We saw some weakness today after yesterday’s huge rally which was expected, though. Today’s trading was pretty choppy as news was mixed on all fronts.
In economic news, the ADP employment number (private employment) came in much better than expected. Companies added 8,000 jobs in March while analysts were looking for a 45,000 decrease (Bloomberg.com). The employment numbers are the best tools we have to measure the health of the economy and the consumer, and as the financial system has slowly deteriorated it is a very positive sign to see companies adding jobs.
The February Factory Orders number of -1.3% was weaker than expected. Analysts were only looking for a decrease of 0.8%. January’s reading was -2.3%. “Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, fell 2.4 percent…Orders excluding defense equipment decreased 1.5 percent. Bookings for military gear fell 2.2 percent. Bookings for transportation equipment increased 1.8 percent as aircraft demand rose 5.1 percent. Demand for automobiles dropped 2 percent” (Bloomberg.com).
Best Buy reported earnings today that topped analysts’ expectations. Net earnings were $737M, or $1.71 per share. Analysts were looking for $1.65 per share. “Total sales rose 4% to $13.4B, better than the $13.17B analysts expected.” Same-store sales, however, declined 0.2% (Source: CNBC.com).
Monsanto also reported good earnings today. “Monsanto earned $1.13 billion, or $2.02 per share…from $543 million, or 98 cents per share, in the prior year. Its revenue jumped 45 percent to $3.8 billion from $2.6 billion in the prior-year period.” Analysts were looking for $1.72 per share. (Source: Yahoo! Finance, “Monsanto 2Q Profit Surges, Revenue Climb). Monsanto sold off on this news down to $106, but rallied to close the day at $112.
The big news on the day came from Ben Bernanke’s testimony to Congress. He said, “It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly.” Bernanke also testified that Bear Stearns was about to file for bankruptcy and the decision to bail out Bear Stearns was done “to ‘prevent a disorderly failure’ of the company and the ‘unpredictable but likely severe consequences of such a failure for market functioning and the broader economy’” (Source: Bloomberg.com). This statement from Bernanke is the most pessimistic we have received from him since problems began in July 2007.
Crude oil rallied almost $4 after a bearish inventory report showed “gasoline stockpiles declined 4.53 million barrels to 224.7 million barrels last week” (Source: Bloomberg.com). The entire energy complex rallied today off this news.
After hours, Research in Motion reported strong earnings that handily beat expectations. The company earned $412.5M, or 72 cents per share. This compares with $187.4M, or 33 cents per share from the same period a year earlier. Analysts were looking for 66-70 cents per share. “For the upcoming first quarter, the company said it expects revenue of $2.23 billion to $2.3 billion and a profit of 82 cents to 86 cents a share — better than the 77 cents expected by analysts, according to Reuters Estimates” (Source: CNBC.com). Look for strength in the tech names tomorrow.
In other news…
- According to Bloomberg.com, analysts expect the economy to grow at 0.1% in the first quarter of 2008
- The International Monetary Fund decreased its forecast for global growth because there is now a 25% chance of a world-wide recession.
DJIA 12,605.83 -48.53 (-0.38%)
Nasdaq 2,361.40 -1.35 (-0.06%)
S&P 500 1,367.53 -2.65 (-0.19%)
NYSE Volume 4,279,693,000
2-Yr Bond 1.88% +0.08
10-Yr Bond 3.60% +0.03
30-Yr Bond 4.38% -0.02
Crude Oil (May) 104.83 +3.85
Nat Gas (May) 9.832 +0.108
Gold (June) 900.20 +12.40
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