YAHOO [BRIEFING.COM]: Stocks
sported solid gains for the entire session as a batch of positive news items
brought buyers into action. However, afternoon trade became rather subdued as
the stock market entered a familiar sideways drift.
Global indices got an
overnight lift from news that Abu Dhabi has supplied Dubai's corporate
flagship, Dubai World, with $10 billion. Several weeks ago Dubai World had
requested to freeze its debt payments amid a lack of liquidity. By doing so,
Dubai World had rekindled concern about the security of global credit markets.
On a related note, Standard
& Poor's lowered its foreign currency sovereign credit rating and
local-currency credit rating on Mexico. The announcement follows several other
downgrades and cautionary comments made by ratings agencies in the last two
weeks.
Speculation of a pick up in
merger and acquisition activity helped win support for stocks this session.
That was caused by a move by ExxonMobil (XOM 69.69, -3.14) to
acquire XTO Energy (XTO 47.86, +6.37) in an all-stock
transaction valued at $41 billion. Since that values XTO at $51.69 per share, a
premium of roughly 25% over its closing price this past Friday, several
related plays in the oil and gas exploration industry (+6.4%) garnered support.
Integrated oil and gas stocks (-2.1%) fell out of favor, though, and hampered
the broader energy sector (+0.2%).
Financials lagged in the early
going, but managed to attract buyers as the session progressed and finished
with a 0.6% gain. The sector's slow start stemmed from concerns of shareholder
dilution at Citigroup (C 3.70, -0.25), which announced it will
repay its $20 billion in TARP securities and terminate its loss-sharing
agreement with the government with an issue of $17.0 billion of common stock,
with an over-allotment option of $2.55 billion, and $3.5 billion of tangible
equity units made up of prepaid common stock purchase contracts and
subordinated notes. Meanwhile, the Treasury will unwind its approximate 34%
stake in the company.
Citigroup's announcement has
given rise to speculation that other TARP recipients like Wells Fargo
(WFC 25.49, +0.08) and PNC Financial (PNC 53.36, +0.61) may
soon announce repayment plans.
Renewed selling pressure
against the U.S. dollar took the Dollar Index down 0.3% and provided broad
support for stocks. However, the dollar's decline was particularly beneficial
to materials stocks, which climbed 1.5% as commodities prices fell to a 1.0%
loss, according to the CRB Commodity Index.
Gains were broad for the
entire session, but action was a bit choppy in the early going. Things steadied
in the afternoon so that stocks could make a solid close, though. Telecom was
the only major sector in the S&P 500 to finish with a loss; it declined
just 0.1%.
Advancing Sectors: Materials (+1.5%), Industrials (+1.2%),
Consumer Discretionary (+0.9%), Health Care (+0.9%), Tech (+0.9%), Financials
(+0.6%), Utilities (+0.4%), Consumer Staples (+0.3%), Energy (+0.2%)
Declining Sectors: Telecom (-0.1%)DJ30 +29.55 NASDAQ +21.79 NQ100
+1.0% R2K +1.6% SP400 +1.5% SP500 +7.70 NASDAQ Adv/Vol/Dec 1838/1.86 bln/883
NYSE Adv/Vol/Dec 2268/1.07 bln/780