Worries over the Italian banks and the European debt crisis conspired to bring stocks down Friday despite better-tha-expected news on durable goods orders.
As of near market close on Friday, the Dow was down 79 to 11,971, the Nasdaq was off 30 to 2,657, and the S&P 500 lost 11 to 1,272.
The Commerce Department revised first quarter GDP up slightly from a 1.8% growth rate to 1.9%, but said the overall economic slowdown remains unchanged, and expects weak second quarter growth due to lack of consumer spending and slow hiring.
The Federal Reserve cut forecast 2011 GDP to 2.8% from 3.2% and 2012 GDP growth from close to 4% to 3.5%. Despite the slowdown, durable goods orders rebounded in May, signaling a growing factory sector.
China vented its anger at the European Union’s emissions trading rules for airlines, which has led to a delay in revealing a major Airbus deal with a catalog value of about $4 billion. China's ire at the EU’s intention to regulate greenhouse emissions of foreign airlines operating to and from the bloc prevented Airbus from naming the buyer of 10 of its A380 superjumbo jets, though the deal does not appear to be in jeopardy. Both Russia and the U.S. have also objected to the EU’s proposed greenhouse regulation plans.
According to reports, private equity firms KKR & Co, Silver Lake Partners, and a third investor are close to buying closely-held GoDaddy Group Inc., the world’s largest registrar of internet domain names for between $2 to $2.5 billion. The company operates under the flagship GoDaddy.com and is known for its flashy- and pricey- television ads. Ancillary products and services along with steady fee income makes for an attractive private equity target. GoDaddy hired investment bank Qatalyst Partners to shop the company last year.
Alcoa (NYSE:AA), meanwhile, reached an agreement to provide aluminum sheet and plate products to Airbus in a deal worth around $1 billion. Alcoa aluminum will be used on practically all of commercial Airbus jets, and include products such as fuselage panels and structural components of wing skins. Alcoa has developed aluminum alloys to compete with new lightweight composites. So far, aluminum remains the material of choice in aerospace applications.
The FDA issued new warnings on a class of drugs used to treat anemia in patients with kidney disease. These drugs, known as erythropoetins, stimulate the formation of red blood cells. Recent clinical trials have shown they may increase the risk of adverse cardiovascular reactions, stroke, and even death. Amgen (NASDAQ:AMGN) and Johnson & Johnson (NYSE:JNJ) are major producers of the product; they intend on placing warning labels on the drugs. Amgen sells the drug under the brand names Aranesp and Epogen; J&J sells it under the name Procrit.
Hackers recently broke into Electronic Arts Inc.'s (NASDAQ:ERTS) servers, stealing customer information. They targeted a bulletin board website for a videogame called “Neverwinter Nights” in the attack. EA said the attack was “highly sophisticated” and it will implement additional security controls. This is the latest in a string of attacks targeting gaming companies including Sony, Sega, Nintendo, and Square Enix.
In other news, the U.S. is seeking a 385-year sentence for Lee Farkas, the former chairman of mortgage lender Talyor, Bean & Whitaker Mortgage Corp, because he continues to deny responsibility as the mastermind of a multibillion-dollar fraud of staggering proportions. Farkas was found guilty of selling phony assets to other lenders and attempting to fraudulently obtain $500 million from TARP. The severe sentence is intended as a deterrent to other executives in the position of power.
Stocks on the Move
Blackboard Inc (NASDAQ:BBBB) increased 6.9% due to acquisition talks that may occur next week with Providence Equity Partners.
Boston Scientific Corp (NYSE:BSX) slipped 3.2% as UBS cut the stock from "buy" to "neutral" and lowered its price target from $7.91 to $7.65.
Pain Therapeutics Inc. (NASDAQ:PTIE) swooned 40% when the FDA delayed approval of is new long acting painkiller, Remoxy.
SucessFactors Inc. (NASDAQ:SFSF) dropped 14% with an announced workforce reduction.
Southern Union Co. (NYSE:SUG) jumped 17% with a $4.86 billion all cash offer from Willams Cos (NYSE:WMB) last night for the pipeline company.
Oracle Corp (NASDAQ:ORCL) fell 3.8% with a 6% drop in hardware sales after having forecast a 6-12% increase in March.