The Greek economic crisis goes on and on and on.
IPO's are back at their highest level since before the economic collapse of 2008.
Here are the top financial stories of the day:
1) Debt standoff pressures stocks, drives wary mood-from Reuters
Stocks dipped on Monday as lawmakers remained in a standoff over raising the debt ceiling to avoid default, but investors were convinced a compromise will be reached before next week's critical deadline.
Trading volume, however, was light even for a seasonally quiet period, suggesting investors were holding to the sidelines. In another sign of negative sentiment, declining stocks far outpaced advancers despite the day's moderate declines.
Lawmakers are facing an August 2 deadline to raise the $14.3 trillion debt ceiling to avert a U.S. default.
"If you listen to all of the rhetoric and read all of the print, August 2 has the potential of being one of the worst days ever, if the debt ceiling isn't raised," said Hank Smith, chief investment officer at Haverford Trust Co. in Philadelphia.
But the market is not reacting as if that's going to happen, he said. "Politicians are being politicians...but when they get to the end of the cliff, they're not going to jump. They will raise the debt ceiling."
A deal remained elusive in Washington as President Barack Obama's Democrats and their Republican rivals pushed for separate budget proposals in Congress, increasing the threat of a ratings downgrade and default that could sow chaos in global markets. For details, see (ID:nN1E76N0CA) A two-stage Republican plan would call for $1.2 trillion in cuts.
Investor anxiety remained high, reflected in the CBOE Volatility Index (Chicago Options:^VIX - News), which jumped 10.5 percent, its biggest percentage increase in two weeks.
The Dow Jones industrial average (DJI:^DJI - News) was down 88.36 points, or 0.70 percent, at 12,592.80. The Standard & Poor's 500 Index (^SPX - News) was down 7.59 points, or 0.56 percent, at 1,337.43. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was down 16.03 points, or 0.56 percent, at 2,842.80.
Among the weakest sectors were health care (^GSPA - News), telecommunications (^GSPL - News) and consumer staples (^GSPS - News), erasing some of last week's market gains notched on second-quarter earnings that were mostly stronger than expected. The S&P index of each sector was down at least 1 percent.
On the New York Stock Exchange, decliners outweighed advancers by about 4-to-1, while Nasdaq losers
beat winners by about 10-to-3.
The political jousting in Washington pushed gold prices to record highs as the fear of a default raised the appeal of bullion versus the greenback. The dollar fell to a record low against the Swiss franc, a safe-haven currency.
"There is concern about the implication about what our own debt rating will be as we air out this dirty laundry to try to come to a resolution," said Kevin Caron, market strategist at Stifel, Nicolaus & Co in Florham Park, New Jersey.
Strong earnings reports have offset worries about the debt debate, helping stock indexes post gains last week. Of the 154 S&P 500 companies that have reported earnings so far, 75 percent have beaten analyst expectations, according to Thomson Reuters data.
2) Moody's warns Greek default virtually 100 percent-From the AP
Moody's downgraded Greece's bond ratings by a further three notches Monday and warned that it is almost inevitable the country will be considered to be in default following last week's new bailout package.
The agency said the new EU package of measures implies "substantial" losses for private creditors. As a result, it cut its rating on Greece by three notches to Ca -- one above what it considers a default rating.
Though Moody's said a Greek debt default is "virtually certain," it noted that the new measures will increase the likelihood that Greece will be able to stabilize and eventually reduce its overall debt burden.
It also said the package also benefits other eurozone countries by "containing the near-term contagion risk that would likely have followed a disorderly payment default or large haircut on existing Greek debt."
In recent weeks, financial markets have been rocked by fears that much bigger economies like Spain and Italy may get dragged into Europe's debt crisis mire, which has also seen Ireland and Portugal bailed out alongside Greece.
Eurozone countries and the International Monetary Fund last week agreed to give Greece a second bailout worth euro109 billion ($155 billion), on top of the euro110 billion granted in rescue loans a year ago.
If all goes to plan, banks and other private investors will contribute some euro50 billion ($71 billion) to the rescue package until 2014 by swapping Greek bonds that they hold for new ones with lower interest rates or slightly lower face value, or selling the bonds back to Greece at a low price
"The support package incorporates the participation of private sector holders of Greek debt, who are now virtually certain to incur credit losses," Moody's said in a statement. "If and when the debt exchanges occur,
Moody's would define this as a default by the Greek government on its public debt."
