Dow finishes up 33; Street lives with Alcoa results

The aluminum giant says a 27% decline in prices hurt fourth-quarter earnings, but revenue is better than expected. Tim Cook earns $378 million as Apple CEO. Gold and oil slip. Bristol-Myers inks a $2.5 billion deal.

By Charley Blaine Jan 9, 2012 2:41PM

Charley Blaine8:19 p.m. ET

 

The good news in today's stock market is that bank stocks are higher for the fifth straight day. And chip stocks are doing nicely.

The rest of the market seems to have plodded along, with the major averages little changed. Commodities, including gold (-GC) and crude oil (-CL), were modestly lower.

The old worries about Europe haven't gone away; European stocks closed mostly lower. Investors were betting -- correctly -- that Alcoa's (AA) quarterly results wouldn't at least be in line with estimates. Revenue was better than expected, although the company lost 3 cents a share due to restructuring. The company sees global demand rising 7% this year. Shares rose 27 cents to $9.43 in regular trading and were up another penny after hours.

At the same time, Apple (AAPL) was one of a number of stocks that hit all-time highs. Apple peaked at $427.75 around 10:30 a.m. ET, thanks to two upgrades, but pulled back to $421.73, down 67 cents. Also hitting new all-time highs today: Nike (NKE), Union Pacific (UNP) and paint-maker Sherwin-Williams (SHW). 

The Dow Jones industrials ($INDU) closed up 33 points to 12,393. The Standard & Poor's 500 Index ($INX) added 3 points to 1,281. The Nasdaq Composite Index ($COMPX) gained 2 points to 2,677, while the Nasdaq-100 Index ($NDX) was off 6 points to 2,351.

Article continues below.

Pulling the Nasdaq-100 lower was weakness in Google (GOOG), Microsoft (MSFT), Amazon.com (AMZN) and Costco Wholesale (COST). (Microsoft is the publisher of MSN Money.)

Nonetheless, the S&P 500 finished up 1.84 in the first five days of the year. In the 38 prior instances of gain in the first five days of the year, the index finished higher 33 times, according to the Stock Trader's Almanac.

Futures trading suggests will stocks will open higher on Tuesday. Japanese stocks opened higher in Tuesday trading.

But earnings from WD-40 (WDFC) and Standard Microsystems (SMSC) missed estimates, and Juniper Networks (JNPR) and Liz Claiborne (LIZ) lowered guidance after the close.

Zynga (ZYNG) shares ended the day 20% below their IPO price of $10.

Alcoa shares hold their own after earnings
We can say the Street is OK with Alcoa's results because the stock has either been up modestly or flat after hours. Moreover, the stock is up 9% since Dec. 30. That was after falling 43.8% in 2011, second-worst among the 30 Dow stocks.

At 5 p.m., it was flat as Alcoa said its loss came as prices fell some 27% during the year. One reason prices fell was huge production in China while demand globally dropped back, CEO Klaus Kleinfeld told CNBC today.

Kleinfeld guessed that a third of China's production is being made at a loss.

The company said it lost $193 million, or 18 cents a share, from continuing operations. Excluding restructuring costs, the loss came to $34 million or 3 cents a share.

Ahead of its quarterly results, Alcoa has been announcing closures of facilities. It expects to reduce its capacity by 12%. Last week, it said its Alcoa, Tenn., facility will be shuttered for good. Today, it said it's curtailing operations at three plants in Spain and Italy.

Alcoa lost 3 cents a share, in line with Street estimates, compared with 21 cents a share after the market became glutted with cheap aluminum. In September, the company had forecast 28 cents a share.

Revenue was $5.99 billion, ahead of the Street estimate of $5.78 billion and up from $5.65 billion a year ago.

A big payday for Apple's Cook
Apple CEO Tim Cook was rewarded handsomely in the 2010-11 fiscal year. The man who held the fort down while Steve Jobs was ailing and became CEO when Jobs resigned earned nearly $378 million. That includes $900,000 in salary and $376.18 million in restricted stock awards, the company's proxy statement says.

In the 2009-10 fiscal year, Cook earned more than $59 million, including $52.3 million in restricted stock, an $800,000 salary and a cash bonus of $5 million for serving as acting CEO again while Jobs was recovering from a liver transplant.

