The market continued to drift lower Friday ending on the day’s lows. The market has calmed down significantly (decreased volatility) after last week’s Bear Stearns news that sent the markets on a wild ride.
The negative tone was set before the bell when JC Penney offered poor guidance. JCP said its “quarterly profit will be about 50 cents a share, down from an earlier projection of 75 cents to 80 cents” and same store sales “will post a ‘high single-digit’ percentage-point decline” (Source: Bloomberg.com). All the major retailers, including Abercrombie, American Eagle, Kohl’s, Nordstrom, and Macy’s, were down 5-7% off the JC Penney news.
In economic news, personal income rose more than expected for February. Analysts were looking for a 0.3% increase, but the number came in at 0.5%. This is up from January’s 0.3% reading. Personal spending was in-line at a 0.1% increase, but lower than last month’s reading of 0.4%. Core PCE inflation was also in-line at 0.1%, but lower than 0.2% last month. The consumer sentiment (Reuters/University of
To the financials…Lehman got upgraded to a “buy” at Citigroup. The analyst said “Lehman has ample liquidity to run its business” and he sees 70% upside to the company’s stock price (Source: Bloomberg.com). Meredith Whitney, the Oppenheimer analyst, predicts that Citigroup will have to cut its dividend again. She said the banks will face ‘earnings headwinds’ and expects Wachovia, Bank of America, and Wells Fargo to also lower their dividends. She thinks JPMorgan is the only bank that can maintain its current dividend (Source: Bloomberg.com). Bloomberg.com reported that Fannie Mae and Freddie Mac may raise $20B to buy more debt securities.
Friday was a pretty boring day on Wall Street. Look for things get a little more interesting next week with Monday’s Department of Agriculture annual crop planting report and Friday’s employment data.
DJIA 12,216.40 -86.06 (-0.70%)
Nasdaq 2,261.18 -19.65 (-0.79%)
S&P 500 1,315.22 -10.44 (-0.79%)
NYSE Volume 3,660,964,000
2-Yr Bond 1.67% -0.06
10-Yr Bond 3.47% -0.09
30-Yr Bond 4.33% -0.05
Crude Oil (May) 105.62 -1.96
Nat Gas (May) 9.800 +0.113
Gold (Apr) 930.60 -18.20
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