Archive for December, 2008

Stocks fall on Dow Chemical news, economic worry (Reuters)

Monday, December 29th, 2008 | Finance News

NEW YORK (Reuters) –
Wall Street slid on Monday after Kuwait pulled out of a joint venture with Dow Chemical due to the deepening global recession, threatening Dow's planned takeover of Rohm & Haas.

Rising energy shares tempered losses after oil prices rose 6 percent following Israeli air strikes in the Gaza Strip. The third day of fighting came as Israel prepared to launch a possible invasion.

Dow Chemical shares (DOW.N) tumbled to their lowest level since 1991 after Kuwait decided to end the planned $17.4 billion joint venture, citing slumping petrochemical sales and the global financial crisis.

The news raised concerns that Dow, the largest U.S. chemical company, would not be able to complete its deal to buy rival Rohm & Haas (ROH.N), which Dow had agreed to acquire for about $15.3 billion in July. Rohm & Haas shares fell as much as 25 percent.

The declines were exacerbated by light volume, analysts said. Trading is expected to be light throughout the week, abbreviated by the New Year's holiday on Thursday.

"What stocks are grappling with is discounting how long, how deep of a recession this is going to be and when the sun is going to go up again," said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland.

"That clearly drove the decision," he added, of Kuwait's decision to cancel the Dow Chemicals deal.

The Dow Jones industrial average (.DJI) slipped 31.62 points, or 0.37 percent, to 8,483.93. The Standard & Poor's 500 Index (.SPX) fell 3.38 points, or 0.39 percent, to 869.42. The Nasdaq Composite Index (.IXIC) dropped 19.92 points, or 1.30 percent, to 1,510.32.

The Dow is down 3.9 percent month-to-date after a 5.3 percent fall in November and 36 percent for the year.

The Nasdaq was dragged down by large-cap tech companies including BlackBerry maker Research In Motion (RIM.TO) (RIMM.O), which fell 5 percent to $38.81, and Cisco Systems (CSCO.O), down 1.6 percent to $16.01.

Dow Chemicals and Rohm & Haas were among the largest percentage decliners on the New York Stock Exchange. Dow was down 19 percent to $15.32, while Rohm & Haas fell 16.1 percent to $53.34.

The collapsed joint venture added to concerns about the chemicals industry, which has been struggling because of recessions in most developed countries and a sharp slowdown in emerging economies.

Economic worries overshadowed gains in the energy sector as oil climbed on concerns that crude supplies could be disrupted by tensions between Israel and the Hamas-ruled Gaza Strip.

Chevron (CVX.N) and Exxon Mobil (XOM.N) were among the best performers on the Dow, while the S&P 500 index (.GSPE) of energy stocks rose 1.9 percent. Chevron rose 1.7 percent to $71.55 and Exxon Mobil rose 1.1 percent to $78.02.

Analysts, meanwhile, said the rise in energy prices did not bode well for struggling consumers.

As 2008 draws to a close, investors are hoping the incoming White House administration will offer another stimulus package in an effort to help steer the country out of a year-long recession. The broad S&P 500 is down about 40 percent for the year, second only to 1931's record drop of 47.1 percent.

President-elect Barack Obama has said signing a major economic stimulus package will be his priority when he takes office on January 20.

Over the weekend, one of Obama's top economic advisers said financial policy should address both immediate job creation and longer-term investment needs.

Lawrence Summers, Obama's pick to head the White House National Economic Council, said spending government money solely to stimulate consumer spending would be a short-sighted mistake.

Volume was slim on the New York Stock Exchange, where about 875.4 million shares changed hands, far below last year's estimated daily average of 1.90 billion. On the Nasdaq, about 1.17 billion shares traded, well below last year's daily average of 2.17 billion.

Decliners outnumbered advancers on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, about five stocks fell for every two that rose.