Apple's fiscal year ends on the last Saturday of September.

Energy prices -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Crude oil (-CL)

$101.31

$101.56

2.51%

2.51%
(per barrel)











Heating oil (-HO)

$3.0730

$3.0702

5.45%

5.45%
(per gallon)











Natural gas (-NG)

$3.0110

$3.0620

0.74%

0.74%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.7590

$2.7516

3.82%

3.82%
(per gallon)











Brent crude 

$112.45

$113.06

4.72%

4.72%
(per barrel)











Retail gasoline

$3.3740

$3.3710

3.21%

3.21%
(per gallon; AAA)












Bank stocks make a move
Bank stocks generally suffered in 2011, with the KBW Bank Index ($BKX) down 24.6%. This year has started strongly, with the index up 6.6% this month, including a 1.2% gain today to 42. Bank of America (BAC), the poster child for problem banks, is up about 13%; shares rose 9 cents to $6.27; they had fallen to as low as $4.92 on Dec. 19.

It's not clear if investors see a turnaround in the bank's problems, which are mostly related to its disastrous 2008 acquisition of Countrywide Financial, or are simply speculating that the stock couldn't fall any lower.

But the fact is regional bank stocks were higher today after an upgrade from Credit Suisse.

It also could be that investors don't see the group overall falling much more. All 24 stocks in the KBW Index were higher last week, led by SunTrust Banks (STI) and Bank of America, up 11.6% and 11.2%, respectively.

JPMorgan Chase (JPM) will be the first of the biggest banks to issue fourth-quarter results when it reports on Friday. Shares were off 6 cents to $35.30.


Bristol-Myers' big deal
Over the weekend, pharmaceutical maker Bristol-Myers Squibb (BMY) said it has agreed to buy Inhibitex (INHX)  for $26 a share, or $2.5 billion. The company is looking to boost its pipeline ahead of the loss of patent protection for its blood thinner Plavix.

The bid for Inhibitex is more than double Inhibitex's $9.87 close on Friday despite its main drug, for hepatitis C, only being in midstage trials.

Inhibitex was up $13.83 to $23.70. Bristol-Myers-Squibb was off 31 cents to $33.91.

Rivals in the market for hepatitis C were also higher. Vertex Pharmaceuticals (VRTX)  was up $1.63 to $35.68; Achillion Pharmaceuticals (ACHN) added $1.80 to $9.72.

Gold, oil drop modestly
Gold settled down $8.70 to $1,608.10 an ounce. Gold is still up 2.6% this month. Copper (-HG) was off 1.9 cents to $3.416 a pound, but silver (-SI) added 9.9 cents to $28.782 an ounce.

Crude oil, meanwhile, finished down 25 cents to $100.31, and Brent crude was off 87 cents to $112.19 a barrel.

The dollar was off slightly against the euro and the British pound. The 10-year Treasury yield was 1.96%, down from Friday's 1.961%.

The euro gained after German Chancellor Angela Merkel and French President Nicolas Sarkozy said today that they have made progress toward implementing tougher budget rules across the eurozone. They also said they would aim to foster stronger growth and job creation.

Alcoa leads the Dow; Netflix tops the S&P 500 and Nasdaq-100
Alcoa's gain today was the best among the Dow stocks, followed by Bank of America and Caterpillar (CAT). Microsoft, McDonald's (MCD) and IBM (IBM) were the laggards.

Netflix (NFLX), continuing its big recovery from 2011's drubbing, jumped $11.89 to $98.18. That was the top performance among S&P 500 and Nasdaq-100 stocks.

The stock jumped after hedge fund manager Whitney Tilson told CNBC he sees the company as a potential buyout target, with a market cap of $4.9 billion.

In five days of trading in 2012, the stock is up 41.7%.

Netflix was followed by Juniper Networks (JNPR) among S&P 500 stocks and by Green Mountain Coffee Roasters (GMCR), maker of the Keurig brewing system, among Nasdaq-100 stocks. 


Juniper, however, fell 2.1% after hours to $21.08 after warning fourth-quarter earnings will be 26 cents to 28 cents; the consensus estimate was 34 cents. Revenue will be $1.1 billion to $1.2 billion, compared with the Street estimate of $1.19 billion.

