a week, while Treasuries, the dollar and yen advanced.
Host Hotels & Resorts Inc., the nation’s largest lodging real estate investment trust, slid 15 percent. Delta Air Lines Inc. and Carnival Corp. lost 14 percent, while Chevron Corp. fell 1.8 percent as crude tumbled on concern the illness will curtail travel. Humana Inc., the second-biggest provider of U.S.-backed medical benefits, rose 6.9 percent as earnings more than doubled. GM, the largest automaker, rallied 21 percent.
“Concerns about how broad-based the outbreak is have grown over the course of the day,” said Douglas Cliggott, manager of the $84 million Dover Long/Short Sector Fund, which has beaten 94 percent of its peers over the last year. “The hope that a lot of travel-related industries had seen the worst has taken a severe hit today.”
The Standard & Poor’s 500 Index slid 1 percent to 857.51, dropping for the first time in three sessions. The Dow Jones Industrial Average declined 51.29 points, or 0.6 percent, to 8,025. The Russell 2000 Index slipped 1.9 percent. About three stocks fell for each that rose on the New York Stock Exchange.
U.S. stocks extended a global slump in equities after the flu outbreak spread from Mexico to as far as New Zealand and five U.S. states and Lawrence Summers, director of the White House National Economic Council, said the U.S. economy will keep contracting. The MSCI World Index of 23 developed nations lost 0.9 percent, halting a four-day advance.
Mexico Stocks, Peso Drop
In Mexico, where the swine-flu death toll has exceeded 100, the benchmark Bolsa index tumbled 3.3 percent and the peso slid 4.1 percent against the dollar, the most in six months.
The S&P 500 has rallied 27 percent since March 9 as companies from American Express Co. to Ford Motor Co. posted better-than-estimated earnings and investors speculated U.S. Treasury Secretary Timothy Geithner’s plan to finance the purchase of as much as $1 trillion in illiquid assets from banks will help to pull the global economy out of a recession.
Host Hotels slid $1.16 to $6.64. Marriott International Inc., the biggest U.S. hotel chain, lost 5.1 percent to $21.17.
Carnival, the biggest cruise-line operator, slumped $3.84 to $24.59. Las Vegas Sands Corp., the casino operator, fell 6.9 percent to $6.91.
Airlines Tumble
A gauge of U.S. airlines tumbled 11 percent after earlier losing 15 percent, the steepest intraday drop since stock trading resumed after the Sept. 11, 2001, terror attacks. The swine flu outbreak may push global airlines and commercial-plane makers to further losses and poses additional concerns for the “strugging” industries, said Deutsche Bank AG analysts.
Delta Air Lines, the world’s largest carrier, lost $1.13 to $6.75. UAL Corp., operator of United Airlines, dropped 14 percent to $5.50. US Airways Group Inc., the smallest U.S. full- fare airline, slid 17 percent to $4 for the steepest slide among 13 carriers in the Bloomberg U.S. Airlines Index.
Smithfield Foods Inc., the world’s largest pork processor, tumbled 12 percent to $9.04. Tyson Foods Inc., the largest U.S.- based meat producer, retreated 8.9 percent to $9.96.
Hog and pork-belly futures plunged the maximum allowed by the Chicago Mercantile Exchange on speculation that meat demand will shrink with the global spread of swine flu in humans. Cattle futures also dropped.
Chevron, the second-biggest oil producer, fell $1.19 to $65.41. Oil slid 2.7 percent to $50.14 a barrel in New York.
Swine Flu
The outbreak in the U.S. grew to 40 confirmed cases, the World Health Organization said. Six people in Canada contracted swine flu and more cases are likely, government officials said. New Zealand said as many as 13 students who recently visited Mexico may have swine flu.
A flu pandemic capable of killing more than 70 million people worldwide would push the world economy into a “major global recession” costing more than $3 trillion, the World Bank said in October in a revised estimate of a worst-case scenario.
Stocks battered by the swine flu outbreak may represent bargains for long-term investors, said JPMorgan Chase & Co.’s Chief U.S. Equity Strategist Thomas Lee. The decline in global equities following the outbreak of Severe Acute Respiratory Syndrome in February 2003 proved to be an “excellent” opportunity to pick up shares, Lee said. This is probably a similar situation, the New York-based strategist wrote in a research report today.
“Nothing about swine flu seems thesis changing,” said Lee. He reiterated his forecast for the S&P 500 to climb to 1,100 by year-end, representing a 27 percent surge from the April 24 close.
Banks Retreat
Bank shares slumped on concern government stress tests will force some lenders to raise more capital, possibly by converting preferred stock held by the government’s Troubled Asset Relief Program into common shares. Banks received preliminary results of the tests last week. A final report will be published May 4.
SunTrust Banks Inc., KeyCorp and Regions Financial Corp., pegged by Morgan Stanley last week as the “most likely” to need capital, each dropped at least 8.5 percent today.
Humana rallied $1.89 to $29.24. The provider of medical benefits said 2009 earnings excluding some items will be at least $6.10 a share, beating the average analyst estimate of $5.92. Humana also said that first-quarter profit more than doubled as it raised prices and had fewer elderly customers whose prescriptions dragged down earnings last year.
GM Rallies
GM’s plans to cut liabilities helped the market rise briefly in midday trading, and helped limit its eventual slide.
GM surged 35 cents to $2.04. The automaker working to stave off a June 1 U.S.-backed bankruptcy stepped up dealer shutdowns and job cuts and offered equity to bondholders under a plan to reduce liabilities by $44 billion.
“The GM announcement about cutting jobs has given some positive bias to the market,” said Rob Morgan, who helps oversee $6 billion as the market strategist at Clermont Wealth Strategies in Lancaster, Pennsylvania. “People are happy to hear news like that from GM instead of that they’re just going to file for bankruptcy.”
Whirlpool Corp., the world’s largest appliance maker, climbed 7.3 percent to $43.69 after reporting first-quarter profit that exceeded analysts’ estimates. Net income fell 28 percent to $68 million, or 91 cents a share, from a year earlier. Analysts had anticipated a loss of 18 cents, the average of four estimates compiled by Bloomberg.
Earnings Watch
Qualcomm Inc. gained 4.4 percent to $43.17. The world’s biggest maker of mobile-phone chips said third quarter sales will be at least $2.4 billion, beating the average analyst estimate of $2.35 billion.
Earnings have slumped 32 percent on average for the 186 companies in the S&P 500 that released first-quarter results since April 7, data compiled by Bloomberg shows. Still, profits have topped analysts’ estimates by an average 16 percent. The January-to-March period is projected to be the seventh straight quarter of declining earnings, the longest stretch on record.
Treasuries gained, sending the benchmark two-year note’s yield down seven basis points, or 0.07 percentage point, to 0.89 percent. The 10-year bond’s yields slipped eight basis points to 2.92 percent.