Market Wrap: S&P Cuts European Banks; Cengage Goes Belly-Up; SEC Probes at Linn, LinnCo
Market wrap for July 2nd
End of the Day: S&P 500 down 0.9 to 1,614.08; Dow Jones down 42.6 to 14,932.41; Nasdaq down 1.1 to 3,433.40
* The U.S. Commerce Department said that orders for manufactured goods rose 2.1 percent in May to $485 billion, from a revised 1.3 percent gain in April and expectations for a 2.0 percent gain. Excluding transportation, new orders increased 0.6 percent.
* Standard & Poor's Ratings Services today said it lowered its long-term counterparty credit ratings on Barclays Bank PLC (NYSE: BCS), Credit Suisse AG (NYSE: CS), and Deutsche Bank AG (NYSE: DB) to 'A' from 'A+'. At the same time, we affirmed our 'A/A-1' long- and short-term ratings on UBS AG (NYSE: UBS). The outlooks on these banks are stable. For the full report, click here.
* Cengage Learning, Inc., entered an agreement with certain of its lenders to restructure its balance sheet and significantly reduce its approximately $5.8 billion of outstanding debt to better position the Company for long-term growth and profitability.
* American Realty Capital Properties, Inc. (Nasdaq: ARCP) and American Realty Capital Trust IV, Inc. ("ARCT IV") announced that they have signed a definitive merger agreement whereby ARCP will acquire all of the outstanding shares of ARCT IV for stock and cash in a transaction valued at approximately $3.1 billion.
* LINN Energy, LLC (Nasdaq: LINE) and LinnCo, LLC (Nasdaq: LNCO) announced that they have been notified by the staff of the Securities and Exchange Commission ("SEC") that its Fort Worth Regional Office has commenced a private, non-public inquiry regarding LINN and LinnCo. Although the impact of the inquiry on the timing of LinnCo's proposed merger with Berry Petroleum Company (NYSE: BRY) is difficult to predict, LinnCo and LINN remain committed to the completion of the transaction.
* Eight of the largest U.S. banks are slated to face even tougher capital requirements than those instituted under Basel III. Such sules, according to the Fed, include a higher 5 percent to 6 percent leverage ratio along with a greater amount of long-term debt. Specifically, the proposal says all banks should keep a level of common equity tier-1 ratio of 4.5 percent, a tier-1 capital ratio of 6 percent, and a total capital ratio of 8 percent of risk-weighted assets.
* Prudential Financial, Inc. (NYSE: PRU) said it plans to fight stricter capital rules imposed under Dodd-Frank legislation. For more color, click here.
* Tesla (Nasdaq: TSLA) received enough signatures on a White House petition which seeks to prevent States from blocking direct-to-customer sales of its automobiles.
* Mitsubishi UFJ Financial Group, Inc. (NYSE: MTU) agreed to take a $5.6 billion stake in Bank of Ayudhya. The stake could be up to 75 percent of total outstanding common if all of Krungsri's shares except the shares held by the Ratanarak Group are tendered and purchased. For more color, click here.
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