LMT, NOC, ITT, LLL, CW, ATK left out of rally
A few defense stocks were left out of today’s rally following reports that the Obama administration has told the Pentagon to pare its next budget request to the level it projected a year ago, down nearly $60 billion from a more recent Pentagon wish list.
It has long been suspected that weapons and war equipment spending are first in line for budget cuts. Areas that are likely to be safe from budget cuts include intelligence, communications, and surveillance.
The Obama administration plans to present an overview of its fiscal 2010 budget request by the end of this month, followed by a detailed proposal by April.
Caterpillar (CAT) +5.28%
Moody’s Investors Service said Caterpillar will be in a better position to cover $14 billion of debt coming due in the next 12 months after making its largest bond sale. The slump in demand for Caterpillar’s products and the amount of debt coming due over the next 12 months led Moody’s to lower its rating outlook to negative from stable on Jan. 26.
Caterpillar paid spreads about a percentage point narrower than in its last sale in December; however, the spreads on the notes sold yesterday were still about a percentage point higher than similar bonds sold in September.
Moody’s comments seem to have quelled concerns that Caterpillar would have to cut their dividend.
General Electric (GE) +2.30%
GE shares struggled for much of the day after a JPMorgan analyst said GE’s AAA Rating "Unsustainable."
Then, of course, General Electric said they will keep their 31-cent dividend, but will review the payout for the second half.
Procter & Gamble (PG) +1.28%
Bloomberg reports that PG’s pharmaceutical unit may fetch as much as $billion from its bidders. PG is looking to exit the drugs business since sales have been declining for several years in the face of generic competition, and PG is not willing to spend the kind of money on pharmaceutical R&D to remain competitive.
Johnson Controls (JCI) +10.53%
First, shares are definitely benefiting from news that the U.S Auto Suppliers’ Industry aid request may reach $25 billion.
In other news, Johnson Controls was added to the Calvert Social Index, a broad-based, rigorously constructed benchmark for measuring the performance of U.S.-based socially responsible companies.
Finally, Barron’s ran a special report on the very significant stock purchases by Beda Bolzenius, corporate vice president and president of automotive experience business.
Quick Hits
- Bank of America Rejects Nationalization, More U.S. Funds, Lewis Tells CNBC
- Obama Names Advisory Panel
- Senate Seeks to End Impasse, Vote on Stimulus This Evening
Peter Lazaroff, Junior Analyst
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