Abraxis Rises 21%; Alcoa Dips
JULY 1, 2010
Stocks fell in the final session of the second quarter as a report on private-sector jobs weighed on sentiment and as Moody’s warned it may cut its credit rating on Spain.
Alcoa, Walt Disney and Hewlett-Packard were among the decliners.
The Dow Jones Industrial Average dropped 96.28 points, or 1%, to 9774.02. The Dow fell 3.6% this month, its second consecutive monthly drop. For the quarter, it tumbled 10%, breaking a streak of four quarterly gains and marking the measure’s worst second-quarter since 2002.
Alcoa was the Dow’s worst performer in the quarter, with a 29% drop. The aluminum company also was the Dow’s worst performer Wednesday with a slide of 28 cents, or 2.7%, to $10.06. Not far behind it, Walt Disney declined 80 cents, or 2.5%, to 31.50, and H-P slid 1.02, or 2.3%, to 43.28.
3M was the only Dow component that managed to end the session in the black, as the industrial company was lifted by a better-than-expected report on Chicago-area manufacturing. 3M eked out a gain of 50 cents, or 0.6%, to 78.99.
The Nasdaq Composite lost 25.94 points, or 1.2%, to 2109.24. The measure fell 6.6% this month and dropped 12% in the second quarter, its worst quarterly performance since the fourth quarter of 2008.
The Standard & Poor’s 500-stock index slipped 10.53 points, or 1%, to 1030.71, reaching a 2010 closing low. All of the measure’s sectors ended the session in negative territory, with the technology sector hit the hardest while industrials lagged behind.
The materials sector had the biggest percentage decline for the quarter.
Anadarko Petroleum had the biggest percentage decline among the measure’s 500 components this quarter; it slid 50%, weighed down by the April 20 explosion of the Deepwater Horizon rig and the resulting oil spill.
Wednesday’s stock declines came as a report from Automatic Data Processing showed private-sector jobs in the U.S. increased by 13,000 last month, less than the gain of 60,000 jobs expected by economists.
“Investors were really taken aback by that ADP report,” said Tyler Vernon, principal and portfolio manager at Biltmore Capital Advisors. For the government’s monthly nonfarm payrolls report due Friday, Mr. Vernon said, “investors now are expecting bad news and they’re just [hoping] for less-bad news. The psyche has really changed from where it was just a couple weeks ago.”
Also weighing on market sentiment, Moody’s Investors Service put Spain’s Aaa credit rating on review for a possible downgrade, citing flagging economic prospects, challenging fiscal targets and rising funding costs.
Meanwhjle, the Securities and Exchange Commission will seek comments on a proposal to expand a single-stock “circuit breaker” pilot program to stocks within the Russell 1000 index and certain exchange-traded funds.
Celgene (Nasdaq) fell 2.42, or 4.6%, to 50.82, after the company agreed to acquire Abraxis BioScience for at least $2.9 billion in cash and stock, broadening its cancer-drug portfolio. Abraxis (Nasdaq), whose primary treatment is Abraxane, a breast-cancer injection approved in the U.S. and Europe, surged 12.89, or 21%, to 74.20.
General Mills fell 1.38, or 3.7%, to 35.52, after the packaged-food company posted a 41% drop in fiscal fourth-quarter profit on higher costs and lower sales. The company also forecast earnings for the new year below analysts’ projections. The results also weighed on fellow packaged-food company Kellogg, which slid 1.45, or 2.8%, to 50.30.
Ford Motor climbed 20 cents, or 2%, to 10.08, after the auto maker said it is reducing its debt by more than $4 billion, a sign the company remains confident in its own turnaround despite a softening car market in the U.S.
BP‘s American depositary receipts rose 1.21, or 4.4%, to 28.88, as speculation of potential deal activity had investors viewing the oil company’s assets, and possibly the company as a whole, as an acquisition target.
Russian oil company TNK-BP, which is jointly owned by BP and a group of Russian businessmen, said it would be interested in buying assets from its U.K. shareholder as a platform for international expansion.
Monsanto slipped 1.12, or 2.4%, to 46.22. The fertilizer company’s fiscal third-quarter earnings plunged 45% on restructuring charges and reduced herbicide sales. It also forecast per-share results this quarter, excluding restructuring charges, between a nine-cent loss and an 11-cent profit.
Philips-Van Heusen edged up 52 cents, or 1.1%, to 46.27. The apparel maker said it would top its fiscal second-quarter forecast if current trends continue, including a 12% rise in same-stores sales at its U.S. outlet operations.
Continental Airlines rose 68 cents, or 3.2%, to 22, and UAL (Nasdaq) climbed 57 cents, or 2.9%, to 20.56. The airlines said in a filing that they will hold a “kickoff meeting” with the Federal Aviation Administration on July 9 to outline the process for securing a “single operator certificate” for their planned merger, with a formal combination targeted for the first quarter of 2012.
American depositary receipts of Brazilian meatpacker BRF-Brasil Foods fell 87 cents, or 6.2%, to 13.26, after the Brazilian Finance Ministry’s antitrust division recommended approval of the merger of Perdigao and Sadia, which created BRF, with restrictions that could mean the sale of some assets.