Stocks End Lower Ahead of the Fed Chairman’s Congressional Testimony SP500 Leaders: MIL, SII, PWR, AIG and HUM

Published on Monday, 22 February 2010 18:16 Written by Christopher Lynn

New York, February 22^nd (TradersHuddle.com) - Stocks ended a choppy session lower, snapping a fourth consecutive gain streak. Investors for the most part held back ahead of Ben Bernanke’s testimony before Congress. Investors mulled over earnings news, corporate takeovers, increasing rate worries and lower commodity prices

The Dow Jones Industrial Average fell 18.97 points, or 0.18%. The S&P 500 index lost 1.16 points or 0.10%, while the NASDAQ slid 1.84 points or 0.08%. Market breadth was positive. On the NYSE, winners topped decliners by a very narrow margin. On the NASDAQ, advancers outpaced losers by a rate of 8 to 7.

Trading was choppy from the start without a committed direction, Investors weighed earnings news with the prospects of Ben Bernanke’s congressional testimony on the state of the economy later in the week.

The Fed Chairmen will deliver his semi-annual report on the economy and interest rates to House and Senate panels on Feb. 24-25. Bernanke may tell Congress this week that an increase in the central bank’s benchmark interest rate isn’t imminent amid a weak jobs market, dissipating doubts that last week’s move to increase the discount rate was an equivocal sign of an increase on the benchmark rate.

Health insurers' shares rose after President Obama proposed a revised overhaul of U.S. healthcare.

Energy shares were the biggest drag in the broad market index on the flip side financial stocks rose 1.1% as a group, posting the biggest gain among 10 industries in the S&P 500. Bank of America (NYSE:BAC) jumped 2.08% to $16.21 to post the biggest gain in the Dow Jones Industrial Average. Investors lifted banks’ shares after the hike in the discount rate was seen as a vote of confidence in the financial system and worries about tougher rules for banks eased.

Leading the S&P 500 index was Millipore (NYSE:MIL), as shares of life science and pharmaceutical industries provider soared 22.44% to $87.35. Millipore shares surge as much as 36% amid reports that Thermo Fisher Scientific (NYSE:TMO) made an unsolicited takeover offer for about $6 billion for Millipore. According to Bloomberg News, a deal between Millipore and Thermo Fisher, the world’s largest lab instrument maker, could be agreed to as early as next week. Millipore reportedly hired Goldman Sachs as a financial adviser.

Smith International (NYSE:SII) posted the second largest percentage gain in the S&P 500, as shares of the drill bits and drilling fluids maker climbed 8.83% to $41.03. Shares jumped after Schlumberger (NYSE:SLB), the oil services giant announced an $11 billion all stock take over deal for Smith International, as Schlumberger eyes gas drill growth. Schlumberger expects pretax savings of $160 million in 2011 and $320 million in 2012.

The third best gain in the broad market index was Quanta Services (NYSE:PWR), as shares of the specialized contractor to electric utilities, telecommunication and cable television operators gained 7.72% to $19.26. Quanta shares jumped as the contractor beat analysts’ estimates by $0.04 a share on better than expected revenue. The company said it expects 2010 earnings to range between 90 cents and $1 per share on sales of $3.9 billion to $4.2 billion. Analysts are predicting earnings of 94 cents per share on sales of $4.1 billion.

The fourth best S&P 500 stock was American International Group (NYSE:AIG), as shares of the insurance company added 7.16% to $28.43 on more than 2.5 times the average trading volume. Shares moved to the upside after investors and analysts seemed to think that AIG’s business is getting back to normal, expecting an earnings report that will show more normalized earnings, as the company announced that it expects to retire 85% of its radioactive derivative trades by end of the year.

The fifth biggest gain in the broad market index was Humana (NYSE:HUM) as shares of the managed health provider added 5.56% to $47.87. Humana, one of the biggest provider of Medicare advantage, moved higher after the Centers for Medicare & Medicaid Services announced an almost 1.4% increase for next year to a baseline payment rate for Medicare Advantage plans. The increase in payment rates helped offset worries about President Obama’s proposal to overhaul the healthcare system and regulate insurance premiums.