Market Summary: Wed. April 23, 2008

Today was moderately higher, led by some really nice earning reports. The Dow was up 42, the S&P was up 4 and the Nasdaq led the way up 28. As has been the case lately, the big tech names led the way higher. The Nasdaq has outperformed the other 2 indices by 2 full percentage points over the last 7 days.

Stocks would have been higher if it wasn’t for Ambac, which posted a huge loss. This reminded investors that, while things have quieted down recently, there are still major problems in the financial world.

An interesting sector today was the natural gas stocks which were down while natural gas itself was up. The obvious answer is people taking some profits off as these shares have rallied a ton lately.

We’re seeing a breakdown in a lot of the commodities that have rallied of late. Wheat’s run has broken down. Gold’s run is breaking down. And I think oil will pull back closer to 100 within a week. Make no mistake though, until the dollar starts to recover or the rest of the world's economies start looking like ours, the commodities will keep running.

On earnings: the companies that are beating, for the most part, have significant sales outside the US and/or sell to businesses, not directly to consumers. There are exceptions, i.e. Apple, but for the most part, I’ve noticed these characteristics. I will go bullet point format below with companies the reported today.

Before the open:

Boeing- beat strongly even with the Dreamliner production problems

EMC- Beat, kind of - they had a loss on an acquisition but beat without it. Big tech companies are working because companies are not slowing down their spending on IT

Delta- Posted a $6.4 BN loss on 2 factors: jet fuel is expensive and a $6.1BN writedown of goodwill. Northwest had a similar writedown. I’m not sure exactly what it is but I’m betting it’s them cleaning up their balance sheets before the merger so they start with a clean slate. I’ll try to figure it out and keep you posted.

Phillip Morris International- Beat and raised. People smoke no matter what and apparently people are buying higher quality cigarettes in other parts of the world.

Schering-Plough- Remember all the Vytorin controversy? It led to prescriptions falling less than 20% instead of the 100% people were fearing. SGP knocked it out of the park.

Chipotle- Despite my avid dining, Chipotle missed by a little. Rising costs of all the food will hurt

Freeport McMoran- Had great numbers but pulled back some with people taking some gains off the table. We’ve seen this in some other companies that have reported good numbers. If they’ve had a big run into earnings some may pullback no matter what they report.

After the close:

Apple- Beat on every metric. Had a down-beat conference call, but they are known for sandbagging expectations (under promise, over deliver)

Amazon- Posted solid earnings but gross margins are getting squeezed (as were Apple’s) and that is something that scares analysts. You may see a couple downgrades.

The dollar was mixed.

DJIA 12,763.22 +42.99 (+0.34%)
Nasdaq 2,405.21 +28.27 (+1.18%)
S&P 500 1,379.93 +3.99 (+0.29%)
NYSE Volume 4,077,188,000

2-Yr Bond 2.22% -0.02
10-Yr Bond 3.77% +0.03
30-Yr Bond 4.49% +0.03

Dollar Index 71.819 +0.490
Crude Oil (June) 118.30 +0.23
Nat Gas (May) 10.781 +0.174
Gold (June) 909.00 -16.20