PortfolioCrafter - Market Commentary 4/23/07
April 23rd, 2007 / 7:13 pm / by portfoliocrafter
Stocks suffered losses as investors weighed the need to consolidate the previous week’s strong gains against news of U.K. based Barclays Plc’s plan to buy Dutch bank ABN Amro Holdings NV for $91 billion, the biggest bank deal in history. The overall market’s advance was also hampered by a 2.8% jump in crude oil prices amid continued tensions in Nigeria.
The Dow Jones industrial average closed down 42.58 or 0.33% to 12,919.40, the broader S&P 500 closed down 3.42 or 0.23% to 1,48o.93, and the Nasdaq composite ended lower 2.72 or 0.11% to 2523.67.
Market breadth was negative. On the NYSE, losers narrowly beat winners 17 to 15 on volume of 1.438 billion shares. On the Nasdaq, decliners topped advancers 17 to 12 on volume of 1.938 billion shares.
The major gauges struggled for direction as investors looked to position themselves after last week’s run. The slew of deals could not keep the markets in positive territory. It is expected that we’re going to have some tepid trading in the coming days. The early wave of earnings reports has been better than expected. However, forecasts in the first-quarter were particularly low-key, amid economic uncertainty. Earnings are currently on track to have risen 5.2% from a year ago.
Shares of Barclays closed down $1.74 to $58.26, after it said that it will buy ABN Amro for $91 billion. Shares of ABN Amro closed down $1.23 to $48.06. As part of the deal, ABN would sell its U.S. unit LaSalle Bank to Bank of America for $21 billion in cash. However, ABN said it will hear a counter bid from a group led by Royal Bank of Scotland.
Shares of MedImmune closed up $8.56 or 18% to $56.57, after AstraZeneca said it will buy the company in a $15.6 billion all-cash deal. Stock of AstraZeneca closed down $3.08 or 5% to $55.96, on bets that the drugmaker was overpaying for MedImmune. Additionally, AstraZeneca said it was ending its partnership with drug developer AtheroGenics which closed down $0.56 to $3.09, after a heart disease drug the two companies were developing did not produce desired results in a trial.
Dutch bank ABN Amro paved the way for the largest ever banking takeover, backing an offer lodged by Britain’s Barclays valued at about $91.2 billion.
Stock of Applied Micro Circuits closed down $0.80 or 22% to $2.73, after the chipmaker warned that both fiscal fourth quarter revenue and first quarter revenue would miss estimates.
U.S. light crude oil for June delivery rose $1.78 to settle at $65.89 a barrel on the New York Mercantile Exchange.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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