All My Net Biz

Canadian conglomerate Onex Corp. and U.S. private equity firm The Carlyle Group have teamed up to buy Allison Transmission from GM for $5.6 billion US.

General Motors had announced back in January that it wanted to sell Allison as part of its restructuring planto raise money and concentrate on its core business of vehicle production. Onex Corp. three-month trading

The sale includes Allison’s seven manufacturing plants in Indianapolis. Allison, which makes transmissions for commercial trucks, buses and military vehicles,has annual revenues of more than $2 billion US and employs 3,400 people.

“Allison should enjoy continued growth as the adoption rate of automatic transmissions in commercial vehicles continues to grow,” said Onex managing director Seth Mersky in a release.

Onex and The Carlyle Group will each make an equity investment of$750 million US. The Onex side of the investment is being made by Onex Partners II the company’s large cap private equity fund.

Onex shareholders appeared to like the deal. The stock was up $1 at $36.66 in early TSX trading.

Stock futures pointed to a sharply lower open Thursday as credit market fears spooked financial markets. Nasdaq futures were down 16 points vs. fair value S&P down 16 points and Dow down 121.

There’s lots of earnings news, but that’s not the focus. Investors are very nervous about credit conditions with investment banks, lenders and home builders falling hard before the open. Oil prices are soaring toward record highs. Treasury yields are at their lowest levels since May.

A couple of big-cap leaders bucked the trend. Apple () traded higher by about 8% in the premarket. Late Wednesday, the iPhone maker delivered a 70% jump in fiscal Q3 profit, smashing views, on strong Mac and iPod sales. For the current quarter, Apple gave a very conservative outlook. But the company has a history of low-balling its guidance.

Baidu.com () was sharply higher after it continued its streak of triple-digit growth. Late Wednesday, the Chinese Internet search firm said second-quarter profit surged 128% to 57 cents a share, easily beating analysts’ estimates of 43 cents. According to Beijing-based research firm Analysys International Baidu had 58% of China’s search revenues in the second quarter vs. Google’s () 23%.

Meanwhile, Dow component Exxon Mobil () reported second-quarter income of $1.83 a share, missing views of $1.96. Shares edged lower in pre-market trading.

Fellow Dow member 3M () beat views and raised its full-year outlook. The Scotch tape maker now sees earnings between $5.40 and $5.60 per share, well ahead of views of $4.86 a share.

Intercontinental Exchange () delivered Q2 profit excluding charges ahead of views. But the stock slipped in pre-market trading.

Online real estate information provider LoopNet () beat views for the fifth straight quarter since coming public last June. The company also guided Q3 and full-year guidance mostly in line with estimates.

On the economic front, durable goods orders rose 1.4% in June, the biggest gain in three months. But that was below expectations of a 2% rise. Orders ex transportation fell 0.5%, while core capital goods orders also fell.

New home sales for June will be out at 10:00 a.m. ET. Economists expect 900,000 units. Pulte Homes (), D.R. Horton (), Beazer Homes () and Ryland () all swung to quarterly losses.

Wednesday was likely a busy one for many option traders that focus on IBD 100 stocks. With volatile price swings, earnings and increased premiums across-the-board, there were plenty of reasons for considering adjustments and perhaps opening fresh positions as well. In the following, we’ll recap a couple of the more extreme regions of that particular universe.

In front of this evening’s earnings release, Apple () saw a surge in options activity and in its risk premiums. On the day, total volume swelled to more than 600,000 contracts versus its typically brisk 200,000. Further, a Put / Call ratio in conjunction with existing high and firmer implieds during Wednesday’s session suggest bullish bets were being wagered in front of the report.

ATM implieds for August were near 55% with the 140 / 135 Strangle fetching 13 points or $1300 a contract. Hence, on an expiration basis traders would need shares of AAPL either above 153 or below 122 in order to profit. In the after-hours session, the stock is moving to the plus side near $143 in volatile trade. However, with an expected decline in the implieds, the “juice” or Vega component of nearly 0.30 per contract will mean a stronger move is still necessary if any profits in Thursday’s session are going to materialize. If we anticipate a drop in the premiums to the 40% area, the stand alone ‘vol crush’ for the Strangle will be approaching 4.50 points of the 13 point initial debit.

While trading in Apple’s options was impressive, Wednesday’s most unusual activity in percentage terms was Buffalo Wings (). The restaurant operator isn’t scheduled to release its earnings until July 30, but it appears some bullish positioning is taking place in front of the report. While signs of distribution have crept into the picture; the latest being today’s technical attempt at breaking one-month price supports, option traders were most active in the OTM August 45 Calls. Front month implieds spiked by five percentage points to 67% during the session.

