US & World Daily Markets Financial Briefing 16-04-2010

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Stocks Mostly Lower In Mid-Morning Trading

Stocks are mostly on the downside in mid-morning trading on Friday, as a disappointing reading on consumer sentiment and worrisome guidance in some corporate report cards has generated some selling pressure.

Despite recent signs of the beginning of a recovery in consumer spending, Reuters and the University of Michigan released a report showing a substantial deterioration in consumer sentiment in the month of April.

The preliminary reading on the Reuters/UofM consumer sentiment index for April came in at 69.5, a notable decline from the final March reading of 73.6. The decrease came as a surprise to economists, who had expected the index to rise to a reading of 75.0.

Earlier, the Commerce Department released a report showing that housing starts rose by 1.6 percent to an annual rate of 626,000 in March from the revised February estimate of 616,000. With the increase, housing starts rose to their highest level since November of 2008.

Economists had been expected housing starts to rise to 610,000 from the 575,000 originally reported for the previous month.

Meanwhile, earnings prompted some of the early downside in the markets, as guidance offered by firms that reported after the close yesterday weighed down sentiment.

Google Inc. (GOOG) said that its profit for the first quarter rose 38 percent from last year, driven by strong growth in advertising revenues. On an adjusted basis, quarterly earnings came in well ahead of expectations, as did revenues. Nonetheless, the stock has lost ground amid concerns over rising costs.

Chipmaker Advanced Micro Devices Inc. (AMD) said that it swung to a first quarter profit, helped by higher revenue and improved margins as well as a hefty accounting gain on deconsolidation of its Globalfoundries Inc. joint venture.

The results surprised analysts, who had expected a modest loss for the firm. Revenues were also able to top consensus estimates. The firm's outlook disappointed, however, as it said sales are likely to be flat or negative in the upcoming quarter.

This morning, Bank of America Corp. (BAC) reported first quarter net income of $0.28 per share, topping Wall Street expectations for $0.09 per share. Revenues totaled $31.97 billion, down from $35.76 billion in the prior year quarter but still higher than the $27.90 billion forecast for the period.

General Electric Co. (GE) said it earned $0.17 per share in the first quarter, edging out projections of $0.16 per share. Quarterly revenues came in at $36.61 billion, down from $38.44 billion in the same period last year and short of the $37.10 billion expected by analysts.

While the Nasdaq and the S&P 500 have remained stuck in negative territory, the Dow has been bouncing back and forth across the unchanged line. The Dow is currently down 16.25 points or 0.2 percent at 11,128.32, the Nasdaq is down 10.87 points or 0.4 percent at 2,504.82 and the S&P 500 is down 3.67 points or 0.3 percent at 1,208.00.

Sector News

Banking stocks are some of the worst performers in the early going, driving the Kbw Bank Index down by 1.7 percent. With the retreat, the index is backing further off of a nearly eighteen-month closing high set on Wednesday.

Airline stocks are also under pressure following additional flight cancellations today, as a volcano eruption in Iceland has led to hazardous flying conditions. The NYSE Arca Airline Index is down by 1.8 percent, pulling back off of the more than two and a half-year high set yesterday.

Further weakness is present among semiconductor stocks, with the Philadelphia Semiconductor Index sliding by 1 percent. The index is moving lower after setting its best closing level in nearly two years yesterday.

Gold, steel and transportation stocks are also retreating, while strength among some commercial real estate, computer hardware and health insurance stocks is helping to moderate the pullback by the broader markets.

Stocks Driven By Analyst Comments

Diebold (DBD) is down in mid-morning trading after being downgraded at Keybanc Capital Markets from Buy to Hold based on valuation. The stock has slipped by 2.7 percent, moving further off of Thursday's twenty-two month closing high.

Americredit (ACF) is also moving lower following a downgrade at Keefe, Bruyette & Woods Inc. from Market Perform to Underperform, also based on valuation. Shares are currently down by 2.6 percent, pulling back off of yesterday's two and a half year closing high.

