Stock Market News for May 3, 2011 - Market News
May 03 2011 - 5:06AM
Zacks
Late on Sunday, US President Barack Obama declared: “I determined
that we had enough intelligence to take action and authorized an
operation to get Osama bin Laden and bring him to justice….After a
firefight, they killed Osama bin Laden and took custody of his
body.” The press briefing instantly led to celebrations among
citizens and the cheer was expected to be carried into the markets.
However, the news of the death of the al-Qaida chief failed to
sustain the gains for long. Combined with economic data and merger
and acquisition news, markets rallied in the morning session, but
thereafter declined modestly to end in the red.
The Dow Jones Industrial
Average (DJIA) dropped less than 0.1% to settle at 12,807.36. The
Standard & Poor 500 shed 0.2% to close at 1,361.22. The Nasdaq
Composite Index was down 0.3% and finished the day at 2,864.08. On
the New York Stock Exchange composite volumes were at 4 billion
shares and for every two stocks that advanced, three stocks moved
downward. The fear-gauge CBOE Volatility Index rose above
16.
According to the President,
the 10-year hunt for the mastermind behind the 9/11 attacks finally
came to an end as a “small team of Americans” nailed down al-Qaida
chief Osama Bin Laden. During a late-night speech at the White
House, Obama declared that “justice has been done”, as under his
direction, a small group of Americans launched their attack against
a compound in Abad Abad, Pakistan, and gunned down the head of the
militant Islamic group. Obama also said: “The death of bin Laden
marks the most significant achievement to date in our nation's
effort to defeat al Qaeda.” The news allowed global shares to share
an uptrend and even the US stock futures were on moving higher. But
after the initial rally, US markets failed to continue their
winning momentum. Investors fear further terrorist attacks as
retaliation against the killing of the al Qaeda chief. These
concerns ended the initial cheer, which was taking the benchmarks
higher.
According to analysts, the
development surely has many positives and has provided people a
larger sense of security because of which consumer confidence is
likely to rise. The much welcomed news should also drive investors
to buy more equities as their fears on global security have been
significantly diminished and this will lead to lower equity risk
premiums. On the contrary, chances of retaliation cannot be washed
out and that might keep a lot of investors worried. The event could
not provide much strength to the markets, and analysts opined that
the timing of the news is quite improper. The death of Laden has
almost become a non-event as it has chipped-in when the markets are
busy with earnings results and economic data. Crude prices had
slipped more than a percentage following the news of bin Laden’s
death. Finally, prices managed to stabilize in the late hours and
closed at $113.52.
In earnings news, Dish
Network Corp. (NASDAQ:DISH) (19.0%) and Humana Inc. (NYSE:HUM) were
among the firms to report strong quarterly results and their shares
climbed 19.0% and 0.5%, respectively. Chesapeake Energy Corporation
(NYSE:CHK) managed to beat earnings estimates, but shares took a
beating and dipped 1.3%. The company was on the wrong footing as it
revised spending guidance higher without lifting the production
guidance.
Mergers and acquisition news
also shared the limelight during the day. News of Teva
Pharmaceutical INDUSTRIES Limited (NASDAQ:TEVA) agreeing to buy
Cephalon Inc. (NASDAQ:CEPH) for $6.8 billion in all cash-deal
lifted the shares of these companies by 3.4% and 4.0%,
respectively. Separately, Community Health Systems, Inc. (NYSE:CYH)
increased its bid to $4.1 billion for the takeover of Tenet
Healthcare Corp. (NYSE:THC) and said this is the best and final
offer. Also, Nasdaq OMX Group Inc. (NASDAQ:NDAQ) and
IntercontinentalExchange, Inc. (NYSE:ICE) stated that their board
officials have granted an exchange offer to buy all the outstanding
shares of NYSE Euronext, Inc. (NYSE:NYX).
Coming to economic reports,
The Institute of Supply Management reported an uptick in
manufacturing activity. The manufacturing index indicated growth
for the 23rd consecutive month in the overall economy, as well as
expansion in the manufacturing sector for the 21st consecutive
month. The ISM Manufacturing Index decreased to 60.4 in April,
following a decrease to 61.2 in March from the 61.4 level in
February.
Separately, The Commerce
Department reported Construction Spending increased by 1.4% to
$768.9 billion during March, against expectations that the figure
would increase by 0.4%, after decreasing by 1.4% in February. Year
over year, construction spending had declined by 6.7% from the
March 2010 estimate of $824.0 billion.
CEPHALON INC (CEPH): Free Stock Analysis Report
CHESAPEAKE ENGY (CHK): Free Stock Analysis Report
COMMNTY HLTH SY (CYH): Free Stock Analysis Report
DISH NETWORK CP (DISH): Free Stock Analysis Report
HUMANA INC NEW (HUM): Free Stock Analysis Report
INTERCONTINENTL (ICE): Free Stock Analysis Report
NASDAQ OMX GRP (NDAQ): Free Stock Analysis Report
NYSE EURONEXT (NYX): Free Stock Analysis Report
TEVA PHARM ADR (TEVA): Free Stock Analysis Report
TENET HEALTH (THC): Free Stock Analysis Report
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