Insurance Stocks Clobbered–Here’s Why
Stocks slid Thursday on
higher oil prices, lackluster economic data and a weak report by General Motors.
Add to that news that Eliot Spitzer was investigating the insurance industry and
it added up a rough day on the Street. The
Dow closed below 10,000 for the first time since September 27.
Eliot Spitzer is taking on the insurance
industry, specifically bid rigging and payoffs by Marsh and McLennan
(
MMC |
Quote |
Chart |
News |
PowerRating).
Other companies named in the investigation are: Ace, AIG
(
AIG |
Quote |
Chart |
News |
PowerRating), The Hartford
and Munich American. The Insurance Index
(
IUX.X |
Quote |
Chart |
News |
PowerRating) dropped 3.8%; AIG lost
10% and MMC fell 24%.
The trade deficit for August rose more than
expected to $54 billion; import prices rose 0.2%; export prices rose 0.4%.
Jobless claims for the week of 10/9 rose 15,000 to 352,000.
Oil inventories rose by 4.2 million
barrels. Heating oil inventories fell by 2.5 million barrels. The EIA said
demand for heating oil rose 3.1% in the past month. Gasoline inventories rose
1.2 million barrels. Crude oil is trading $8 above its 50-day moving average, a
rare occurrence.
General Motors
(
GM |
Quote |
Chart |
News |
PowerRating) missed estimates, reporting 0.78, warned, and announced 12,000 job cuts
in Europe. The company also cited rising raw materials costs.
Bank earnings are in focus. The good news: lower
reserves for bad loans. The bad news: low rates are putting pressure on spread
revenue and capital markets have been poor. Citigroup
(
C |
Quote |
Chart |
News |
PowerRating) Q3 profits
rose, 1.02 vs. a 0.99 estimate, but missed on revenues. 58% of profit came from
its consumer unit. Bank of America
(
BAC |
Quote |
Chart |
News |
PowerRating) beat by a penny. Q3 profit
rose 29%; the company missed on revenues.
PlanetOut
(
LGBT |
Quote |
Chart |
News |
PowerRating) IPO came at $9. The stock is trading at 10.37.
Sun Microsystems
(
SUNW |
Quote |
Chart |
News |
PowerRating)
reported a narrower loss; Juniper
(
JNPR |
Quote |
Chart |
News |
PowerRating) reported 0.09. Tomorrow is
triple witching.
| Dow | -107.88 | 9897.45 |
| S&P 500 | -10.36 | 1103.29 |
| Nasdaq | -17.51 | 1903.02 |
Strong sectors were:
Airlines
(
XAL.X |
Quote |
Chart |
News |
PowerRating) +1.93%, Oil Services
(
OSX.X |
Quote |
Chart |
News |
PowerRating) +2.04%, Natural Gas
(
XNG.X |
Quote |
Chart |
News |
PowerRating)
+1.22%.
Weak sectors were: Insurance
(
IUX.X |
Quote |
Chart |
News |
PowerRating)
-6.75%, Semis
(
SOX.X |
Quote |
Chart |
News |
PowerRating), , Brokers
(
XBD.X |
Quote |
Chart |
News |
PowerRating) -1.67%.
10-year notes were: +140
at 113 170
The dollar
was -0.33 at 87.55
Gold was +2.00 at 417.90
Crude Oil was +0.86 at 54
1.58 billion on the Nasdaq.
Market breadth was negative.
| NYSE | Issues | |
| Advancing | 1349 | Up Vol 438 |
| Declining | 1939 | Down Vol 1041 |
| Ratio | 1.43 | 2.37 |
| Nasdaq |
||
| Advancing | 944 | Up Vol 474 |
| Declining | 2104 | Down Vol 1073 |
| Ratio | 2.22 | 2.26 |
Stocks in the News
Apple (AAPL)
reported 0.27 vs. a 0.18 estimate (0.26 adjusted for dilution). Revenues were
$2.35 billion vs. a $2.15 billion estimate. The company shipped over 2 million
iPods, more than the 1.45 million consensus.
Abbot Labs
(
ABT |
Quote |
Chart |
News |
PowerRating) was in-line and posted a higher Q3 profit.
United Healthcare
(
UNH |
Quote |
Chart |
News |
PowerRating) reported 1.04, beating by 0.04.
Southwest Airlines
(
LUV |
Quote |
Chart |
News |
PowerRating) said Q3 profits rose 12.3%.
Sandisk (SNDK)
missed by 0.05; the stock fell $5 in after hours trading.
Lam Research (LRCX)
beat by 0.06 and announced a $250 million share buyback.
QLogic (QLGC)
beat by 0.04.
InFocus
(
INFS |
Quote |
Chart |
News |
PowerRating) cut its Q3 sales outlook.
Nokia
(
NOK |
Quote |
Chart |
News |
PowerRating) said Q3 earnings fell, but that sales were strong
going into the last quarter.
Novellus (NVLS)
was in-line. The company lowered its outlook, saying customers have become more
cautious.
Brice Wightman