A total of 312 S&P 500 stocks were higher on the day, along with 54 Nasdaq-100 stocks.

Short hits from the markets -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0100%  0.040%

0.00%  0.00%
5-year Treasury note 

0.841%  0.856%

1.33%  1.33%
10-year Treasury note

1.960%  1.961%

4.76%  4.76%
30-year Treasury bond

3.029%  3.016%

4.85%  4.85%
Currencies











U.S. Dollar Index

81.388  81.597  1.08%  1.08%
British pound

1.5451  1.5423  -0.56%  -0.56%
(in U.S. $)

          
U.S. $ in pounds

£0.647  £0.648  0.56%  0.56%
Euro in dollars

$1.27  $1.27  -1.67%  -1.67%
(in U.S. $)

          
U.S. $ in euros

€ 0.785  € 0.788  1.70%  1.70%
U.S. $ in yen 

76.98  76.81  -0.15%   -0.15%
U.S. $ in Chinese

6.34  6.31  0.17%  0.17%
yuan

            
Canada dollar

$0.975  $0.000  -0.65%  -0.65%
(in U.S. $)

          
U.S. dollar 

$1.027  $1.029  0.66%  0.66%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,608.10

$1,616.80

2.64%

2.64%
(per troy ounce)











Copper (-HG)

$3.416

$3.435

-0.58%

-0.58%
(per pound)











Silver (-SI)

$28.7820

$28.6830

3.11%

3.11%
(per troy ounce)











Wheat (-ZW)

$6.4175

$6.2475

-1.69%

-1.69%
(per bushel)











Corn (-ZC)

$6.5200

$6.44

0.85%

0.85%
(per bushel)











Cotton 

$0.9612

0.9552

4.84%

4.84%
(per pound)











Coffee

$2.2465

2.2455

-2.18%

-2.18%
(per pound)











Crude oil (-CL)

$101.31

$101.56

2.51%

2.51%
(per barrel)










 

82Comments
avatar
Seems like the new code word for today is "Let them get jobs and then they can buy cake and eat it". At least Marie kept it simple saying only "Let them eat cake".

Both Gingrich and Santorum faced criticism this week when they spoke of overhauling food stamps and other welfare programs by seeming to equate food stamp recipients and blacks. Gingrich said he would encourage blacks to demand paychecks, not food stamps, and Santorum said that he did not want to "make black people's lives better by giving them somebody else's money. I want to give them the opportunity to go out and earn the money."
Jan 9, 2012 3:17PM
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Investors are predicting a great Alcoa earnings report?
......or maybe "not as bad as expected"

Less negative is the new positive!

Jan 9, 2012 11:13PM
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Here's the REAL story of the "market" today, since Charlie and the other shill slaves of sell side money rapers won't  help you with the truth:

 

Alcoa was expected to generate $(0.03) in EPS in Q4 and did. However, it took it 5.99 billion in top line revenue just to not miss traditionally lowered Wall Street estimates. This compares to the $5.7 billion it was expected to make: so there goes your margin.  Also, Alcoa's CapEx jumped from $325 million in Q3 to $486 million in Q4, meaning that based on the traditional Free Cash Flow definition of EBITDA-CapEx, (that's used for bond indenture purposes), Alcoa actually burned cash in Q4...whoops, MSN and CNBS failed to mention that?

 

In other market notes (yep, again not mentioned here at MSN's "buy, buy, buy" idiot-fest), was total volume today was the lowest for the year and nearly 20% below December's record low average.  This means just a few contract blocks "traded" by the big bank HFT algo-robots easily ramped (read: manipulated) the close into the green. 

 

Finally, ICI just reported that retail investors pulled a total of $140 billion from Mutual Funds in 2011 (that beats the $90B+ from 2010).  SO since Mutual Funds can't print money like Bernanke, that means this market ramp that's been occuring is on huge leverage.  Hmmm, how did "huge leverage" work out a few years ago???

 

This concludes your truth pill for the day.

Jan 9, 2012 11:53PM
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The only real way to end career politicians is to establish term limits for ALL elected officials from the President to the dog catcher.
Jan 9, 2012 8:36PM
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Since politicians have allowed the RAPING of this country I think the American people should do some RAIPING of their own on election day!!

