Tag - Stbk

This morning it was reported that payrolls declined at a faster than expected rate and the unemployment rate rose to 9.5%. Neither of these are good news, and the stock market responded with a sharp sell-off. The Dow Industrials fell 212 points or 2.5%, the Nasdaq dropped 49 points or 2.67%, the S&P 500 fell 26 points or 2.8%. Small caps tend to lead, and today was no exception - the Russell 2000 was down 18 points or 3.5%.

Because we are heading into a holiday weekend, volume was on the light side.

Declining stocks outpaced advancing stocks by a 4 to 1 margin. The biggest loser on the day was Discovery Labs (Nasdaq:DSCO). The stock was cut in half after the FDA delay evaluation of the company's infant respiratory distress drug, Surfaxin.

Other top declining stocks include another biotech, Sepracor (Nasdaq:SEPR) which dropped 18% after it released disappointing trial results for a depression drug. The decliners list was littered with regional bank stocks too, including Park Bancorp (Nasdaq:PFED) down 25%, and Starling Banks (Nasdaq:STBK) down 17%.

Ironically, several regional banks made today's top advancing stocks list. Crescent Banking Co. (Nasdaq:CSNT) led the way with a 47% gain. OakRidge Financial Services (Nasdaq:BKOR) rose 25% and Virginia Commerce Bancorp (Nasdaq:VCBI) rose 17%.

NaviSite (Nasdaq:NAVI) rose 23% on heavy volume on news of a lawsuit settlement. And Matrixx Initiatives (Nasdaq:MTXX) rounds out the big winners with a 18% gain.

*****And so it begins. I'm talking about earnings estimate revisions for banks. And yes, they are headed lower. First up is Morgan Stanley (NYSE: MS). Credit Suisse analyst Howard Chen was expecting a profit of $0.80 a share. Now he says a $0.40 loss is more likely.  

Oppenheimer's Chris Kotowski dropped his expected $0.20 per share loss to $0.94 per share.  

Ironically, part of the reason for the downward revisions is Morgan Stanley's credit quality. But even this is misleading. Accounting rule changes earlier this year allowed falling prices for a company's debt to be treated as a profit on the assumption that the company could show a paper profit by buying back debt at a price lower than what it was sold for.  

Make sense. If you sell a bond at $1 and can buy it back for $0,50, you've essentially made $0.50. But of course, no banks actually did this. They didn't have the cash on hand to buy back debt, because one of the reasons a company's debt falls in value is because investors realize the company has assets that are worth less. In the case of the banks, these impaired assets are often non-performing loans or mortgage related securities.  

As these assets fall in value, the banks have to hold more loss reserves. That, of course precludes them from buying back their own debt.  

*****It should be obvious that accounting rules allowing banks to treat falling prices for its own debt as profits is a complete sham. The measure is a bookkeeping trick designed to let the banks appear healthier while they get their act together. It's just buying time.  

Will it be enough time? I don't see how that's possible, and I've outlined my reasoning over the last few days. Basically, unemployment is still rising (the unemployment rate hit 9.5% today) and the improvement in the housing market appears to be temporary based on foreclosure sales and government mortgage assistance. Some see "green shoots" here. I don't. 

*****There's at least one IPO market getting ready to heat up. No, it's not the U.S. It's China. As many as 100 Chinese companies may be getting ready to list their shares in Hong Kong. And many will come calling for inclusion on U.S. indices as well.  
The first company that will float their shares to the public will be a holding company that's constructing high-speed railroads between Shanghai and Beijing. The $5 billion China expects to raise will go to expand other railways. 
Bloomberg reports that since China announced its $585 billion stimulus plan, it's more than doubled its spending on railroads.  

This is more evidence that China is one of the few countries in the world that can actually grow its economy without taking on massive debt. I view this as very bullish and it's why I've been recommending Chinese stocks frequently in my SmallCapInvestor PRO advisory service. To discover what we're buying to take advantage of China's stimulus spending, click HERE. 

*****Here's TradeMaster Daily Stock Alerts' Jason Cimpl with his weekly video chart analysis. I've really been enjoying his analysis. And his TradeMaster readers enjoy the profits it leads to. But I'd like to hear from you.

