Stocks opened lower this morning after Wal-Mart announced its fourth quarter earnings will miss analysts’ forecasts. The company expects profit to be $0.91-$0.94 per share. This range is down from the company’s November estimate of $1.03-$1.07 per share. Also, Wal-Mart’s December same store sales disappointed investors. Analysts were expecting an increase of 2.6%, but Wal-Mart only reported a 1.7% increase. Over the last year, Wal-Mart has been the quintessential recession-proof stock, exceeding expectations nearly every quarter. Wal-Mart remains the premier retailer in these tough times – I’d use this weakness to buy.
A better-than-expected initial jobless claims number gave reason for investors to turn positive, and by the end of the day stocks closed near the unchanged mark.
Other news:
1) The Bank of England cut its benchmark interest rate 50 basis points to 1.50%.
2) The Treasury sold $16 billion of 10-year notes at 2.419%
3) Financial stocks were mixed on the day, but for the third day in a row JPMorgan was the laggard finishing the day down 3%.
4) Walgreen's announced they will cut 1,000 management jobs in 2009.
5) The Federal Reserve purchased $10.2 billion of mortgage-backed securities to help the ailing housing industry. The Fed plans to buy $500 billion of these securities by June 30th. Here is a very good explanation of why the Fed is buying these bonds.
6) Citigroup announced they will “support legislation that would let bankruptcy judges cut mortgage rates for at-risk borrowers.” If Citigroup wants more of the TARP money they better publicly “support” the government’s proposal.
7) After the bell, Chevron announced that its fourth quarter earnings would be “significantly lower” than the third quarter’s earnings because of lower oil and gas prices.
8) Here’s the full text of Obama’s stimulus package speech.
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