BROAD MARKET SUMMARY: It depends on who you ask, but most folks would agree 13,000 is a technical level for the DJIA. This week with that particular index having the abilty to break through and close the week above that level is a good positive indicator. Back that up with the S&P 500, a much broader equity measure, doing the same to its technical level of 1,400. Notably, the S&P 500 ended April as one of its best months in years. So this week, personal spending was up, unemployment was down, we saw a good factory order report, and the Q1 GDP reading shows we still aren't in a recession. How much of the doom & gloom is real, and how much is simply the pundits playing on our fears? Remember this is only one week, but it has been said that the stock market is a leading indicator.
INDEX
5/02 Close
4/25 Close
% Chg
DJIA
13,058.20
12,891.86
+1.29%
S&P 500
1,413.90
1,397.84
+1.15%
NASDAQ
2,476.99
2,422.93
+2.23%
West Texas Intermediate Crude closed at $116.29/bbl. Gold Futures closed at $858.00/oz
Next FOMC Meeting:June 24 & 25, 2008 - Tuesday/Wednesday
Notable Economic Data This Week:
• Consumer confidence weakened in April to a measure of 62.3.
• ADP reported 10,000 jobs were added in April versus expectations of a drop of 60,000.
• Q1 GDP came in at 0.6%, higher than the 0.5% forecast.
• Crude inventories expanded again this week to 3.848 million.
• Personal spending for March was up 0.4%, higher than Feb and expectations.
• PCE core inflation in March was 0.2% vs. expectations of 0.1% and the 0.1% in Feb.
• The unemployment rate in April was 5.0%, lower than 5.1% in Feb and forecasts of 5.2%.
• March factory orders were up 1.4%, soundly beating expectations of a 0.2% increase.
Not quite the speed of light, but Verizon (VZ) is reporting growth in fiber-based Fios product offerings. The company added 262,000 subscribers and now serves 1.8 million Fios customers. Q1 profit was up 14.1% year over year to $4.3 billion on revenue of $23.8 billion. EPS of $0.57 met analyst expectations.
Warren Buffet is hungry for a deal. Berkshire Hathaway (BRK) is helping fund a $23 billion buyout of Wm. Wrigley Jr. (WWY) by Mars Inc. The all cash deal puts together the maker of gums Extra, Eclipse, and Orbit with the company that produces M&Ms, Snickers, and other candy. The buyout should be complete in six to 12 months where Wrigley will become a subsidiary of Mars.
The improvements underway at Ford (F) have attracted more interest from billionaire Kirk Kerkorian. His company Tracinda Corp currently owns 100 million shares and is offering $8.50 per share for another 20 million shares, representing a 13% premium to last week’s close. If this purchase goes through, Kerkorian’s company will own roughly 5.6% of Ford stock.
MK-0524A, we have a problem. Merck’s (MRK) cholesterol drug under testing, got the “no go” signal from the US FDA this week. Although the drug was not approved for use, the company vows to press forward in the process. “Cordaptive” was the concepted name for the drug, but Merck will now seek the name “Tredaptive” for use in the US.
Investors are pleased with results from recently public listed credit card processors. Visa (V) saw cardholder spending cause a 28% increase in earnings, while MasterCard’s (MA) profit more than doubled in Q1. More customers outside the US used their debit and credit card for purchases, which drove both companies higher and made their shareholders even more pleased.
After recognizing over $10 billion in losses over six months, Citigroup (C) is trying to raise money from the street. Selling $3 billion of its common stock via public offering has not set well with existing investors through this dilutive nature of financing effort.
The FOMCcut the fed funds rate by another 25 bps, bringing the total of this year’s cuts to 3.25% and the rate now rests at 2.0%. Inflation in energy and commodity prices will be monitored, but most indications are that the series of rate cuts could be over for now as the Fed enters this “wait-and-see” demeanor.
The S&P 500 ended its best month last Wednesday as April closed with the best performance in over four years. Topping results from December 2003, the S&P 500 index was up 4.8% in April.
The price of Gold has reeled in significantly. As of this week, the price of the commodity is down 18% in the last six weeks.
Exxon Mobil (XOM)posted the second highest corporate profit of all time this quarter, but yet the street was still let down. Earnings expectations of $2.10 were missed significantly by the actual earnings for the period of $1.62 per share. The report of $10.9 billion of profit for the quarter is second only to Exxon’s own quarterly profit of $11.7 billion just last month. Seemingly, analysts thought the behemoth could do no wrong and just keep posting world record profit numbers, but margins in the refinery operations were down by more than half.
Apache (APA) has had a bang-up year. The Q1 net income was reported at $1.02 billion or $3.03 per share. This is up 108% from the same period a year ago where earnings were $492 million or $1.47 per share.
