Today we saw another market gain, but several key stocks gave back some recent gains. The oil inventories report as well as reports Hurricane Dolly only took down a max of 8% of Gulf of Mexico and nearby production, helped lower oil prices over $3.00 to under $125.00 per barrel. Today was rather light on the economic front so the market was led higher mostly thanks to earnings from DJIA components. Longer-term rates rose on Fed comments today calling for rates to rise sooner rather than later, although that was independent and slightly different than the actual Beige Book comments.
AT&T Inc. (NYSE: T) was the winner of DJIA components after reporting earnings this morning, particularly since it has lost nearly one-third of its value. Shares were up 4% at $33.11 in today's final minutes.
The week got off to a shaky start in the wake of several earnings disappointments, thus a lot of attention will be paid to Amazon (NASDQ: AMZN) when it reports its second quarter numbers this afternoon after the market closes.
Analysts are looking to see Amazon show earnings of 26 cents per share, and revenue of $3.96 billion. The last time that the company reported earnings was April 23, when be itat analysts' estimates by 2 pennies, with a reported 34 cents per share for its first quarter.
It has definitely been a tough couple of months for retailers, but we could see some strength in Amazon as a result of changes it made during the quarter which allows users to shop the store from their cell phones via its new service TextBuyIt.
Today was a clear win for the bulls, although the bears aren't forgotten by any measure. Oil fell another $4.00 today and to around $134/barrel. The CPI report also came in less timid than some PPI watchers were expecting, although it is still very high. Today's rally is probably more attributable to pricing action in banking and transportation stocks. Even the stodgy FOMC minutes didn't hurt today.
Below are the unofficial closing bell levels for index levels today:
Airline earnings came out very cautiously but not as bad as many would have guessed and didn't have the ring of any immediate death sentences for the industry. AMR Corp. (NYSE: AMR), the parent of American Airlines, managed to post better than expected gains before items even if its losses were near $1 billion. Its shares were up over 33% at $5.90 in today's final minutes. This may have actually been the best day ever for major airline stocks.
Intel Corp. (NASDAQ: INTC) today reported better-than-expected second quarter results, allaying fears that the economic slowdown would hurt the world's largest chipmaker.
Net income rose 25% to $1.6 billion, or 28 cents and sales jumped 9.1% to $9.47 billion, beating analysts' expectations of profit of 26 cents on revenue of $9.33 billion. The company even gave robust guidance of $10 billion to $10.6 billion. Analysts surveyed by Bloomberg expected sales of $10.01 billion. Shares of the Santa Clara, Calif.-based company rose in after-hours trading along with other tech bellwethers such as Microsoft Corporation (NASDAQ: MSFT), Dell Inc. (NASDAQ: DELL) and Google Inc. (NASDAQ: GOOG).
"Intel had another strong quarter with revenue at the high end of expectations and earnings up substantially year over year," said Paul Otellini, Intel president and CEO, in the earnings release. "As we enter the second half, demand remains strong for our microprocessor and chipset products in all segments and all parts of the globe."
Early in the day, rumors that a government bailout might destroy the value of the common stocks of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) sent the shares down almost 50%. Comments by the government and an offer by the Fed to provide short-term funds to the firms helped, a little. At the close, FNM was off about 22% and FRE was down about 3%.
Most of the market did relatively well, but shares in big financials could not be saved, even by reassurances from the Treasury Secretary himself. Comments from the former president of the New York Fed to the affect that Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) sent the stocks down with Freddie Mac down, at one point, over 25%.
Hopefully we are either getting toward the beginning of the end in this bear trend. If not, we are in for a long 2008 between presidential candidates bantering caught in a weak economy and a down trending market. The daily sell-off is hard to argue against since buying only works for a short period right now. About the best thing the bulls could hang a shingle on today was an initial flat reading seen in some index after the open. That wasn't to hold. All of the same reasons that the bulls hung on to were overrun by the same arguments the bears have been using all along.
Cisco Systems Inc. (NASDAQ: CSCO) was one of the bigger losers in key technology on two different reports causing concern on Wall Street. Shares were down over 5.3% at $21.66 in today's final minutes.
