Select Tech Shares Among Winners As Dow Tumbles Triple-Digits (RSH, BX, THC, HPQ, AAPL, LONG)
After a nice rally following a lower open, the bottom fell out the market late in the day. The oil patch was particularly weak after another attempt to stop the Gulf oil leak failed and the Feds opened a criminal investigation into the spill. We continue to believe the general market will remain weak in the near term, but that investors can methodically dollar cost average into positions on down days.
Stocks dropped on the day, with the Dow falling -113. The S&P dropped -19 points to 1,071, while the Nasdaq tumbled -35 points to 2,222. Oil fell -$1.39 to $72.58 a barrel, while gold rose $12.60 to $1,224.80 an ounce.
On the economic front, the Institute for Supply Management’s manufacturing index slipped to 59.7 in May from 60.4 in April. Economists were expecting a reading of 59.0. A level above 50 indicates expansion.
In M&A news, shares of electronics retailer RadioShack (RSH) rose 2.8% after the NY Post reported that private equity firm Blackstone Group (BX) was the leading bidder for the firm after an initial round of bids. RadioShack announced last month that it was seeking strategic alternatives, including a large share buyback or sale of the company.
Shares of Tenet Healthcare (THC) sunk -17.5% after the hospital operator confirmed that it was in talks to acquire the second-largest hospital operator in Australia, Healthscope. Two unidentified parties have also joined the bidding, Healthscope said, offering 1.84 billion Australian dollars ($1.5 billion). An Australian newspaper has identified the other two bidders as private equity firms Kohlberg Kravis Roberts and CVC Capital Partners.
In other news, technology giant Hewlett-Packard (HPQ) announced it was laying off 9,000 workers as it consolidates and automates data centers. The company plans to take a $1 billion charge spread out over a few years as a result. It will also hire approximately 6,000 workers during this time for sales and service delivery positions. H-P shares fell -0.9%. 333 Pros counted H-P among their top-15 U.S.-listed equity holdings at the end of the first quarter.
Shares of Apple (AAPL) rose 1.5% after the company announced on Monday that it has sold over 2 million iPods in the less than 60 days. The device debuted in early April in the U.S. and this past weekend in nine other countries. At the end of Q1, 597 Pros held Apple in their top U.S.-listed equity holdings, making it one of the ten most popular stocks among 13F-filing asset managers based on the same criteria.
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