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MarketView
Events defining the day's trading activity on Wall Street
Lauren Rudd
Thursday, April 24, 2008
Summary Stock prices turned in a solid gain on Thursday as the bottom feeders began buying some of the down trodden financial stocks on growing optimism that the worst may be over for banks. Reinforcing that thesis was the latest jobs and manufacturing data that pointed to the possibility of a more resilient economy than had been previously postulated. Investors also took note that Merrill Lynch did not lower its dividend and Credit Suisse cut its exposure to risk. Both actions added to the Street’s confidence that the financial sector is stabilizing and the credit crisis was nearing an end. The latest data also helped to ease worries regarding the economy. In the latest week for which there is data, fewer people applied for unemployment insurance, while a measure of the appetite of companies to invest came in stronger than expected in the form of the durable goods statistics. The optimism surrounding the outlook for banks spread to insurance stocks, after Travelers raised its earnings forecast. At the same time, the shares of American International Group, the industry leader and a Dow component, ended the day up $3.11, or 7.09 percent, to close $46.97. Thursday's gain marked the highest close for the NASDAQ since early January. During the session, the Dow topped 12,900 for the first time since last January. However, after hours trading painted a slight grimmer picture. For example, Microsoft saw its share price fall 4.7 percent to $30.30 after the software giant posted its quarterly revenue and guidance for June’s quarter earnings outlook at the low end of the Street's expectations. Ford posted an unexpected return to profit for the
first time in three quarters. Strong results in In the commodities sector, the June crude oil contract settled down $2.24 at $116.06 per barrel as the dollar strengthened and eased some worries over the issue of inflation. Positive views on Apple also helped the day’s sentiment on Wall Street. Shares of Apple, which reported results late Wednesday, ended the day up $6.05, or 3.71 percent, to $168.94 on the NASDAQ. A dip of 0.3 percent in March durable goods orders was mostly due to a big drop in orders for transportation goods, according to data released by the Commerce Department. The report included an encouraging sign, stating that
shipments of non-defense capital goods excluding aircraft, a closely
watched proxy for businesses' capital spending, increased 1.2 percent in
March. That suggested the potential for stronger foreign demand for New Home
Sales Fall The Commerce Department reported on Thursday that new home sales fell sharply again in March, reaching their lowest point in more than 16 years as new home prices plummeted. The decline in housing has chilled growth and Thursday's data showed that for new homes, at least, the market remained dire. Single-family new home sales slumped 8.5 percent in March to a 526,000 unit annual rate, the weakest pace since October 1991, while the median sales prices versus a year ago dropped by the largest amount since 1970. March's fall follows a downwardly revised 575,000 units in February. The sharp decline in new home sales was in contrast to the more modest 2 percent drop in sales of previously owned homes in March reported on Tuesday. Interest rate futures markets had fully priced another quarter percentage point Fed ease at the meeting on April 29-30. But these chances were reduced to show only about an 80 percent likelihood the central bank would move after Thursday's data, which also showed initial jobless claims fell last week and durable goods orders exhibited some resilience in March. Unemployment
Down Jobs and factory data suggested slumping home values may not be hurting the economy as much as feared. First-time jobless claims fell sharply last week was mostly due to a big drop in orders for transportation goods, led by motor vehicles. The number of U.S. workers filing initial claims for unemployment benefits fell by 33,000 last week to 342,000, the Labor Department said, compared Street estimates for about 375,000 new claims. The four-week moving average of new claims, a more reliable guide to underlying labor trends because it irons out weekly fluctuations, eased last week to 369,500 from 376,750. Durable Goods
Orders Fall Commerce Department data separately showed that new
orders for long-lasting New orders excluding transportation rose 1.5 percent, while transportation equipment fell 4.6 percent, including a matching drop in motor vehicles and parts which was the steepest drop since last August. "Durable goods were on the firm side with an improvement in orders once the volatile transportation stripped out," Goldman Sachs economists wrote in a note to clients. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, was unchanged as forecast and the previous month was revised up to show a 2.0 percent decline, from a 2.4 percent drop reported before. But shipments of this so-called "core" measure of
capital spending jumped by 1.2 percent; possibly hinting at stronger
foreign demand for Microsoft
Disappoints Microsoft reported weak quarterly Windows sales and gave current quarter earnings forecast at the low end of Wall Street expectations, sending its shares down nearly 5 percent on Thursday. The results were set against the backdrop of Microsoft's battle to buy Yahoo Inc, but the company declined to comments on the proposed merger. Microsoft posted a net profit of $4.39 billion, or 47 cents per share, for its third quarter ended March 31, compared with $4.93 billion or 50 cents per share a year ago. Revenues increased 0.4 percent to $14.45 billion. The third-quarter profit a year ago received a one time increase from revenue deferred by delays in releasing upgrades to the company's Windows and Office software. The company forecast next fiscal year's earnings to rise by 13 percent to 18 percent, predicting strength from its software businesses. It projected earnings per share in fiscal 2009 starting in July to be in a range of $2.13 to $2.19 per share, and called for revenue of $66.9 billion to $68.0 billion. Microsoft's results came two days before a deadline set by Chief Executive Steve Ballmer for Yahoo's board to accept Microsoft's unsolicited takeover offer or face a proxy fight. In the last few days, Ballmer reiterated that Microsoft has no plans to raise its cash-and-stock offer for Yahoo, now worth $44.1 billion, saying the software company would even walk away from a deal if the two sides could not agree on a price. Yahoo's board has said Microsoft's offer undervalues the company, while its management insists it is not against selling to Microsoft, just not at the price it is offering. Microsoft's March-quarter figures last year included 11 cents per share of extraordinary profit and $1.6 billion in additional Windows and Office revenue for coupons issued to consumers affected by development delays. Microsoft’s shares were up 6 percent this week on expectations of a strong result. In after-hours trading the shares fell to $30.35. Earnings fall
at American Express After the close of regular trading, American Express posted first-quarter earnings that fell 6 percent as it set aside more money for credit losses. According to the company, net income came in at $991 million or 85 cents per share, as compared to $1.06 billion, or 87 cents a share a year ago. Earnings from continuing operations were 84 cents a share. Revenue after interest expense was $7.2 billion, up 11 percent from the same quarter last year. In after-hours trading, American Express shares rose 3.8 percent to $46.89 after closing at $45.18 in regular trading.
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MarketView for April 24
MarketView for Thursday April 24
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