Friday’s Market Recap: Stock Indexes End With Losses For The Week

All three major indexes were down for today and the week, with the S&P (^GSPC) down 1.14% today.  The NASDAQ (^IXIC) was down 0.54% to close at 1680.14, with the Dow (^DJI) dropped 0.75% closing at 8268.64.  Yields on the treasury fell to 3.136% as the price on the 10-year was up.  The price of crude oil fell to settle at $56.34, while gold headed in the opposite direction settling up at $931.30.

Prudential Financial (PRU) and Ameriprise Financial (AMP), became two of the six life insurance companies extended TARP funds by the Treasury Department, have declined the government’s offer of capital.  Prudential has not accepted the money as their stock has seen significant appreciation from a low this calendar year of just above $11 to close today at $37.75, and the company believes that they are in no need of government support.  Many also believe that if Prudential believes that it does need more capital, that they will probably find financing in the private market than from the government.  Chairman and CEO of Ameriprise, Jim Cracchiolo, said that their reason for not accepting funding from the government was that upon further evaluation of the company and its future, that they were happy with its current capital position.  So far only two life insurers have accepted the offer of TARP funds, Hartford Financial (HIG) and Lincoln Financial (LNC), for $3.4 billion and $2.5 billion respectively.

In other financial news, both JP Morgan (JPM) and Citigroup (C) plans on selling bonds not backed by the government.  Citi plans on selling $2 billion of 10-year investment grade bonds sold at 8.765%, which will not be backed by the FDIC’s Temporary Liquidity Guarantee program.  Citi plans on using the money from the selling of its bonds to fund its business segments, possible expansion, and refinancing or an extension of maturities on debt.  Citi has been told by the federal government that it must raise $5.5 billion, as it failed the stress test.  JP Morgan sold $1 billion worth of credit card backed bonds today, increased from $700 million because of strong demand.  The triple-A rated bond with a maturity of 2.067 years, will not be backed by TALF.  Investors who will likely buy this are those who have not filled out TALF paperwork and need the debt. They will turn to  JP Morgan because of their superior credit card exposure.

In tech news, McAfee (MFE) announced that it had agreed to buy privately owned Solidcore Systems Inc. for $33 million, and McAfee will pay another $14 million if performance targets are reached.  Solidcore Systems is a computer security company that provides technology to protect computers from viruses and only allows authorized software to run.  McAfee believes that its acquisition of the security company will further cement itself as the leader in endpoint security.  The acquisition of the company will be realized in the second quarter and is expected to decrease earnings per share.

Disclosure: The Fund the author is associated with is long JPM.

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