On the other hand, Regal Entertainment (RGC) is on the rise after being upgraded at Janney Montgomery Scott from Neutral to Buy. The stock has gained 1.1 percent and is bouncing off of a one-month closing low set yesterday.

TSX Likely Poised For Lackluster Session

Bay Street stocks are poised for a mixed opening Friday amid falling commodities prices and the continued flow of encouraging earnings reports from across the border. However, renewed concerns over the euro zone debt issues and profit taking may put pressure.

On Thursday, the S&P/TSX Composite Index edged up 7.11 points or 0.06% to 12,211.52, its fresh 18-month high.

The price of crude oil is moving down, easing $0.81 to $84.71 a barrel and the price of gold is slipping $3.20 to $1,156.50 an ounce.

Financial stocks may be in play after Bank of America reported first quarter earnings of $0.28 per share, beating consensus estimates by a notable margin.

Wednesday, JP Morgan reported first quarter net income of $0.74 per share, beating consensus estimates for a earnings of $0.64 per share.

General Electric Co said Friday that excluding one time items it earned $0.21 per share in the first quarter, beating analysts' expectations for a net income of $0.16 per share.

In corporate news from Canada, space science products maker COM DEV International bought substantially all of the assets of Routes AstroEngineering, a privately owned company specializing in the design and manufacture of advanced instruments for space science research applications.

Logistics technology solutions provider Descartes Systems Group said its wholly-owned subsidiary, Dexxcartes bvba, has completed the acquisition of Zemblaz NV, formerly denominated as Porthus NV.

Mineral explorer Keegan Resources announced that Maurice Tagami has been appointed President and Chief Executive Officer of the company

Gold company Avion Gold said it entered into an agreement with Canaccord Financial Ltd.to sell 35.80 million common shares for gross proceeds of C$25.06 million.

Gold explorer Alder Resources said it plans to complete a non-brokered private placement financing of 12 million common shares at C$0.25 per share, for gross proceeds of C$3 million.

Elevators and escalators maker Symax Lift (Holding) Co reported net income of C$0.04 per basic share for fiscal 2009, up from C$0.02 per share in the prior year.

Petroleum and natural gas firm Bellamont Exploration said its fourth-quarter net loss narrowed to C$0.01 per share from C$0.02 per share in the prior year period.

In economic news, Statistics Canada said manufacturing sales edged up 0.1% to $ 44.10 billion in February, with most of the sales increases in Western Canada and Ontario. Analysts were expecting the sales to edged up by 0.8%.

In other report, the agency said new motor vehicle sales increased 8.1% to 138.336 units in February.

From the U.S., the Commerce Department said housing starts rose by 1.6% to an annual rate of 626,000 in March from the revised February estimate of 616,000. Economists were expecting starts to rise to 610,000 from the 575,000 originally reported for the previous month.

Watch us trade “Live”! Watch our Top Tier Traders make ($500 - $2000) a day
in “real time” and learn how to easily duplicate the process!  Click Here for more information

Most Asian markets ended Friday’s session lower, retreating from multi-month highs after mixed economic data re-ignited growth concerns and led to a sell-off. The Japanese and the Hong Kong market led the decliners. Additionally China announced a few measures to curb artificial price increases in the real estate market, which is likely to have a moderating influence on growth.

China's State Council stipulated a minimum 30% down payment on the purchase of first homes larger than 90 square meters, up from 20%, and it raised the minimum down payment on second homes to 50% from 40%. The government also announced that it was stepping up the introduction of tax policies to influence purchases and adjust property investment returns.

Japan’s Nikkei 225 average opened lower and declined steadily throughout the session to close down 171.61 points or 1.52% at 11,102. Along with macro factors, the yen’s strengthening also hit sentiment. A majority of stocks declined in the session, with the declines led by Nitto Boseki, Fuji Electric, Furukawa, J Front Retailing, Kuraray, Mitsumi Electric, Nippon Soda and Shimizu.

