Freddie Mac (FRE) and Fannie Mae (FNM) shares are seen weaker after remarks from former St. Louis Fed's Poole saying that the housing agencies were "technically insolvent." Wires report that Treasury Secretary Paulson said this about Fannie Mae and Freddie Mac: "Their regulator has made clear that they are adequately capitalized." According to the Wall Street Journal, The Bush administration has held talks about what to do in the event FRE, FNM falter. Officials don't expect the entities to fail, and no rescue plan is imminent. But the discussions have become more serious recently given the mortgage companies' financial woes, the newspaper says. S&P maintains sell on shares of FRE, cuts target to $6. Maintains hold on shares of FNM, cuts target to $15.
Lehman Brothers (LEH) fell 9% amid unfounded speculation that PIMCO would be reducing business with company traders. However, PIMCO spokesman Mark Porterfield responded to S&P MarketScope's phone call questioning the speculation with an email that states, "PIMCO continues to trade with Lehman." Also, the stock may be impacted by comments from Treasury Secretary Hank Paulson, who said that while Freddie Mac and Fannie Mae are adequately capitalized, the government must allow some banks to fail.
Wachovia (WB) says it appointed Robert K. Steel, who most recently served as Under Secretary for Domestic Finance for the U.S. Dept. of Treasury, as WB's new CEO, president and member of the board of directors, effective immediately. WB also says it expects to report an after-tax loss available to common stockholders of $2.6-$2.8 billion, or $1.23-$1.33 per share, for second quarter, excluding goodwill impairment charges. S&P maintains sell.
Rohm & Haas (ROH) agrees to be acquired by Dow Chemical (DOW). Terms: $78 cash per ROH share. DOW expects deal to be meaningfully accretive to EPS in the second year following completion, with pre-tax annual cost synergies expected to be at least $800 million per year.
General Electric (GE) said Thursday that it is considering a spinoff of its lighting and appliance divisions, confirming what many analysts have been speculating about in recent weeks.
Wal-Mart Stores (WMT) posts 5.8% June same-store sales [without fuel], 6.4% higher with fuel, 12% higher total sales. Sees 2%-4% higher July U.S. same-store sales [without fuel]. Because of improved sales results during second quarter, it raises EPS forecast to $0.82-$0.84.
Boeing (BA) announces that second quarter will include a charge of about $0.22 on previously acknowledged delays on its Airborne Early Warning & Control [AEW&C] program. BA continues to expect $5.50-$5.85 2008 EPS, as company-wide performance and productivity are expected to offset the AEW&C charge by yearend.
Cato Corp. (CTR) shares jumped after the fashion specialty retailer posted a 4% rise in June same-store sales and a 7% increase in total sales.