Are we there yet? Microsoft (MSFT) is rumored to have increased its bid for Yahoo (YHOO) “by several dollars per share” according to a New York Times article. Trying to keep things friendly, at least for this week, Microsoft has apparently opted for the kinder approach in exchange for the hostile takeover talk we’ve heard over the last couple of weeks. The obvious options were increasing the bid, initiating a hostile takeover, or just walking away from the deal. Shareholders saw a deadline come and go last weekend that stipulated Yahoo must respond, but no activity ensued.
The Dollar showed some true relative strength. After an extended period of serious declines against virtually every notable other worldly currency, the greenback climbed back this week. With the prospect of the FOMC holding rates steady in the coming months, the currency strengthened on the expectation that the key interest rates in the US will stop the contraction. At a five week high against the euro, the US dollar has made a nice comeback recently.
ALFONSE
StockwireAdmin
It depends on who you ask, but most folks would agree 13,000 is a technical level for the DJIA. This week with that particular index having the abilty to break through and close the week above that level is a good positive indicator. Back that up with the S&P 500, a much broader equity measure, doing the same to its technical level of 1,400. Notably, the S&P 500 ended April as one of its best months in years. So this week, personal spending was up, unemployment was down, we saw a good factory order report, and the Q1 GDP reading shows we still aren't in a recession. How much of the doom & gloom is real, and how much is simply the pundits playing on our fears? Remember this is only one week, but it has been said that the stock market is a leading indicator.
Not quite the speed of light, but Verizon (VZ) is reporting growth in fiber-based Fios product offerings. The company added 262,000 subscribers and now serves 1.8 million Fios customers. Q1 profit was up 14.1% year over year to $4.3 billion on revenue of $23.8 billion. EPS of $0.57 met analyst expectations.
Warren Buffet is hungry for a deal. Berkshire Hathaway (BRK) is helping fund a $23 billion buyout of Wm. Wrigley Jr. (WWY) by Mars Inc. The all cash deal puts together the maker of gums Extra, Eclipse, and Orbit with the company that produces M&Ms, Snickers, and other candy. The buyout should be complete in six to 12 months where Wrigley will become a subsidiary of Mars.
The improvements underway at Ford (F) have attracted more interest from billionaire Kirk Kerkorian. His company Tracinda Corp currently owns 100 million shares and is offering $8.50 per share for another 20 million shares, representing a 13% premium to last week’s close. If this purchase goes through, Kerkorian’s company will own roughly 5.6% of Ford stock.
MK-0524A, we have a problem. Merck’s (MRK) cholesterol drug under testing, got the “no go” signal from the US FDA this week. Although the drug was not approved for use, the company vows to press forward in the process. “Cordaptive” was the concepted name for the drug, but Merck will now seek the name “Tredaptive” for use in the US.
Investors are pleased with results from recently public listed credit card processors. Visa (V) saw cardholder spending cause a 28% increase in earnings, while MasterCard’s (MA) profit more than doubled in Q1. More customers outside the US used their debit and credit card for purchases, which drove both companies higher and made their shareholders even more pleased.
After recognizing over $10 billion in losses over six months, Citigroup (C) is trying to raise money from the street. Selling $3 billion of its common stock via public offering has not set well with existing investors through this dilutive nature of financing effort.
The FOMC cut the fed funds rate by another 25 bps, bringing the total of this year’s cuts to 3.25% and the rate now rests at 2.0%. Inflation in energy and commodity prices will be monitored, but most indications are that the series of rate cuts could be over for now as the Fed enters this “wait-and-see” demeanor.
The S&P 500 ended its best month last Wednesday as April closed with the best performance in over four years. Topping results from December 2003, the S&P 500 index was up 4.8% in April.
Exxon Mobil (XOM) posted the second highest corporate profit of all time this quarter, but yet the street was still let down. Earnings expectations of $2.10 were missed significantly by the actual earnings for the period of $1.62 per share. The report of $10.9 billion of profit for the quarter is second only to Exxon’s own quarterly profit of $11.7 billion just last month. Seemingly, analysts thought the behemoth could do no wrong and just keep posting world record profit numbers, but margins in the refinery operations were down by more than half.
Apache (APA) has had a bang-up year. The Q1 net income was reported at $1.02 billion or $3.03 per share. This is up 108% from the same period a year ago where earnings were $492 million or $1.47 per share.
Are we there yet? Microsoft (MSFT) is rumored to have increased its bid for Yahoo (YHOO) “by several dollars per share” according to a New York Times article. Trying to keep things friendly, at least for this week, Microsoft has apparently opted for the kinder approach in exchange for the hostile takeover talk we’ve heard over the last couple of weeks. The obvious options were increasing the bid, initiating a hostile takeover, or just walking away from the deal. Shareholders saw a deadline come and go last weekend that stipulated Yahoo must respond, but no activity ensued.
The Dollar showed some true relative strength. After an extended period of serious declines against virtually every notable other worldly currency, the greenback climbed back this week. With the prospect of the FOMC holding rates steady in the coming months, the currency strengthened on the expectation that the key interest rates in the US will stop the contraction. At a five week high against the euro, the US dollar has made a nice comeback recently.