On the other hand, Hino Motors rose 3.69% after it said that it booked a group net loss of 3 billion yen for the year ended March, much lower than what was expected.

Australia’s All Ordinaries opened modestly lower and moved sideways in early trading before plummeting sharply in late morning. Thereafter, the index moved sideways once again to close down 16.80 points or 0.33% at 5,007. Energy stocks slumped following the pullback in oil prices, and most other stocks also declined, albeit by more moderate margins.

In corporate news, the takeover news around MacArthur Coal intensified, with the company announcing earlier in the day that two of its major shareholders, namely Posco and Arcelor Mittal (MT) have communicated their support for U.S. suitor Peabody’s (BTU) offer for the company. The announcement followed the submission of a revised proposal by Peabody. Subsequently, Macarthur said it intends to enter discussions with Peabody and has postponed the extraordinary general meeting scheduled for April 19th, 2010.

Hong Kong’ Hang Seng Index opened lower and declined further in early trading before showing consolidation. At the close of trading, the index was down 292.56 points or 1.32% at 21,866. Property and resource stocks came under severe selling pressure, driving the weakness in the market.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

The major European markets opened Friday’s session notably lower, although they have since then recouped most of their losses. The French CAC 40 Index and the German DAX Index are moving down 0.29% and 0.13%, respectively, while the U.K.’s FTSE 100 Index is down about 0.19%.

Sony Ericsson, a joint venture of Sony (SNE) and Ericsson (ERIC), reported a profit of 21 million euros for its first quarter compared to a loss of 293 million euros in the year-ago period despite reporting a 19% year-over-year decline in revenues to 1.41 billion euros. Shipments of mobile phones fell 27.5% to 10.5 million units.

On the economic front, Eurostat reported that the euro area’s trade surplus totaled 3.3 billion euros in February compared to a deficit of 9 billion euros in the previous month. Economists expected a surplus of 3 billion euros. Exports rose 2.7% month-over-month, while imports were up 1.5%.

A separate report released by Eurostat showed that the euro zone’s annual inflation rate rose to 1.4% in March compared to a 0.9% rate in the previous month. Economists expected the inflation rate to have been maintained unchanged at its preliminary estimate of 1.5%.

U.S. Economic Reports

Housing starts rose by 1.6% to an annual rate of 626,000 in March from the revised February estimate of 616,000. With the increase, housing starts rose to their highest level since November of 2008.

Economists had been expected housing starts to rise to 610,000 from the 575,000 originally reported for the previous month. The increase was due to a jump in multi-family starts, which surged up by 39.7%to an annual rate 88,000, more than offsetting a 0.9% drop in single-family starts to an annual rate of 531,000.

Federal Reserve Governor Kevin Warsh is scheduled to speak to the 19th Annual Hyman Minsky Conference at the Levy Economic Institute of Bard College at 9 AM ET.

The preliminary report of the Reuters/University of Michigan's consumer sentiment survey for April is scheduled to be released at 9.55 AM ET. The consumer sentiment index is expected to rise to 75 from March's 73.6.

Earnings

Mattel (MAT) reported first quarter net sales of $880.1 million, up 12% year-over-year. The company reported earnings of 7 cents per share compard to a loss 14 cents per share last year. Analysts estimated a loss of 3 cents per share on revenues of $859.87 million.

Bank of America (BAC) said its first quarter earnings after preferred dividends fell to 28 cents per share from 44 cents per share last year. Revenue net of interest expense on a fully taxable-equivalent basis fell 11% to $32.3 billion. Analysts estimated earnings of 9 cents per share on revenues of $27.97 billion.

General Electric (GE) reported first quarter earnings from continuing operations of 21 cents per share, down 19% year-over-year. The company’s revenues fell 5% to $36.6 billion. The company said it expects to grow earnings for the balance of 2010. The consensus estimates called for earnings of 16 cents per share on revenues of $37.10 billion.

