Opening View: Bank of America Extends Winning Streak for Financials

Monday, July 21, 2008

Opening View: Bank of America Extends Winning Streak for Financials

Sticking with currencies and commodities, the U.S. Dollar Index is off 0.03% in early trading with traders cautious ahead of more reports from U.S. banking companies. Gold futures are taking advantage of this weakness, as August gold futures are up $5.40 at $963.40 an ounce in London trading. Elsewhere, crude futures are back above the $130 level following a lackluster meeting with Iran. The September crude futures contract has added $1.41 to $130.87 per barrel in electronic trading.

Turning to Bank of America (BAC: sentiment, chart, options), the banking giant reported that second-quarter net income fell 41% to $3.41 billion, or 72 cents per share. Revenue rose 3% to $20.32 billion on expanded net interest yield, loan growth, and higher income from service charges, mortgage banking, and investment and brokerage services. Analysts expected earnings of 59 cents a share. Countrywide Financial, whose results weren't reflected in the second-quarter report, had a second-quarter net loss of $2.33 billion.

In pharmaceuticals, Swiss drug giant Roche Holding AG said that it has offered to buy the 44% of Genentech (DNA: sentiment, chart, options) that it doesn't already own for $43.7 billion. Roche said that it is seeking better leverage in its pipeline and DNA's competitive strengths. At $89 a share, Roche's offer represents an 8.8% premium to DNA's closing price on Friday. Roche already owns 54.9% of the U.S. cancer specialist and markets many of its treatments.

Also in pharmaceuticals, Merck (MRK: sentiment, chart, options) and Schering-Plough (SGP: sentiment, chart, options) said that they would delay their second-quarter earnings reports until after the market closes today. The firms said the delay was due to the release later today of a study of Simvastatin plus Ezetimibe (otherwise known as Vytorin). Sales of Vytorin have suffered recently after a controversial study showed it wasn't any more effective in treating heart disease than generic versions of Zocor.