QLogic Corp. (NASDAQ: QLGC) was a winner after it actually raised guidance. Shares were up over 9% today in the final minutes at $15.27.
VeriSign Inc. (NASDAQ: VRSN) was a standout winner today. Shares were raised, although there are more questions than answers outstanding on this stock now. Shares were up 2.8% at $33.77 in today's final minutes.
Yahoo! Inc. (NASDAQ: YHOO) shares were down over 2% at $24.09 despite rumors on Jerry Yang about to resign. I called the company, and it denied such rumors right on the spot.
After a brief refreshment, today just ended up being ugly rather than what many were hoping would be a boring day. Today's action was likely due more to analyst concerns, but a late-day news report on a security breach scare at LAX airport may have added stress to a trading day that would have otherwise been quiet. The markets are grossly oversold, but there just seems to be very few reasons for traders to hit their "BUY" buttons on keyboards.
These are UNOFFICIAL closing bell levels for major index readings:
General Motors (NYSE: GM) was the daily disaster due analyst call. Merrill Lynch downgraded the stock to Underperform and noted that "the chances of bankruptcy aren't impossible." 24/7 Wall St. noted the same weeks before, and we even posted odds on what the chances are that major auto or airline companies would have to file for protection by the end of 2008 to early 2009.
Oil was again the headline event today with the price per barrel near $142.00 and talk of $150.00 sooner rather than later. But all in all this day was far "less bad" than it could have been, especially if you consider the selloff yesterday, and consider that this was a Friday ahead of a shortened work week where traders are leery of holding positions. To top it off, the June quarter ends on this coming Monday.
The University of Michigan posted consumer confidence today at a 28-year low as inflationary pressures and fears remain high. The final June reading fell down to 56.4 from 59.8 in May and down from the prior June preliminary release of 56.7.
What the fundamentals couldn't help with, the charts did.... on selling. If you don't want to blame the charts, you could always point to Goldman Sachs downgrades and a myriad of everything else. The DJIA and S&P 500 Index broke early-year support levels. We even saw oil cross above $140.00 per barrel in electronic trading. Thankfully, there's no speculation driving up oil, because the speculators buying say they aren't driving up prices.
Q1 GDP was revised up 0.1% to 1.0%, although the data is now as old as the hills. While existing home sales posted a gain, we saw yet another median housing price drop. If this sounds overly pessimistic, it is simply because this is the sort of day it was. It even feels like Dr. Pangloss took the summer off.
Citigroup Inc. (NYSE: C) was the first casualty on a Goldman Sachs downgrade accompanies by a note that the company may cut the dividend or need cash. Those shares were down 6% at $17.70 in today's final minutes.
Yup, that pretty much sums up Oracle Corp. (NASDAQ: ORCL)'s recently delivered quarterly results. Strong. So strong, one could forget there is a slowdown in economic activity. So strong, no one remembers now Oracle's previous quarter scare (that the weak economy indeed would affect it and tech stocks). So strong, it has surpassed International Business Machines (NYSE: IBM) to become the second-largest software company in sales. It is no wonder then that the stock climbed 1.86% in after-hours trading to $22.97. It closed at $22.55.
By the numbers, Oracle's profit jumped 27% to $2.04 billion, or 39 cents a share, but excluding acquisition costs and some other expenses, profit rose to 47 cents a share. Revenue rose 24% to $7.28 billion. Oracle beat analysts' estimates on both counts. And this is just the tip of the iceberg; the results showed strength and improvement in many areas:
New software sales in the U.S. grew 22% and overall sales in the Americas, where the U.S. dominates, grew 18% after declining last quarter. Doesn't look like companies are cutting too much spending on software, does it? Keep in mind, growth in the region was indeed slower.
The segment that competes with SAP jumped 36% - a good example of Oracle's ability to bounce back.
Sales of new software licenses climbed 27% - it's amazing how Oracle managed to turn the trend on this number that concerned investors so much in the previous quarter. If that's not a good sign for future sales, what is? And if that doesn't give confidence in management and strategy, what does?
Operating margin for the quarter was 48% - better than Microsoft (NASDAQ: MSFT)'s, and that says it all.