No doubt, general market conditions are in part responsible for the increased pump in implieds. But, with more than 2,000 contracts changing hands, existing Open Interest of just 1,407 and daily average volume of just 1,240; demand for protective strategies in lieu of stock look to be more than sufficient evidence. Also active and accounting for nearly as much volume, the OTM September 32.50 Puts look like a ‘cheapy’ bet. While the implieds are theoretically rich, for a 0.60 closing price and three sessions remaining until the report, the logic of using them as the basis for a starter position can be appreciated in conjunction with risk management.

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Watch today’s Markets Desk video.

Stocks rallied all the way from negative to positive territory, closing at session highs.

Smaller stocks led the advance, with the small-cap S&P 600 surging 1.3%. Nasdaq followed closely with a 1.2% gain. The midcap S&P 400 climbed 1.1%, S&P 500 0.9% and NYSE composite 0.8%.

Blue chips lagged, with the Dow returning 0.7%.

Volume appeared to be slightly higher across the board. This was somewhat of a letdown, considering the size of the broad-based gains.

Oil prices ended the day with a $1.20 surge to $68.97 a barrel, pushing many leading oil stocks into higher ground on heavy trade.

Advancers outnumbered decliners by 3-to-1 on the NYSE and by more than 2-to-1 on the Nasdaq.

Spectrum Control () gapped up, erupting 2.47, or 18%, to a record 16.34 on 10 times its usual trade. The stock cleared a seven-week double-bottom base, and is now 9% extended past its 14.97 buy point.

The electrical component maker reported late Tuesday a 54% surge in Q2 EPS and said it expects Q3 EPS to rise more than 57%. Q2 sales, however, only rose 5%.

Amerigon () soared 1.18, or 7%, to a record close of 17.43, successfully rebounding off its 10-week support. The company makes climate control systems for automobile and truck OEMs.

On the downside, Crocs () gapped down, sinking 2.21, or 5%, to 43.04 on 2 1/2-times its normal volume.

Monsanto () gapped down, but closed near the top of its trading range, off 1.21 at 66 in above-average trade. The company makes corn and other crop seeds for growers worldwide.

Fertilizer firm CF Industries Holdings () gave up 1.45 to 57.04.

3 p.m. ET Update: Stocks Head Higher In Late Trading

By MARIE BEERENS

After a brief retreat, stocks shot up with renewed enthusiasm to fresh highs for the day.

Around 3 p.m. EDT, the small-cap S&P 600 led with a 1.1% advance, closely followed by Nasdaq which was up 0.9%. The S&P 500 and NYSE composite rose 0.6% each. Blue chips underperformed, with the Dow industrials only up 0.3%.

The sudden rebound came right around the time U.S. Treasury Secretary Henry Paulson made comments about the U.S. and global economies. Paulson said the recent rise in interest rates is in many ways positive, serving as a “wake-up call” to rein in excesses in financial markets.

Volume was tracking slightly higher on both the NYSE and the Nasdaq.

Bond yields were down from Tuesday’s levels, but picked up slightly in late afternoon. Earlier in the day, a sharp decline in durable goods orders and a continued flight to safety had fueled a bond rally.

Fertilizer stocks, which have been firm leaders recently, were the worst performing group for the day.

Computer, chips and retail stocks fared best.

Oil prices spiked up 2%, pushing oil stocks higher.

Arena Resources (), Buckeye GP Holdings (), GlobalSantaFe (), Schlumberger () all rose in above-average trade.

The surge in crude didn’t stop the market from marching forward.

Nuance Communications () rose 0.90, or 6%, to 16.93. The stock shot up from under its 50-day moving average on higher volume.

Warnaco Group () cleared a three-weeks-tight pattern, surging to a new high. The apparel maker jumped 1.94, or 5%, to 38.57 on heavy trade. The company is featured in the current Daily Stock Analysis.

Perdigao () flew 1.20 to a record 38.49. The Brazilian meat processor successfully rebounded off its 10-week line, clearing a 37.44 buy point.

1 p.m. ET Update: Stocks Up, Trading At Session Highs

By JUAN CARLOS ARANCIBIA

The major indexes were higher and at session highs in midday trading, erasing earlier losses.

The Nasdaq led with a 0.5% gain at 1 p.m. ET, as chip, Internet, software and other technology-related industries were among the day’s best. The S&P 500 was up 0.2% while the Dow and NYSE composite were practically flat.

Volume was tracking modestly higher on the NYSE. On the Nasdaq, it was almost the same as it was at this time Tuesday.

