YAHOO [BRIEFING.COM]: Sellers
had their way with stocks for the entire session, causing the stock market to
finish at session lows with its worst loss by percent in more than one month.
While all 10 major sectors in
the S&P 500 suffered sharp losses, the selling effort was rooted in the
financial sector. Financials finished 11.4% lower after Bank of America
(BAC 8.02, -2.58) reported that its first quarter credit loss
provisions totaled $13.4 billion, up almost $5 billion from the fourth quarter.
The announcement provided an excuse for participants to sell bank stocks after
watching them rally in recent weeks. Just last week bank stocks spiked after BB&T
(BBT 19.79, -3.63) stated banks could still post profits while
building reserves. To that point, Bank of America actually generated pretax,
preprovision income of $19 billion, which exceeded expectations. Diversified
banks finished 15.6% lower and diversified services stocks sank 15.9%.
Credit card companies were
also out of favor. Their weakness stemmed from fear that tighter regulation may
be in order. Consumer finance stocks dropped 15.0%.
Sun Microsystems (JAVA 9.15, +2.46) managed to make a gain
amid the session's declines. The stock soared after Oracle
(ORCL 18.82, -0.24) announced it will acquire the company for $9.50 per share,
which marked a premium of more than 40% above JAVA's closing price last week.
The announcement comes after
talks between IBM (IBM 100.43, -0.84) and Sun Microsystems
faltered. IBM stated it has no intention to return to discussions with Sun
Microsystems, according to reports.
PepsiCo (PEP 49.86, -2.27) announced it is doing
some buying as well. PepsiCo will purchase remaining stakes in Pepsi
Bottling Group (PBG 30.73, +5.53) for $29.50 per share and PepsiAmericas
(PAS 25.04, +5.16) for $23.27 per share, which translates to
respective premiums of roughly 17% over last week's closing prices. PepsiCo
also announced better-than-expected first quarter adjusted earnings per share
results.
With stocks dropping,
investors sought the safety of gold. Gold prices closed at $887.50 per ounce,
up 2.3%. Interest in gold was strong enough to help gold prices overcome a
resurgent dollar, which climbed roughly 0.8%, according to the Dollar Index.
The dollar's bounce came about
after ECB President indicated that more rate cuts may be in order for the
European economy, though such cuts would come in measures of 25 basis points.
The stronger dollar weighed
heavily on crude oil prices. May contracts finished 8.8% lower at $45.90 per
barrel. DJ30 -289.60 NASDAQ -64.86 NQ100 -3.3% R2K -5.6% SP400 -5.4% SP500
-37.21 NASDAQ Adv/Vol/Dec 444/2.92 bln/2257 NYSE Adv/Vol/Dec 295/1.76 bln/2800