Top 10 News Items 5/11-5/15: Equity Offerings En Fuego, Treasury Approves TARP Funds for Life Insurers, GM CEO Says Bankruptcy 'More Probable', Closes 1,100 Dealers
Here is a recap of the top news items from this week on Wall Street:
1. Equity offerings were all the rage this week as stocks (as measured by the S&P 500) have now rallied nearly 30% from the March lows, prompting companies to "sell high". The offering hysteria began with financials following last week's TARP results, but soon expanded to other sectors of the market. So far in May, about $38 billion in equity offerings have already been announced, smashing the previous record set in April at $22 billion. Some notables included: BB&T (NYSE: BBT), US Bancorp (NYSE: USB), Capital One (NYSE: COF), KeyCorp (NYSE: KEY), Ford (NYSE: F), MGM MIRAGE (NYSE: MGM) and SunTrust (NYSE: STI).
2. The U.S. Treasury confirmed this week what many traders had been expecting for some time: life insurance companies will now be able to apply for TARP funds. Insurers such as Hartford (NYSE: HIG), Prudential (NYSE: PRU) and Lincoln National (NYSE: LNC) rallied sharply on Thursday and after gapping substantially higher on Friday morning, the stocks closed lower for the week.
3. Speaking on a conference call early Monday, General Motor's (NYSE: GM) new CEO, Fritz Henderson, said bankruptcy at the automaker is "more probable" given the large tasks management will need to complete before the Obama administration's June 1st deadline. It gets worse: after the close that day, 6 GM execs liquidated their entire positions. The stock tumbled more than 20% on Tuesday. To close the week, GM announced that it will close about 1,100 car dealerships immediately, an issue which has been looming over shareholders for some time.
4. Several key retail earnings were released this week: Wal-Mart (NYSE: WMT), Nordstrom (NYSE: JWN), J.C. Penney (NYSE: JCP) and Kohl's (NYSE: KSS). The SPDR S&P Retail ETF (NYSE: XRT) finished this week about 6.4% lower.
5. Another IPO opened for trading this week. After pricing at $19 -- above its expected range of $16-$17 -- DigitalGlobe's (NYSE: DGI) stock closed this week at $20.50, up nearly 8% from where it priced. The issue saw solid volume, showing that investors are still showing an appetite for equities.
6. Intel (Nasdaq: INTC) was issued a record $1.45 billion fine from the EU this week, saying the company used rebates to thwart competition. Intel's CEO, Paul Otellini, responded with We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace - characterized by constant innovation, improved product performance and lower prices." Shares of Intel finished this week down less than 1%.
7. Following a month-long, 20% rally in crude oil since mid-April, the commodity fell 3% this week as the EIA lowered its '09 crude oil forecast from $53 to $51.70/barrel. The EIA also indicated that it expects crude to average $55 per barrel during the third quarter.
8. Data out Tuesday showed that the U.S.'s budget deficit in April rose to $20.9 billion, marking the first April budget deficit since 1983. Yikes...
9. Traders dealt with several mid-day outlook surprises this week, specifically, from Intel, MasterCard (NYSE: MA) and IBM (NYSE: IBM). Intel said Q2 is looking better-than-expected so far, MasterCard said FY09 sales growth will likely come in below the 12-15% previously forecasted and IBM said its on pace to sees FY10 EPS of $10-$11.
10. Alpha Natural Resources, Inc. (NYSE: ANR) and Foundation Coal Holdings, Inc. (NYSE: FCL) signed a definitive agreement under which the two companies will merge in an all-stock transaction, creating the world's third largest coal producer. ANR finished this week down 15.6%, while FCL rose 11%.
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