Are We Looking At Another LTCM?
Stocks were lower on rumors that one or more hedge
funds may have a high GM debt exposure. The talk is that traders had
to unwind large GM and Ford debt positions–$8 billion is the guess.
Some funds were long the bonds and short GM stock.
Debt of the two companies was recently cut to junk status by S&P and
may be cut by other ratings agencies soon.
The Dow and S&P closed down 1%, while the Nasdaq fell 0.-86%. Fro the year,
the Dow is off 4.7%; the Nasdaq is 9.8% lower.
The day started off with $52 oil, but a power outage at a
ConocoPhillips
(
COP |
Quote |
Chart |
News |
PowerRating) refinery in Louisiana sent oil prices above $53.
After the bell, Cisco
(
CSCO |
Quote |
Chart |
News |
PowerRating) reported 0.23, a penny ahead;
revenues were $6.2 billion, also ahead of the $6.15 billion estimate; net income
rose 16%. CNET reports that Yahoo
(
YHOO |
Quote |
Chart |
News |
PowerRating) will announce a new music
service this week, hoping to capture some of Apple’s market. Dreamworks
(
DWA |
Quote |
Chart |
News |
PowerRating)
reported 0.44 vs a 0.58 estimate.
Toll Bros.
(
TOL |
Quote |
Chart |
News |
PowerRating) reported a record backlog with Q2 contracts +38%
Boeing
(
BA |
Quote |
Chart |
News |
PowerRating) is selling planes to Japan Airlines in a $5.3 billion
deal. Also of note: the Paris Air Show is on June 13–Boeing tends to do well
just prior to the show.
Pfizer
(
PFE |
Quote |
Chart |
News |
PowerRating) said Bextra is likely to return to the market.
Warner Music IPO (WMG) is pricing tonight, between $19-20, down from
$22-24. New Skies (NSE) is trading today. It was priced at 16.50
and closed at 16.58..
The Wall Street Journal says that
hedge funds are hitting a rough patch. Hedge funds’ performance is -1.8% on
average this year vs. the S&P 500 performance of -4.5%. The Journal
estimates there are 8000 hedge funds today vs. 4800 in 2001.
Boeing
(
BA |
Quote |
Chart |
News |
PowerRating) is selling planes to Japan Airlines in a $5.3 billion
deal. Also of note: the Paris Air Show is on June 13–Boeing tends to do well
just prior to the show. GE Commercial will purchase 6 737 airliners for $330
million
Cisco
(
CSCO |
Quote |
Chart |
News |
PowerRating) reported. Estimates are 0.22 with revenues of $6.15
billion. The last 2 quarters, CSCO came in light on sales.
Cray Research may potentially be de-listed at Nasdaq. New symbol:
CRAYE.
Pac-Man turns 25! The game, popular in the early ’80s, has generated
more than $100 million in sales—one quarter at a time.
Wednesday morning, look for the trade balance numbers at 8:30 AM–consensus
$62 billion.
Strong sectors were: Biotech
(
$BTK.X |
Quote |
Chart |
News |
PowerRating) +2.06%
Weak sectors were: Airlines
(
$XAL.X |
Quote |
Chart |
News |
PowerRating) -3.32%
Oil Services
(
$OSX.X |
Quote |
Chart |
News |
PowerRating) -2.24% Brokers
(
$XBD.X |
Quote |
Chart |
News |
PowerRating)
-1.87%
| Dow | -103.30 | 10,281.304 |
| Nasdaq | -16.90 | 1962.77 |
| S&P 500 | -12.66 | 1166.18 |
The dollar was -0.18 at
84.49
Crude Oil was +0.04 at
52.07
Gold was -0.20 at 426.50
1.62 billion on the Nasdaq.
Market breadth was negative.
| NYSE | Issues | |
| Advancing | 1101 | Up Vol 159 |
| Declining | 2110 | Down Vol 551 |
| 1.91 | 3.46 | |
| Nasdaq |
||
| Advancing | 890 | Up Vol 177 |
| Declining | 1927 | Down Vol 456 |
| 2.16 | 12.57 |
Stocks In The News
GM announced its
regular .50 quarterly dividend. There is speculation this may be cut. GM yields
7% at current levels.
El Paso
(
EP |
Quote |
Chart |
News |
PowerRating) missed by 0.06.
Priceline (PCLN)
beat by a penny.
Diagnostic Products
(
DP |
Quote |
Chart |
News |
PowerRating) missed by 0.07 and revenues were light.
Delta Airlines
(
DAL |
Quote |
Chart |
News |
PowerRating) said it expects a large loss for 2005.
Brice Wightman