Today’s session was filled with news. Before the bell, initial jobless claims were reported at 357K, better than the analysts’ estimates of 383K. Last week, we saw a huge spike in claims to 410K and everyone was scared out of their shoes. Today’s reading was a very positive sign that the economy is not spiraling out of control. Also, the trade deficit was wider than expected. The Bank of England lowered its target rate (fed funds equivalent) 25 bp to 5% and the European Central Bank kept its benchmark rate at 4%. Interest rate reductions on foreign currencies make the dollar relatively stronger; the dollar index finished up $0.28 (Source: Briefing.com).
The major retailers reported last month’s same-store sales (always second Thursday of the month). Wal-Mart and Costco were the big winners on the day. WMT only reported a 0.7% increase in its March same-store sales (analysts were looking for 0.9%), but the company raised its Q1 earnings guidance. “Wal-Mart now expects earnings per share…of 74 cents to 76 cents, up from a previous forecast of 70 cents to 74 cents per share” (Source: MSNMoney). Costco’s same-store sales rose 7%. Analysts were only looking for a 5.9% increase (Source: MarketWatch.com). Target disappointed the street the most. The company reported a same-store sales decline of 4.4%. The consensus estimate was for a 2.7% decline.
For the day, the NASDAQ and large-cap tech stocks were the relative winners. Cisco was strong because Morgan Stanley said the company might beat analysts’ estimates when it reports earnings. Intel was upgraded to “buy” from “neutral” by Bank of America and analysts predicted the company will raise its dividend. Bank of America also upgraded a few other semiconductor companies.
DuPont also raised its quarterly guidance to $1.29 per share. This is higher that the previous estimate of $1.14 to $1.19 estimate. I own shares of DuPont for my investopedia portfolio – this company is a great way to play the agriculture boom through its chemicals division.
There was also lots of financial news to digest today. Lehman Brothers announced it “liquidated three of its investment funds with assets totaling $1B because of ‘market disruptions’” (Source: Forbes.com). Deutsche Bank came out and said it expects Lehman to write-down $2B worth of assets in Q2.
Goldman Sachs’ CEO, Lloyd Blankfein, said “We’re closer to the end than the beginning” when referring to the credit crisis. He also said, “By the end of the year we think we will be on a growth curve again” (Source: Bloomberg.com).
The Fed announced the results of its Term Securities Lending Facility. The Fed offered $50B, but only $33.95B worth of bids was submitted. Investment banks last week tapped the discount window for $32.5B (average daily balance), down $5.6B from the previous week (Thurs-Wed). Commercial banks tapped the discount window for $7.3B, down $3B from the previous week (Source: CNBC TV). Banks seem to be doing a little better and the low demand might mean they are not in need of as much cash as people originally thought. We’ll have to wait and see until next week when most of the financial companies report earnings.
DJIA 12,581.98 +54.72 (+0.44%)
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