Watch us trade “Live”! Watch our Top Tier Traders make ($500 - $2000) a day
in “real time” and learn how to easily duplicate the process!  Click Here for more information

Google (GOOG) declined in Thursday’s after hours session despite reporting first quarter revenues of $6.77 billion, up 23% year-over-year. Excluding traffic acquisition costs, the company’s revenues rose to $5.06 billion. The company’s non-GAAP earnings rose to $6.76 per share from the year-ago’s $5.16 per share. The consensus estimates called for earnings of $6.60 per share on revenues of $4.95 billion.

Advanced Micro Devices (AMD) is likely to be in focus after it reported first quarter revenues of $1.57 billion compared to $1.18 billion last year. The company reported a non-GAAP profit of 9 cents per share compared to a profit of 30 cents per share last year. The company expects a sequential decline in revenues for the second quarter.

Terex (TEX) is likely to see some activity after it said it completed its previously announced divestment of the Terex Atlas heavy construction equipment and knuckle-broom crane manufacturing operations located in Germany to Atlas Maschinen.

Valmont (VMI) receded in Thursday’s after hours session after it reported first quarter sales of $367.4 million, down from $455.2 million in the year-ago period. The company’s net earnings declined to 62 cents per share from $1.37 per share last year. Analysts estimated earnings of 78 cents per share on revenues of $364.95 million. The company said it expects adjusted earnings for the year to decline 25% year-over-year, while it expects second quarter sales and earnings to show negative comparisons with 2009.

Parker-Hannifin (PH) could trade higher after it announced a 4% increase in its regular quarterly dividend to 26 cents per share. SRA International (SRX) may also move to the upside after it announced the receipt of an IT training product support competitive re-complete task order with an estimated contract value of $19.5 million.

Callaway Golf Co. (ELY) may move in reaction to its first quarter preliminary results. On a preliminary basis, the company estimates 11% year-over-year revenue growth to $303 million. The company estimates earnings of 24 cents per share, higher than 11 cents per share last year. Analysts estimate earnings of 25 cents per share on revenues of $298.1 million.

Krispy Kreme Doughnuts (KKD) is expected to see activity after it reported that its fourth quarter revenues fell 5.6% year-over-year to $86.8 million. The company’s earnings rose to 1 cent per share compared to break-even results last year. The company also said it expects consolidated revenues to stabilize in 2011, with revenues, excluding the effects of refranchising company stores, likely to rise in 2011.

Intuitive Surgical (ISRG) could be in focus after it reported that its first quarter revenues surged up to $329 million from $188 million in the year-ago period. The company’s earnings rose to $2.12 per share from 72 cents per share last year. Analysts estimated earnings of $1.68 per share on revenues of $294.82 million.

Christopher & Banks (CBK) is likely to react to its announcement that its fourth quarter net sales dipped slightly to $101.9 million from $103.9 million last year, although they exceeded the mean analysts’ estimate of $100.29 million. The company reported net income from continuing operations of $0.2 million or $0.0 per share, including a charge of $2.9 million, compared to a net loss from discontinuing operations of $8.1 million or 23 cents per share, including charges of $11.9 million. For fiscal 2011, the company estimates high-single digit comparable store sales growth.

Cubist Pharma (CBST) may see some activity after it reported that its first quarter adjusted earnings rose to 61 cents per share from 53 cents per share last year. The company’s net earnings were at 34 cents per share, higher than 13 cents per share a year ago. Revenues rose to $144.1 million from the year-ago’s $121.1 million. Analysts estimated earnings of 36 cents per share on revenues of $150.3 million. The company also affirmed its 2010 revenue guidance of $627 million to $652 million, while analysts estimate revenues of $655.14 million.

DO YOU OWN THE RIGHT STOCKS?

Analyze Your Stocks FREE! – Click Here

Investors Hub Services