By Steve Goldstein, MarketWatch
Dec 14, 2005
No follow-through was seen on Wednesday after last session's Federal
Reserve decision, as stock futures pointed to a give-back of some of Tuesday's
gains.
Data showing the largest monthly fall in import prices in 2 1/2 years
offset a wider-than-expected trade deficit and helped lift the futures off
their worst levels.
March S&P 500 futures fell 1.50 points at 1,275.60 and Nasdaq 100 futures
shed 3.5 points at 1,720.5. Dow industrials futures lost 4 points to 10,888.
On Tuesday, the removal of the word "accommodative" to explain the Federal
Open Market Committee's view on interest rates lifted Dow industrials 56
points at 10,823, the Nasdaq Composite by 4 points at 2,265 and the S&P 500 by
7 points at 1,267.
The Fed decision continued to move currency markets, as did the wider-
than-anticipated trade gap, with the yen in particular rising against the
dollar, with the greenback recently down 1.8% to a 2-week low of 117.90 yen.
The dollar decline didn't help gold prices, as the February futures
contract slumped $9.30 to $514.80.
Prices of goods imported into the U.S. fell 1.7% in November, vs.
expectations of a 0.7% decline, led by an 8% drop in the price of imported
petroleum, the Labor Department said Wednesday. Petroleum prices fell the most
in almost a year. Imported crude oil prices dropped 6.2%.
The U.S. trade deficit widened by 4.4% in October to $68.9 billion, the
Commerce Department said Wednesday. The widening was a surprise. Economists
surveyed by MarketWatch expected the trade deficit to narrow to $62.9 billion.
Imports rose faster than exports in October. The U.S. trade deficit with China
widened to a record $20.5 billion in October compared with $16.8 bln in the
same month last year.
Of companies in focus, Anteon International soared 34% to $54.50 in pre-
open trading from Instinet after General Dynamics said it agreed to buy the
company for $2.2 billion, or $55.50 a share in cash. The deal price includes
the assumption of $100 million in debt, and General Dynamics said the
acquisition of the systems integration company would immediately boost
earnings.
Constellation Energy ran up 8.4% to $61 in Instinet after The New York
Times reported that FPL Group was in talks to buy the company for more than
$11 billion.
Elsewhere, Dow component Boeing Co. tacked on 1.2% to $71.45 after
Australia's Qantas said it would buy 115 B787 commercial jets from the company
as the cornerstone of its domestic Australian and international fleet renewal.
Boeing was competing with rival Airbus for the order.
Apple Computer was knocked 3.1% lower to $72.66 in Instinet after Bear
Stearns downgraded the company to peer perform from outperform, with the
broker citing valuation and maintaining estimates. Bear Stearns said the
valuation reflects much of the near-term optimism and is 7% above its year-end
2006 fair value, even though it's still encouraged by emerging opportunities,
such as Intel-based Macs, iPod shuffle refresh and the emergence of iPod as a
media platform.
The stock had reached an all-time high of $75.46 in intraday trading on
Tuesday.
Electronic Arts gave up 2.8% to $53.61 after Citigroup downgraded the
video-game developer to hold from buy, with the broker saying that while it
continues to believe the company is well positioned to grow with the console
cycle, downward pressure on near- and medium-term estimates due to weaker-
than-expected sales of certain games is likely to limit appreciation in the
shares. The broker also reduced its target price to $60 from $65.
SciClone Pharmaceuticals Inc. tumbled 30% to $2.70 after it reported mixed
results in trials of its Zadaxin drug. SciClone said it and Sigma-Tau S.p.A.
have found from interim results from a Phase 2 trial that Zadaxin with
dacarbazine chemotherapy showed a dose-dependent response for patients with
advanced-stage malignant melanoma. But SciClone said the first Phase III trial
of the drug with pegylated interferon alpha didn't show a statistically
significant benefit compared with pegylated interferon alone in treating
Hepatitis C.
There were some smaller deals that were unveiled Wednesday, both of
European firms buying U.S. ones.
SES Global said it's agreed to buy New Skies Satellites Holdings for $760
million, or $22.52 a share in cash, with New Skies expected to have $400
million in debt at the time of closing. New Skies is the world's fifth largest
satellite operator with 12 months ending Sept. 30 revenue of $233 million. New
Skies, which had been previously reported to have been a target of SES Global,
closed Wednesday at $23.50 a share.
Experian, the credit checking division of U.K. retailer Gus, agreed to buy
privately-held U.S. online shopping service PriceGrabber.com for $485 million.
Also on the M&A front, Europe's top court on Wednesday upheld the European
Union's rejection of General Electric's 2001 acquisition of Honeywell
International. Though the deal wasn't likely to be rekindled no matter what
the court ruled, the decision may have an impact on future deals.
Overseas, the Nikkei 225 tumbled 2% after a lower-than-forecast Tankan
quarterly sentiment indicator, while European markets were mostly lower as the
euro climbed over $1.20.
This MarketWatch news update is provided to you courtesy of Thomson
Financial.
This is Thomson Financial's Market Commentary, which is issued three times
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The information herein is believed to be true and accurate. We take no
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SOURCE Thomson Financial Corporate Group
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