The company, known for its acquisition strategy, closed its $8.5 billion purchase of BEA Systems Inc. in April. The acquisitions didn't just allow Oracle to grow to its second place, but gave it a diversity of products that helps it with sales and crossover sales.
One caveat: This quarter has always been known to be Oracle's best one. Still, the numbers don't lie, and this is one company that has been more than consistent.
Net income at the Ontario-based company in the fiscal first quarter rose to $482.5 million,or 84 cents per share, versus $223.2 million, or 32 cents per share, a year earlier. Revenue soared 107% to $2.24 billion as the company shipped about 5.4 million devices. Though these results were impressive, they were not good enough for Wall Street.
Analysts surveyed by Bloomberg News were expecting RIM to report earnings of 85 cents on revenue of $2.27 billion. Moreover, the company forecast second quarter profit of between 84 and 89 cents per share, missing the Bloomberg estimate of 92 cents. The revenue forecast of $2.55 billion to $2.66 billion, however, is slightly better than the $2.44 billion analysts had expected.
The problem that RIM has is that it's not Apple Inc. (NASDAQ: AAPL), which is now trying to lure more corporate customers with the latest version of the iPhone. In baseball terms, RIMM is like the New York Mets, a once mighty team that has fallen on hard times. Apple, on the other hand, is the high-tech world's equivalent of the Boston Red Sox, a once lowly team that now dominates the league.
Picture that the RIM team and the Apple team are playing each other in a real baseball game. RIM is trailing Apple in the bottom of the ninth, the bases are loaded with two outs. RIM management is trying to convince investors that it can hit a home run in this situation, while Wall Street is sure the company will strike out.
RIMM shares are down over 8.5% in after-hours trading to about $130. It closed at $142.336.
The Federal Open Market Committee issued its decision on interest rates Wednesday. It kept rates unchanged as expected but increased the hawkishness of the accompanying statement. It maintained its credentials on combating inflation but was careful not to cause any trauma to the financial markets that would require reversing this position. If this were to occur, the Fed would lose credibility.
The Fed wants to maintain its credentials on inflation control. This is necessary for it to protect the dollar from an uncontrolled spiral downward and an increase in core inflation. However, there is very little that the Fed can do to limit total inflation in the short term. The current inflation is really being primarily driven by the rise in oil prices. This is being caused primarily by the increase in demand in emerging markets, such as China and India. Fed policy has little effect on this. Oil prices rose throughout the last Fed tightening cycle despite the rise in the yield on short-term Treasury Bills.
Oil actually began its rise as the Fed began to increase interest rates in 2004. Prices doubled as the Fed substantially tightened monetary policy. Europe also has some of the same inflation issues that we face despite the refusal of the European Central Bank (ECB) to lower rates.
Today was a coin toss going into the FOMC meeting, and even after the meeting. The market could have gone either way today when the Federal Reserve said it is hoping inflation to come down later in the year and that it isn't that hawkish on inflation versus growth. Traders took the stance that rates will not be running rampantly higher by the end of summer. The other news on the economic front didn't inspire much either, as new home sales and prices in may continued their decline. Oil prices fell at one point more than $4.00 per barrel after an increase in inventory levels.
Below are the unofficial closing levels for today:
Amgen Inc. (NASDAQ: AMGN) saw a rise despite the short selling interest with bets against the company having risen by more than 100% to 48.4+ million shares as of June 13. Shares were up 1.3% at $46.98 in today's final minutes.
Stocks were up today, but less than you might imagine after a large drop of more than $4.00 on oil in late-day prices. So much for Goldman Sachs' raising oil target again today, as well as lifting the oil services sector and upping price targets for some of the sector's stocks .
Here are today's unofficial closing bell index levels:
Evergreen Solar Inc. (NASDAQ: ESLR) was one of the huge winners today with shares up over 20% at $12.33 in today's final minutes. The company announced a huge second round contract that added significantly to its backlog.
Huntsman Corporation (NYSE: HUN) imploded after its private equity buyout was officially notified as "being killed" by the buyers, and shares were down 38% at $12.79 at the end of the day. Mark that as an all-time low.
The week got off to a shaky start in the wake of several earnings disappointments, thus a lot of attention will be paid to 
Intel Corp.
Yup, that pretty much sums up 
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