(Editing by Leslie Adler)

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Retailers who have filed for bankruptcy protection (AP)

Monday, December 29th, 2008 | Finance News

Retailers have come under growing pressure as consumers cut their spending because of the drop in home values, worries about job security, eroding credit and higher food costs. Experts expect a spate of bankruptcies after holiday sales are tallied and weaker players become unable to survive.

Among notable retailers who have filed for bankruptcy protection since May:

_Circuit City Stores Inc., the nation's second-biggest electronics retailer, filed for bankruptcy protection last month as it faced pressure from vendors and consumers who aren't spending. It plans to keep operating.

_KB Toys filed for bankruptcy protection two weeks before Christmas and has begun to liquidate its stores and plans to shutter operations. It is the second time KB Toys filed for bankruptcy protection; the first was in January 2004.

_Parent Co., the operator of online toy seller etoys.com, filed for Chapter 11 bankruptcy protection this week and said it will consider selling some or all of its operations.

_Linens 'n Things filed for bankruptcy protection in May. It announced liquidation sales at its stores in October after failing to find a buyer that wanted to operate the company.

_Steve & Barry's filed for Chapter 11 bankruptcy protection in July, then later abandoned plans to keep stores open and said it would liquidate.

_Mervyns LLC filed for Chapter 11 bankruptcy protection in July and said it planned to begin liquidation sales at its remaining stores and wind down its business.

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Oil rises $2 on Israel and weak dollar (Reuters)

Monday, December 29th, 2008 | Finance News

NEW YORK (Reuters) –
Oil prices rose more than $2 on Monday amid concern that Israeli attacks on Hamas could disrupt Middle East crude oil supplies and as the dollar weakened.

U.S. light, sweet crude settled up $2.31 at $40.02 a barrel, below earlier highs above $42, with thin post-holiday trade making for a volatile day in the market.

London Brent crude settled up $2.18 at $40.55 a barrel, after touching a session high of $43.18.

Oil is on track for a nearly 60 percent loss this year, the biggest annual fall since futures began trading 25 years ago.

Israeli aircraft attacked Hamas targets in Gaza on the third day of an offensive that has killed more than 300 Palestinians, many of them civilians.

The attacks enraged Arabs across the Middle East, raising concerns that the conflict could threaten oil supplies from the region.

"Certainly, oil prices remain sensitive to geopolitical developments, especially those emanating from that part of the world, but the declining dollar, low volume and the return of bargain-hunting Europeans are probably more to blame," Mike Fitzpatrick, vice president at MF Global, said in a report.

The dollar fell broadly on Monday, eroded by a grim outlook for the U.S. economy. Dollar weakness can increase the investment appeal of oil and other commodities.

Economic worries tempered earlier gains for oil, with Wall Street hit by failure of a $17.4 billion joint venture between Kuwait and Dow Chemical, potentially threatening Dow's acquisition of rival Rohm & Haas.

"Equities turned around after crude was up on Gaza, so that was a factor," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

OPEC COMPLIANCE

Oil is down more than $100 a barrel from a record peak of more than $147 in July, depressed as the downturn in the world economy has hit demand for fuel.

OPEC agreed its biggest ever production cut of 2.2 million barrels per day in December, to fight the market's slide.

Libya and Abu Dhabi's National Oil Co have both joined leading producer Saudi Arabia, vowing to cut output by January.

OPEC has cut output three times in an effort to remove about 5 percent of world supply to halt the slump.

China's energy chief said the world's second-largest oil user after the United States would take advantage of falling oil prices to boost imports and build up its fledgling oil reserves.

A poll of analysts ahead of weekly U.S. government inventory data forecast U.S. crude stocks fell by 1.4 million barrels last week. The analysts predicted 1 million-barrel build in distillate inventories and a 1.5 million-barrel build in gasoline stocks.

(Additional reporting by Robert Gibbons in New York, Jane Merriman in London, Luke Pachymuthu in Dubai and Chua Baizhen and Jonathan Leff in Singapore; Editing by David Gregorio)

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