Banking Shares Plummet; Crude Drops on Curbed Demand; Citigroup Stock Slumps to Inception Levels; Volkswagen Chooses Chattanooga; J&J Reports 8% Jump in Profit; SEC Restricts Short Selling; 3-Year European Closing Low; Foolhardy ViroPharma Bid?
- The Standard & Poor's 500 Banks Index dropped 10% to close at 136.01, it’s worst one-day decline since the index’s inception in 1989, Bloomberg News reported. National City Corp. (NCC) was one of the leaders, as it dropped more than 17% to close at $3.12. National City continues to fight off persistent rumors that the Ohio-based bank is not adequately capitalized.
- Crude oil for August delivery dropped 4.5% percent with a decline of $6.49 yesterday (Tuesday) to trade at $138.69 at the close of trading on the New York Mercantile Exchange, Bloomberg News reported. Contracts had traded as low as $135.92 earlier in the day as high gas prices curb demand due to changing consumer-driving habits.
- Citigroup Inc. (C) stock slumped to its lowest level since the financial giant’s creation via the merger of Travelers Group and Citicorp in October 1998, Reuters reported. Citi shares traded as low as $14.01 before paring losses to close down $0.70, a 4.6% decline, at $14.52 yesterday (Tuesday).
- Volkswagen AG (OTC: VLKAY) chose Chattanooga, TN over rival sites in two other states for a new U.S. assembly plant expected to create about 2,000 jobs, The Associated Press reported. Sites in Alabama and Michigan were also considered for the plant, which is part of Volkswagen's strategy to increase its presence in America. Volkswagen, Europe's biggest automaker, closed its last U.S. production facility in 1988.
- Johnson & Johnson (JNJ) yesterday (Tuesday) reported an 8% jump in second-quarter profit, thanks to strong consumer sales and the weak dollar spurring sales overseas. For the first time ever, international sales topped U.S. sales for the company. Favorable currency exchange rates due to the weak dollar accounted for almost two-thirds of the increased sales, according to the Associated Press.
- The U.S. Securities and Exchange has issued an emergency edict to stop "naked" short selling in major financial firms, Reuters reported. The rule requires any person making a short sale in the listed securities to borrow the securities before the short sale is effected and deliver the securities on settlement date.
- European stocks as measured by the FTSEurofirst 300 Index hit a 3-year closing low of 1,110.09 yesterday (Tuesday) as financial shares got hammered. The index of top European shares ended down 2.1% after having been down as much as 3% earlier in the day, Reuters reported. “The sell-off is extremely violent, it's a bloodbath, and I fear that it could last all summer,” one anonymous Paris-based trader said.
- Shares of biotech firm ViroPharma Inc. (VPHM) tumbled yesterday (Tuesday) after announcing a bid to takeover Lev Pharmaceuticals Inc. (OTC: LEVP), Forbes reported. The potential $617.5 million deal will eat away most of ViroPharma’s cash reserves, causing its shares to drop $1.95, a 15% decline, to close at $10.62.