The Dow is off more than 120 points as concern grows about the slowing economy. Apple is the biggest drag on tech stocks. Ingersoll-Rand is buying climate-control company Trane. Online spending is up but not as much as some had hoped.
| Currency | US Dollar |
|---|---|
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| Japanese Yen to US Dollar | 0.008844 |
| Canadian Dollar to US Dollar | 0.994332 |
The stock market just can't catch a break. Financial stocks battered all last week, while telecom stocks were the leaders.
Today, financial stocks are holding their own. But technology, energy and materials stocks are pulling the major averages lower, despite a $10.1 billion deal involving two of the biggest manufacturers of air conditioning equipment.
At 2:25 p.m. ET, the Dow Jones industrials were down 125 points, or 0.9%, to 13,215. The Nasdaq Composite Index was down 43 points, or 1.6%, to 2,593, and the Standard & Poor's 500 Index was off 15 points, or 1%, to 1,453.
Caterpillar (CAT, news, msgs) was the biggest drag on the Dow, down 3.1% to $71.14, after Morgan Stanley downgraded the Dow component to underweight from equal-weight. Analysts said U.S. construction equipment sales will be down in 2008, and prices will fall.
Apple (AAPL, news, msgs), down 2.3% to $186.08, was the biggest drag on the Nasdaq and the Nasdaq-100 Index ($NDX.X). The latter, which includes the biggest Nasdaq stocks, was down 23 points, or 1.1% to 2,072. But Amazon.com (AMZN, news, msgs) was off 2.9% to $86.48, as reports continue to suggest that sales growth for online retailers isn't as big as expected.
Dow component ExxonMobil (XOM, news, msgs) was off 1.6% to $898.71 as crude oil fell under $90 a barrel this afternoon. Offshore driller Transocean (RIG, news, msgs) was down 2.8% to $132.16, and Apache (APA, news, msgs) 2.2% to $102.62.
Materials stocks were hit by concerns about industrial production in China, BNP Paribas analyst David Thurtell said. Freeport-McMoRan Copper & Gold (FCX, news, msgs) slumped nearly 6% to $96.13.
Ingersoll-Rand (IR, news, msgs) is buying heating- and air-conditioning-system maker Trane (TT, news, msgs) for $10.1 billion in cash and stock.
The deal values Trane, which used to be known as American Standard, at $47.81 per share -- a 28.5% premium to Trane's closing price on Friday.
Ingersoll-Rand's climate-control system brands include Hussman and Thermo King; a merger would create a business with $11 billion in sales next year, the companies said. The deal is expected to close in the first quarter of 2008, which will help produce 2008 earnings of $4 per share, Ingersoll-Rand said.
Shares of Trane jumped $8.60 or 23.1%, to $45.80 in midday trading; Ingersoll-Rand shares were down $4.15, or 8.4%, at $45.03.
Holiday shopping a mixed bag so far
There's no economic slowdown on the Web, at least -- but the mall may be a different matter.People are spending briskly online, according to Internet tracking company comScore.
Online sales for the first 44 days of the holiday shopping season -- from Nov. 1 to Dec. 14 -- rose 18% to $22.7 billion, a Sunday report from comScore showed. Shoppers spent $881 million on Monday, Dec. 10 alone -- a 33% increase from Dec. 10, 2006, and the biggest online spending day ever, comScore reported.
- Video: Gifts that pay
But the 18% jump in online sales this season is below the 26% growth rate seen at the same time last year, comScore said. Households earning at least $100,000 have boosted their online spending by 28% this year from last year, comScore's report stated, but households earning less than $50,000 have increased their spending online by only 10%.
ComScore expects online sales for the whole holiday season to hit $29.5 billion this year, a 20% increase from last year's $24.6 billion in online spending.
The overall retail picture is more complicated, however.
Spending on women's clothing fell nearly 6% in the first half of the holiday shopping season, according to a separate report from MasterCard Advisors, a division of credit card company MasterCard (MA, news, msgs), The New York Times reported. Sales of men's apparel rose 4.5%, however, and spending on high-end items rose 10.8%.