Despite Greece's new package, which was more comprehensive than many in the markets had predicted, Moody's said it's going to take many years of hard graft for Greece to get complete control of its debts.
"Greece will still face medium-term solvency challenges -- its stock of debt will still be well in excess of 100 percent of GDP for many years and it will still face very significant implementation risks to fiscal and economic reform," Moody's said.
3) Dunkin' Leads IPO List-From The Wall Street Journal
The U.S. IPO market is revving up this week for the biggest flurry of deals in nearly four years, as the summer hiatus looms.
Eleven initial public offerings are firmly on the calendar. If all manage to price, it will be the busiest week since 13 deals went public in November 2007.
The offerings include a familiar consumer name, Dunkin' Brands Group Inc., which is also the largest offering. It is seeking as much as $400 million through a listing on the Nasdaq under the symbol DNKN. The coffee-and-doughnut chain franchises all of its locations, keeping capital expenses low and operating margins around 34%. But its mature food service business doesn't provide the kind of double-digit growth that investors have been lining up for in Internet IPOs. In the first quarter, revenue rose 9%, same-store sales growth remained less than 3%, and the company booked a net loss due to a debt repricing transaction, and higher interest expense
The other deals range in size from $30 million to $370 million and span a variety of industries and there are some that could match or outshine Dunkin' on the first day of trading. C&J Energy Services Inc. and ADS Tactical Inc. are considered two deals to watch.
C&J, which plans to list on the New York Stock Exchange under the symbol CJES, specializes in hydraulic-fracturing services to extract oil and gas from unconventional deposits. Revenue nearly quadrupled in the first quarter to $127.2 million. For 2010, revenue more than tripled to $244.2 million. Its bottom line looks good, too. The company reported first- quarter net income of $29.1 million, compared with $2.2 million a year earlier. Net income for 2010 was $32.3 million, from a net loss of $2.4 million.
ADS Tactical, which wants to list on the NYSE under the symbol ADSI, enters into procurement contracts with the U.S. military that allows it to coordinate a network of vendors for things such as communications equipment and eyewear to the Department of Defense and Homeland Security. ADS Tactical says it is able to maintain an asset-light, low-inventory business, and expects the military to continue increasing the average amount its spends per soldier. Net sales in the first quarter rose 18% to $344 million, but net income declined 46% on refinancing expenses.
Tea boutique chain Teavana Holdings Inc. is also on the radar. The 180-store chain, headed for the NYSE under the symbol TEA, sells premium loose teas that can cost $25 for about 25 teaspoons. Though the U.S. isn't a big tea-drinking nation, the company has carved out a niche as a premium retailer. In the 13 weeks that ended May 2, net sales rose 36% to $35 million and net income increased 72% to $3.3 million; same store sales rose 6%.
Falling somewhere in the middle of the pack are deals from American Midstream Partners L.P., a natural-gas pipeline and processing partnership that is listing on the NYSE under the symbol AMID; Tangoe Inc., a software company that helps companies manage their communications equipment and services, headed to the Nasdaq as TNGO; and Wesco Aircraft Holdings Inc., a supplier and logistics manager for aerospace companies that is aiming to trade on the NYSE under WAIR.
A straggler may be specialty food distributor Chefs' Warehouse Holdings LLC, which wants to list on the Nasdaq as CHEF. Its net sales and profit margins rose over the past year, but food distributors generate lower profit margins than most other industries and have a customer base that is sensitive to economic downturns.
Three that are likely to struggle are the Uruguay farming operation Union Agriculture Group Corp., which wants to list on the NYSE as UAGR; Horizon Pharma Inc., which wants to list as HZNP on the Nasdaq; and WhiteGlove Health Inc., which is headed to the NYSE Amex under the symbol WGH. None are profitable on an annual basis. Neither agricultural companies nor early-stage biopharmaceutical firms have been a hit with IPO investors. WhiteGlove, which contracts with insurers and self-insured employers to provide medical care in homes and offices, has a relatively unproven business model.
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