*****Finally, I want to wish everyone a great 4th of July holiday. And if you're driving, do it safely. Let's get everyone home safe. I'll talk to you on Monday.

The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are continuing to tumble on weaker-than-expected durable goods orders and lackluster financial firm news, magnifying investors’ already present concerns surrounding a possible economic slowdown.

News of the assassination of former Pakistani Prime Minister Benazir Bhutto only added to the unsettling economic data, shaking the markets.

At 1:36 p.m. ET, the small-cap index was down 15.14 points, or 1.9%, to 781.89. The Dow was down 151.28 points, or 1.12%, to 13,400.41.

Durable goods orders for the month of November edged up a less-than-forecasted 0.1% from October’s 0.4% decline. Economists were forecasting an increase of 2.5%.

In corporate news, Goldman Sachs issued a note late Wednesday speculating that financial juggernaut Citigroup Inc. (NYSE: C) might have to slash its dividend by 40% in light of now greater-than-forecasted write-downs for bad bets on collateralized debt obligations. Goldman is now projecting write-downs in the neighborhood of $18.7 billion, up from the investment bank’s previous estimate of $11 billion.

In related news surrounding the unfolding of the credit crisis, Fitch Ratings put 205 residential mortgage-backed securities backed by bond insurers, including MBIA and Ambac Financial Group, on review for a downgrade.

Hoku Scientific, Inc. (Nasdaq: HOKU), SRI/Surgical Express, Inc. (Nasdaq: STRC) and U.S. Shipping Partners L.P. (NYSE: USS) are among the biggest percentage gainers in Monday's trading among companies with market capitalizations under $750 million.

Here are today's biggest percentage gainers:

Slade's Ferry Bancorp (Nasdaq: SFBC), Metabolix, Inc. (Nasdaq: MBLX) and Salary.com, Inc. (Nasdaq: SLRY) are among the biggest percentage gainers in Friday's trading among companies with market capitalizations under $750 million.

Here are today's biggest percentage gainers:

Cardica, Inc. (Nasdaq: CRDC), Elecsys Corp. (AMEX: ASY) and Sonesta International Hotels Corp. (Nasdaq: SNSTA) are among the biggest percentage losers in Monday's trading among companies with market capitalizations under $500 million.

Here are today's biggest percentage gainers:

Phazar Corp. (Nasdaq: ANTP), NovaStar Financial Inc. (NYSE: NFI) and Sterling Banks, Inc. (Nasdaq: STBK) are among the biggest percentage losers in Monday's trading among companies with market capitalizations under $500 million.

Here are today's biggest percentage gainers:

CyberSource Corp. (Nasdaq: CYBS) reported it agreed to buy Authorize.Net Holdings Inc. (Nasdaq: ANET) for approximately $565 million in a stock and cash deal.

Trump Entertainment Resorts, Inc. (Nasdaq: TRMP) reported that James B. Perry, its president and CEO, is leaving effective July 1.

Keryx Biopharmaceuticals (Nasdaq: KERX) announced the resignation of its senior VP and CFO Ronald Renaud, which will be effective June 27. Mark Stier, the New York, N.Y.-based company’s chief accounting officer, will assumer Renaud’s responsibilities.

These are the biggest percentage losers in Monday's trading among companies with market capitalizations under $500 million:

Memphis, Tenn.-based Back Yard Burgers, Inc. (Nasdaq: BYBI) announced it has agree to be bought for $38 million. BBAC LLC, an investment partnership managed by Cherokee Advisors and C. Stephen Lynn, reported it will buy shares in Back Yard Burgers for $6.50 each in cash, a 29% premium above Friday’s closing price. The deal is expected to close by the third quarter starting Sept. 30.

Because O.I. Corp. (Nasdaq: OICO) believes its own shares are undervalued, the College Station, Texas-based company said it plans to repurchase 10%, or about 300,000, of its shares in the range of $13 to $14.75 per share.

Eden Prairie, Minn.-based Wireless Ronin Technologies, Inc. (Nasdaq: RNIN) announced Monday it has a service agreement to manage and maintain Reuters’ InfoPoint network for digital signs.

These are the biggest percentage gainers in Monday's trading among companies with market capitalizations under $500 million: