NEW YORK: GLG Partners, one of largest hedge funds in Europe, will go public in the United States through a $3.4 billion merger with an investment company, Freedom Acquisition Holdings, according to people briefed on the transaction. The deal, that was expected to be announced Monday, would give GLG, based in London, a footprint in the United States and access to public markets at a time when investors still seem eager for the enormous returns that hedge funds have generated in recent years....
An Ugly Day for Stocks
July 26th, 2007
The stock market dropped like a rock Thursday as investors weighed mixed earnings news and continue to worry about credit markets after financing was pulled from a big buyout deal.
At midday on Thursday, the Dow Jones industrial average was down 207.12 points, or 1.5%, to 13,577.95. The broader S&P 500 moved below the 1,500 mark, down 1.79%, or 27.12 points, to 1,490.97. The tech-heavy Nasdaq Composite was off 1.62%, or 42.94 points, to 2,605.23.
Stocks were broadly lower, with 28 stocks lower for every three higher on the New York Stock Exchange. On the Nasdaq, the ratio was 22 to 5 negative.
On Wednesday, bankers postponed the sale of $12 billion in debt to fund the purchase of an 80% stake in Chrysler Group by Cerberus Capital Management. The deal will still go forward, but the move raised questions about credit market’s willingness to buy riskier corporate debt, and what that might mean for the ongoing boom in buyout activity (see BusinessWeek.com, 7/25/07, «www.businessweek.com»).
Traders are also worried about rising oil prices and the possibility the weak housing market will hurt consumer spending, according to John Wilson, chief technical strategist at Morgan Keegan. “The Dementors seem to be circling around sucking all the joy out of the market,” he wrote in his morning note.
While Apple («www.businessweek.com») and Ford («www.businessweek.com») reported strong earnings, other companies’ earnings reports fell short. More than a third of the S&P 500 report earnings this week.
At 10 a.m., investors learned that new home sales plunged 6.6% in June. Wall Street was expecting a 1.6% drop. May and April new home sales numbers were revised lower.
Also, U.S. durable goods orders Thursday were up 1.4%, less than many had expected, after a 2.3% decline in May. Action Economics says that despite the headline gain, many of the subcomponents fell.
It has been a volatile several days on Wall Street, which is in the heart of earnings season. Stock indexes moved higher on Wednesday, following a sell-off on Tuesday, but the broader market was mostly down. “Yesterday’s rally, while a welcome relief, didn’t have the feel of a significant reversal,” Wilson wrote.
Adding to market worries, oil prices were pushing higher. Following a big spike on Wednesday, Thursday’s September NYMEX crude oil futures were up 99 cents to $76.87 a barrel.
Among the earnings news, Exxon Mobil’s («www.businessweek.com») profits fell 1% in the second quarter. The world’s largest company reported earnings of $1.83, up from $1.72 because fewer shares are on the market due to a buyback program. Analysts were expecting earnings of $1.96 per share, according to Reuters Estimates.
Apple reported third quarter revenue of $5.41 billion and net profit of $818 million, or $0.92 per share, up from revenue of $4.37 billion and profit of $472 million, or $0.54 per share a year ago. Gross margin was 36.9%, up from 30.3% a year ago. The stock was up 7%.
Ford Motor Co. surprised Wall Street by posting a profit in the second quarter of 31 cents. Revenues rose 6% as the company lost 17 cents a year ago.
3M («www.businessweek.com») earned $1.25 per share in the second quarter, up from $1.15 per share and above analyst expectations of $1.18 per share.
U.S. Airways («www.businessweek.com») was down after reporting earnings of $2.77 per share, vs. $3.25 a year ago. Revenues were slightly lower and the firm reported higher non-fuel expenses.
Dow Chemical («www.businessweek.com») was trading lower after reporting earnings of $1.07 per share, vs. $1.05 a year ago. Revenue rose 6%.
Black & Decker («www.businessweek.com») disappointed investors with earnings of $1.75 per share, vs. $1.98 a year ago.
« Harrods chief ‘devastated’ by poisoning of rare birds
MOHAMED al-Fayed, the chairman of Harrods, yesterday said he was devastated by the poisoning of three rare birds of prey which were reared on his Highland estate. Another eight birds are unaccounted for and are also feared to have been killed. The birds were among 16 red kites brought to the Black Isle as chicks last year as part of a programme to reintroduce the species to Scotland. They were later taken to Mr Fayed’s Balnagown Estate in Ross-shire, where they were kept under controlled...