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Spotlight Stocks: Fannie Mae, IndyMac, Merck, Siemens

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Tuesday's top stories and stocks with potential to move.

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Stocks to watch for Tuesday, July 8, 2008:

  • Fannie Mae (FNM) and Freddie Mac (FRE) shares were hit hard yesterday as each fell to the lowest level in nearly 16 years, reported Reuters. The drop was induced when costs to insure their debt against default rose on concern the two largest U.S. mortgage funders may need to raise vastly more capital amid larger-than-expected losses. Investors will keep a close eye on the stocks today after seeing FNM fall 18% and FRE 16% in yesterday's trading.

  • IndyMac Bancorp (IMB), reeling from losses in home-mortgage defaults, said it has stopped taking most types of loan applications and will also cut more than half of its workforce, reported The Wall Street Journal. The company specialized in Alt-A loans during the strong years in the housing market. IndyMac said Monday that it had been unable to raise fresh capital and that it is likely to report a loss for the second quarter bigger than the $184.2 million loss recorded in the first quarter, reported the Journal.

  • Merck (MRK) saw its rating cut by UBS pharmaceuticals analyst Roopesh Patel yesterday from "buy" to "neutral" and saw shares drop 4.8%. The analyst said U.S. sales of Gardasil, the company's cervical-cancer drug, may have fallen about $50 million short of expectations, reported The WSJ. The company is scheduled to report earnings on July 21.

  • Pepsi Bottling Group (PBG) reported fiscal 2Q net income of $174 million, or 78 cents a share, up from $162 million, or 70 cents a share a year ago. The company also beat expectations of 75 cents a share. Net revenue rose to $3.52 billion from $3.36 billion a year ago. The numbers were helped by price increases, which countered the decline in volume.

  • Siemens AG (SI) is planning to announce job cuts which would eliminate 4% of its global workforce, or about 17,150 employees. The cuts come amid an overhaul campaign and because of the global economic downturn, reported Reuters. By 2010, the company hopes to save 1.2 billion euros, or $1.9 billion. "This is all the more important right now, as risks to the world economy have clearly grown due to high raw-materials and energy prices and the financial markets crisis in the United States, and we must assume that we will feel this more and more strongly in the coming months, said Chief Executive Peter Loescher.


Market Recap

  • Asian trading closed with the Hang Seng -3.16%, Nikkei -2.45%, Sensex -1.30%, Taiwan -3.94% and Shanghai +0.81%.

  • Glancing towards Europe, we find the CAC -1.84%, DAX -2.08%, FTSE -2.07%, ATX -2.65%, Swiss Mkt. -0.96% and Stockholm -2.23%.

  • Over in commodities, crude oil is down -0.55 to 140.84 and gold is unchanged at 928.0 this morning.
No positions in stocks mentioned.

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