Among noteworthy action in leading stocks, Deckers Outdoors () rose 1.62 to 96.86. The shoe manufacturer may be trying to clear a three-weeks-tight pattern.

JA Solar () gained 1.95 to 33.35, nothing a record high. The solar-cell maker is 18% extended from a 28.19 buy point.

Another of the market’s firmest leaders came under selling as Terra Nitrogen () fell 9.11 to 122.45. In the context of its advance, Wednesday’s decline wasn’t severe.

Life Partners Holdings () slid 4.22 to 35.66. The thinly traded stock broke stride after three weeks of strong gains.

Netgear () fell to its 50-day moving average, the first time it’s done so since March 29. At the time, Netgear was forming a base.

11 a.m. ET Update: Stocks Lower, But Climb Off Lows

By VINCENT MAO

Most major indexes were moderately lower in late-morning trading but off their earlier lows.

As of 10:45 a.m. ET, the Nasdaq was the lone gainer, rising 0.2%. The Dow fell 0.3% and the S&P 500 eased 0.1%.

Volume was tracking 3% higher on the Nasdaq and 9% higher on the NYSE.

The yield on the 10-year Treasury fell to 5.06%. The drop came after news that durable goods orders tumbled 2.8% in May, far worse than economists’ expectations of a 1% drop.

Machinery and metals stocks were among the weakest Wednesday.

At least two of the market’s top leaders slid in heavy trading.

Crox () gapped down, sinking 3.08 to 42.17 on brisk turnover. The shoe maker slid to a three-week low. Crox broke out of a cup-shaped base in early May and has since ran up for seven straight weeks.

Potash Corp. Of Saskatchewan () gapped down, falling 3.35 to 73.50. The Canadian fertilizer maker was off earlier lows after nearing its 50-day line. Potash is still 14% past a 64.70 buy point of a three-weeks-tight pattern.

Spartan Motors () lost ground for the seventh straight session, losing 1.27 to 25.96. The vehicle chassis maker is now 30% off its 52-week high reached on June 4. Its Accumulation/Distribution Rating has crashed to E from A earlier this month.

On the upside, Apogee Enterprises () gapped up and vaulted 2.45, or 10%, to a record high of 27.65 on heavy trade. Late Tuesday, the glassmaker delivered a 113% pop in fiscal first-quarter profit, easily beating estimates. It also raised its full-year profit guidance.

Parexel International () gapped above its 50-day moving average, rising 1.62 to 41.20. Bear Stearns upgraded the clinical research firm to buy from neutral.

Core Laboratories () also gappped above its 50-day line. Shares climbed 5.91, or 6%, to 97. Late Tuesday, the oil-field services provider raised its Q2 profit outlook to between $1.15 and $1.17 a share, beating analysts’ estimates of $1.09.

Treasury debt prices barely budged Wednesday, after stocks bounced back on strong corporate profits that shifted investors’ focus from credit concerns.

Trade was choppy, reflecting large swings in U.S. equities markets where sentiment was torn between credit worries sparked by news that Chrysler had postponed a $12 billion auto loan deal and strong profits.

That left Treasury investors indecisive, although benchmark yields briefly dipped to a seven-week low.

“Treasuries are taking their cue from the stock market. Being their earnings (reporting) season, it’s just been very volatile, leaving Treasuries pretty much unchanged,” said Rudy Narvas, senior analyst at the market analysis company 4Cast.

Concerns about financing for takeovers temporarily weighed on the stock market, allowing the bond market to tap a modest flight-to-quality bid and driving the yield on the benchmark 10-year note to just below 4.90 % its lowest since the start of June.

In late New York trade, the 10-year note was up in price for a yield of 4.90%, compared with 4.92% late Tuesday. Two-year notes were unchanged in price to yield 4.74%, compared with 4.75%. Bond prices and yields move inversely.

The market was little moved by a lackluster auction of $18 billion worth of two-year notes. The Federal Reserve’s beige book, an anecdotal summary of economic conditions around the U.S., also attracted mild interest from the bond market.

The report noted moderate economic growth in several districts. It said districts overall reported continuing production cost pressures, especially for oil-related items.

Analysts said it was a reminder to investors that inflation remains a concern for the central bank, with some suggesting that those worries could see the 30-year government bond struggle to break below 5.00%.

“It’s almost like 5% is the tipping point. Part of that is the overhang from inflation,” said Doug Roberts, chief investment strategist at Channel Capital Research.

The 30-year bond traded up 2/32 in price for a yield of 5.02%, compared with 5.03% late Tuesday.