PortfolioCrafter - Market Commentary 2/26/07
February 26th, 2007 / 7:50 pm / by portfoliocrafter
Stocks fell as concerns about growth resurfaced with oil prices holding above $61 a barrel, dampening investor enthusiasm and offsetting the latest deal-making news, including the $45 billion takeover of TXU Corp. Blue chips fell for the fourth session in a row, as investors opted to bail out of a variety of sectors.
Today, the Dow Jones industrial average closed down 15.22 or 0.12% to 12,632.26, declining for the fourth session in a row, the S&P 500 closed down 1.82 or 0.13% to 1,449.37, and the Nasdaq closed down 10.58 or 0.42% to 2,504.52.
Market breadth was negative. On the New York Stock Exchange, losers and winners were roughly even on volume of 1.56 billion shares. On the Nasdaq, decliners beat advancers 17 to 12 on volume of 1.90 billion shares.
The rise in oil and gold prices kept inflationary concerns up front. Additionally, the weakness in the broader financial sector added to last week’s worries about sub-prime lenders. The market also received a jolt after news that former Federal Reserve chairman Alan Greenspan warned that the U.S. economy might slip into recession this year.
Over the next few days, investors will be sorting through the bevy of economic news that is on tap, including reports due tomorrow on durable goods orders, consumer confidence and existing home sales.
Stock of Texas utility closed up $7.91 or 13% to $67.93, after agreeing to a $45 billion cash and debt buyout led by two private equity firms and the private equity unit of investment bank Goldman Sachs. This is the largest private equity buyout in history. The group will pay $69.25 a share for the company, a premium of 15.4% over Friday’s close. The cash component of the deal is valued at $32.3 billion.
Shares of Station Casinos closed up $3.20 or 4.2% to $86.50, after agreeing to be taken private for $5.4 billion by a firm led by its management. The total transaction is valued at approximately $8.8 billion, including a $3.4 million debt. FCP has agreed to pay $90 per share in cash, which marks a 30% premium over Station’s closing stock price on Dec. 1.
Shares of XM Satellite Radio Inc. fell 1% to close at $14.93, after its fourth-quarter loss narrowed from a year ago as revenue rose 45% and subscription acquisition costs declined. The company agreed last week to a $13.6 billion merger with Sirius Satellite Radio Inc., a deal expected to face close regulatory scrutiny and potentially have trouble winning approval.
U.S. light crude oil for April delivery rose 25 cents to settle at $61.39 a barrel on the New York Mercantile Exchange.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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