Updated with Carnival and CarMax earnings
NEW YORK (
) -- Here are the top stock market headlines for the morning of Tuesday, September 22, 2009.
Tuesday's Early Headlines
- Healthy Banks to the Rescue of the FDIC. - In a strange twist of fate, The New York Times reports that senior regulators are considering a plan to have the healthiest U.S. banks lend billions of dollars to shore up the deposit insurance fund, which is running out of money due to a wave of bank failures. The Federal Deposit Insurance Corp., which oversees the fund, is reluctant to use its authority to borrow from the Treasury, the report said. The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune, the Times points out, after billions of taxpayer dollars were used to prop up large and small banks over the last year.
- BofA Stuck Between a Rock and a Hard Place. - As part of a move to reduce its reliance on government support, Bank of America (BAC) - Get Report said it agreed to pay $425 million to exit an arrangement with government agencies where losses on risky assets from the Merrill Lynch acquisition would be protected by public funds. The news comes the same day BofA executive Anne Finucane will meet with House Oversight Committee Chairman Rep. Edolphus Towns (D., N.Y.) after the bank did not provide the information sought by a congressional probe into its Merrill Lynch deal by a deadline on Monday. Meanwhile, the Securities and Exchange Commission is set to take BofA to court for failure to disclose bonuses paid to Merrill employees before the acquisition was finalized. This comes after federal U.S. Judge Jed Rakoff rejected a $33 million settlement between the bank and the SEC.
- China Stimulus Delaying Economic Restructuring: ADB. - Bloomberg reports that the Asian Development Bank said China's stimulus spending and record bank lending are interrupting efforts to restructure the economy away from investment- and export-led growth toward private consumption.
- Sun Microsystems Losing $100 Million a Month: Oracle's Ellison. - Reuters reports that Oracle (ORCL) - Get Report CEO Larry Ellison said Sun Microsystems (JAVA) is losing $100 million a month as the European Union delays approving the $7 billion deal between the two companies. Ellison expects the deal will eventually be cleared by European regulators as it was in the United States, without any conditions, the report said.
- Lowe's Reiterates Fiscal Year Outlook. - Lowe's (LOW) - Get Report reiterated its top- and bottom-line outlooks for the 2010 fiscal year, saying it expects earnings in a range of $1.13 to $1.21 a share and a sale drop of around 3%. Analysts expect Lowe's to report earnings of $1.20 a share on sales of $46.9 billion, according to Thomson Reuters. Looking ahead to the 2011 fiscal year, Lowe's expects sales to rise 3% to 4%, with earnings to fall between $1.24 and $1.34 a share. Analysts are forecasting earnings of $1.34 a share on $48.5 billion in revenue.
- Cadbury Puts Pressure on Kraft's Bid. - The Wall Street Journal reports that Cadbury (CBY) has asked a U.K. Panel on Takeovers and Mergers to issue an order demanding that Kraft Foods (KFT) make a formal bid with committed financing. The request by Cadbury appears designed to pressure Kraft to raise its $16.7 billion bid two weeks after making public its takeover proposal, the paper said, adding that Cadbury CEO Todd Stitzer acknowledged a combination with Kraft makes "some strategic sense."
- FOMC Begins Two-Day Meeting, Housing Price Index Due - The Federal Open Market Committee, the central bank's policy-making arm, will convene Tuesday morning for a two-day meeting on monetary policy. Market participants aren't expecting any surprises out of the Fed, which should keep the target range for the fed funds rate at zero to 0.25%. The FOMC's statement will not be released until 2:15 p.m. EDT Wednesday. Meanwhile, the Federal Housing Finance Agency is scheduled to release its July home price index, 10 a.m. EDT, which economists expect will rise by 0.5% after a 0.5% climb in June.
- Suntory agrees to buy Oragina. - The Financial Times reports that Japanese drink company Suntory has agreed to a binding 2.6-billion-euro deal to buy French soft drink company Orangina Schwepps from Blackstone (BX) - Get Report and Lion Capital. The deal marks one of the biggest private-equity exits as the flow of cash back from deals has slowed to a trickle in the last two years, the report noted.
Tuesday's Earnings Roundup
- ConAgra (CAG) - Get Report said fiscal first-quarter earnings fell to $165.9 million, or 37 cents a share. On an adjusted basis, earnings were 38 cents a share. Revenue slipped 3% from a year ago to $2.96 billion. Analysts expected ConAgra to post a profit of 34 cents a share on revenue of $3.09 billion, according to a poll by Thomson Reuters. Looking ahead, ConAgra upped its full-year earnings outlook to "approaching" $1.70 a share, ahead of Wall Street's average forecast of $1.65 a share.
- Carnival (CCL) - Get Report posted fiscal first-quarter earnings of $1.07 billion, or $1.33 a share, topping the Thomson Reuters consensus of $1.18 a share. Looking ahead, Carnival now expects earnings in a range of $2.16 to $2.20 a share during the year, up from its prior forecast of $2 to $2.10 a share.
- CarMax (KMX) - Get Report reported a fiscal second-quarter profit of $103 million, or 46 cents a share, a significant increase from a year ago. Excluding a one-time gain related to the company's finance division, CarMax said it earned 36 cents a share in the quarter, doubling the Thomson Reuters average consensus for a profit of 18 cents a share.