Those sales figures factored in spending from Nov. 23 "Black Friday," through Dec. 12.
Not only were shares of Amazon.com lower, but MasterCard shares were down nearly 4% to $208.13.
Loews quits smoking
Conglomerate Loews (LTR, news, msgs) is quitting the cigarette business.Loews said today it is spinning off Lorillard, the oldest U.S. cigarette maker. Lorillard makes Kent and Newport cigarettes. Loews will exchange its Carolina Group (CG, news, msgs) tracking stock for new shares in a separate Lorillard company.
Shares of Loews rose $1.28, or 2.7%, to $48.08 by midday."Tobacco is not a strategic asset for us," Loews CEO James Tisch said to Bloomberg News. "The company can do better as an independent." Loews' businesses include hotels and financial companies among others.
The Lorillard spinoff is expected to close next year, and the new company will trade on the New York Stock Exchange.
Financials in focus
Three other top Wall Street financial-services companies report earnings this week."I expect the numbers to be terrible," Matt Kelmon, president and portfolio manager at the Kelmoore Strategy Funds, told CNNMoney.com over the weekend. Goldman Sachs (GS, news, msgs) will report fiscal-fourth-quarter earnings on Tuesday; analysts are looking for earnings of $6.61 per share. Morgan Stanley (MS, news, msgs) reports on Wednesday, and Bear Stearns (BSC, news, msgs) releases its earnings on Thursday. Wall Street expects Morgan Stanley to lose 39 cents per share and Bear to lose $1.79 per share.
- Video: Housing and holiday spending
Lehman Bros. (LEH, news, msgs) last week reported better-than-expected earnings, but investors were still disappointed because both earnings and revenue fell. Lehman's chief financial officer also said that the debt markets would likely continue to be a challenge through the first half of 2008.
Merrill to cut bond bonuses
Bond traders at Merrill Lynch (MER, news, msgs) might not have such a merry Christmas.The financial-services company told its fixed-income managers to slash their 2007 bonuses by an average of 40%, according to Bloomberg News. The reduced bonuses are the repercussions of the $2.24 billion loss the company reported for the third quarter and the $8 billion write-downs in bad mortgage bets.
Merrill's dismal third quarter forced Stan O'Neal to leave the company; he was replaced by John Thain on Dec. 1.
Bonuses make up nearly 60% of total pay on Wall Street, Bloomberg noted. Merrill's compensation rose 37% in 2006 to $17 billion.
Shares of Merrill rose 35 cents to $57.19.
Greenspan's bailout idea
Former Federal Reserve Chairman Alan Greenspan has his own idea of how to help out troubled homeowners.Greenspan said that the U.S. government should offer tax breaks or financial help to homeowners who are facing mortgage default. "Cash is available, and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this," Greenspan said Sunday on ABC's "This Week."
"It's far less damaging to the economy to create a short-term fiscal problem, which we would, than to try to fix the prices of homes or interest rates. If you do that, it'll drag this process out indefinitely."
Two weeks ago, President Bush and Treasury Secretary Hank Paulson announced a bailout plan that would freeze interest rates on subprime mortgages for five years on loans that otherwise would have been reset at higher rates. The plan does not pledge any government money to individual homeowners or banks, however.
Separately, Greenspan said the likelihood of a recession is "close to 50%."
'I Am Legend' sets record
Actor Will Smith's new movie, "I Am Legend," presents a pretty depressing picture of New York City in only a few years, but the actor was anything but sad this weekend.Time Warner's (TWX, news, msgs) Warner Bros. produced the movie, which debuted with $76.5 million in box office sales -- the best December opening ever.
The previous December champ was "The Lord of the Rings: The Return of the King," which debuted in 2003 with $72.6 million in box office sales.
This weekend's No. 2 movie was "Alvin and the Chipmunks," produced by News Corp.'s (NWS, news, msgs) Twentieth Century Fox. Apparently a lot of people like chipmunks: The movie brought in $45 million in sales.
By Charley Blaine and Elizabeth Strott.Copyright reserved
