U.S. stocks down for second consecutive week, May 9-13

U.S. stocks closed down for the second week in a row with worries about global growth, the euro-zone debt-crisis, and the coming end in June of the Fed’s second round of quantitative easing. Continued upheaval and heavy selling in the commodities sector dominated the headlines. The Dow Jones Industrial Average shed 42.99 points or 0.34% to close the May 9-13 trading week at 12,595.75, while the S&P 500 index fell 2.83 points or 0.21% to finish at 1,337.77. The Philadelphia Gold and Silver index lost 6.93 points or 3.43% to 195.26.

Cliffs Natural Resources led the decliners with a loss of US$4.56 to US$84.37 per share. On May 12 Cliffs announced that it had completed its acquisition of Consolidated Thompson for $17.25 per share. Cliffs financed the approximately C$4.9 billion (including net debt) transaction through committed financing, including a US$1.25 billion term loan, US$750 million in bridge financing and available cash on hand. Cliffs plans to replace the US$750 million in bridge financing by accessing the capital markets.

Teck Resources dropped US$3.89 to US$46.36 per share. The miner announced on May 8 that employees at its Fording River operation in British Columbia had ratified a new five-year collective agreement, replacing an agreement that expired on Apr. 30. The new agreements at its Elkview and Fording River operations mean that Teck will incur a one-time charge in the second quarter of about $40 million, of which about one-half will be a non-cash accrual related to enhancements to pension and post-retirement benefits.

Fertilizer giants Mosaic and Agrium were down US$3.82 to US$67.35 and US$3.76 to US$80.43, respectively. On May 12 Mosaic announced the start of a secondary offering of 100 million shares with Cargill stockholders and certain debt holders related to Cargill’s exchange of its roughly 64% interest in Mosaic. Agrium, meanwhile, reported on May 11 that it had completed the divestiture of the majority of the commodity management businesses of AWB Limited to Cargill. The cash received from the sale totals US$677 million, which includes the repayment of US$363 million of working capital funding Agrium has provided to the commodities management businesses since Dec. 15, 2010.

On the positive side of the ledger, Mesabi Trust advanced US$1.44 to US$31.85. The royalty trust derives income from the Peter Mitchell iron mine near Minnesota. Unlike most metal and mineral prices, iron ore prices have remained relatively unaffected by the meltdown in commodities over the past few weeks.