Large-cap tech stocks finally got a much needed boost thanks to a positive earnings report from Intel after the bell yesterday. Although Intel only matched analysts’ estimates, the company offered very positive guidance that sent the stock up 6%. The entire market rallied off this news. All eyes will be on Google’s earnings report Thursday after the bell because last quarter the company disappointed with earnings and the stock went from $750 to $450. So far this year, the NASDAQ is down 14% while the S&P500 is only down 9% – large-cap tech stocks have been in the dog house this year.
Also, many investors’ fears were calmed when the CPI number was in-line at a 0.3% increase. The Core CPI showed a 0.2% increase. Yesterday, the PPI was much higher than expected and it was a relief to see the CPI creep up only moderately. Last month’s CPI readings were flat. This month’s increase was attributed to higher gas prices.
It seems like everyday oil hits a new high. Today, oil came within cents of hitting $115 after a bullish inventory report (unexpected drop in supplies). Off of this news, the alternative energy stocks and agriculture stocks were screaming higher. I had to sell some Mosaic and Potash today given their huge run-up lately. Their valuations are getting a little pricey. Since March 20th these two stocks are up about 40%! Monsanto also announced an $800M stock repurchase program over the next three years and Goldman Sachs raised earnings estimates for the company.
The U.S. Dollar Index is quickly approaching its March 17th low of $70.70 as it was down about 1% today to $71.41. The decline in the dollar is helping crude oil prices edge higher. Gold was up almost 2% on the day.
An assortment of positive earnings reports added fuel to the day’s rally. Wells Fargo reported a decrease in profit, but beat analysts’ expectations. “Net income dropped 11% to $2B, or 60 cents a share, from $2.24B, or 66 cents, a year earlier…analysts were estimating Wells Fargo would earn 57 cents a share.” The stock was up 4% on the day.
JPMorgan reported a 50% decrease in its Q1 profit because the company wrote-down $5.1B worth of assets. Net income was $2.37B, or 68 cents a share. This number matched analysts’ expectations. Shares were up almost 7% on the day. JPM also announced it will raise $6B worth of preferred stock to help fix its balance sheet.
Coca-Cola also reported better than expected earnings thanks to strong international sales. “Quarterly net income was $1.50B, or 64 cents per share…compared with $1.26B, or 54 cents per share a year ago.” A weak U.S. Dollar helped international revenues. “Net operating revenue for the quarter…rose 21% to $7.38B, above the Reuters Estimate forecast of $6.90B. But it would have risen only 12% if not for favorable translations of euros and other strong currencies into dollars.”
Don’t think there wasn’t any bad news today. Housing starts hit another new low and were below analysts’ expectations. “Work began on 947,000 homes at an annual rate, the fewest since March 1991.” Building permits also fell to 927,000 compared with 984,000 last month. Industrial production showed an increase of 0.3% last month compared with a decline of 0.7% last month.
Also, the Fed’s Beige Book described the real estate market as “anemic” and that “downside risks to growth are significant.” Significant is a pretty strong word that we haven’t heard the Fed use before.
After the bell, IBM gave a great earnings report. IBM earned $1.65 per share while analysts were only looking for $1.45 per share. The company also raised its EPS outlook for the year to $8.50 from $8.25. Shares are up 2.5% in after hours trading. Look for large-cap tech stocks to be the relative leaders tomorrow.
Tomorrow, we will get earnings reports from Advanced Micro Devices, Capital One Financial, Continental Airlines, E*TRADE Financial, Google, Merrill Lynch, Nokia, Pfizer, and Southwest Airlines.
DJIA 12,619.27 +256.80 (+2.08%)
Nasdaq 2,350.11 +64.07 (+2.73%)
S&P 500 1,364.71 +30.28 (+2.27%)
NYSE Volume 4,229,984,000
2-Yr Bond 1.98% +0.14
10-Yr Bond 3.72% +0.12
30-Yr Bond 4.54% +0.12
Crude Oil (May) 114.93 +1.14
Nat Gas (May) 10.433 +0.228
Gold (June) 948.30 +16.30
No comments:
Post a Comment