                                       Replace

                                       All

                                       Incumbent

                                       Politicians

Think about it people, it's time to end Career politicians!!!!!!!

 

Jan 9, 2012 6:02PM
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The title of the article is..."White House Wants to Convert Foreclosed Houses into Rentals". Another article is about the number of Americans, now walking away from their homes. And this is an improving economy????? H NO!!!
Jan 9, 2012 5:30PM
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The problem is not a banking issue...  The problem is a DEBTOR's issue.  Governments, Home Buyers, Business' that borrowed more than they can pay, and more than they can DEBASE their way out of are the problem.  These cronic SPENDERS cannot live within their means.  They now need to DEFAULT, i.e. give haircuts, declare bankruptcy, or just plain stiff the people that lent them the money. 

 

They will do anyting but bite the bullet, stop deficit spending and pay back what they owe. 

 

Don't be dumb enough to lend the governments money.  Don't have a ton of faith in paper either.  If the can't raise taxes, they can only DEBASE so much, because as the print they will be paid back in the same worthless paper...

 

Sorry  but the biggest deadbeat is our own government.  Before Obama leaves office the Deficit will top 16 Trillion...  When do we add the extra zeros to our paper money?

Jan 9, 2012 7:10PM
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Lets lighten up folks.Smile Here’s a nice bedtime story.Sleepy

Once upon a time, many years ago, there was a centrally operating government that determined how much of anything the people needed. One day they had to decide how many rolls of toilet paper their citizens needed. After days of deliberation, they decided on a number that would replace the existing dwindling supply. They then contacted the government lumberjacks to tell them how many trees would be needed to produce that many rolls of toilet paper. After determining how many trees were needed for all of the other things the population needed that used lumber, the lumberjacks determined they could only supply half the requested rolls of toilet paper. The government then had to decide, from all the other things that needed lumber, how much not to produce of those items to allow enough rolls of toilet paper to be produced. After careful deliberation, the government decided to only produce half of the toilet paper requested because the other uses of lumber were more important.

The rolls of toilet paper were distributed, but because the number of rolls of toilet paper distributed were only half of the actual demand, the other half of the population had no toilet paper and were very angry. However, in their infinite wisdom, the government, at great cost, mailed letters to the entire population telling them to go to Sears & Roebuck and get their free catalogs as a temporary solution to the shortage of toilet paper. However, when checking with Sears, the population found the allotment of lumber to supply paper to print the catalogs had been delayed due to other lumber priorities. The population that received no toilet paper was greatly angered by these events and demanded there always be enough toilet paper for the population. The Government complied, but due to a baby boom, there was shortage of lumber resulting in no houses build for the next 5 years.

[Notice: The above story is fiction. All organizations and events for the product of the Author’s imagination. However, in my youth, I lived in a region where they still had outhouses. Almost all had a Sears Catalog while a few had toilet paper. I visited one of my friends many times to enjoy the luxury of using toilet paper.]

Jan 9, 2012 4:55PM
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Credit, If you know how to invest, a 401K is still a good thing, especially with an employer match. 401 seps are even better although rare these days. 100% employer funded, I put in nothing from my check. Leaving money under your mattress, you lose both ways, no chance of growth and inflation hits your money too. Stay out of the market, it's your choice.
Jan 9, 2012 3:34PM
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Bank stock make move
Another news article was discussing the potential of under-water home owners walking away from bad loans.  Kind of makes a fellow wonder if the banks are moving into the soon to be abundant vacant houses.
Jan 9, 2012 5:25PM
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Investors were betting -- correctly -- that that Alcoa's (AA+2.89%) quarterly results, due after today's close, wouldn't be as bad as expected. Revenue was better than expected. Shares rose 27 cents to $9.43 in regular trading and an additional 5 cents to $9.50 after hours.

 

In April 2007 the stock traded at $35.49 and on April 2008 it was $34.78 and then dropped like a rock.  The fact this stock which is considered a bellweather indicator of the manufacturing sector has not rebounded only further reflects the state of our manufacturing outlook for aluminum products etc. along with our economic conditions.

Jan 9, 2012 5:38PM
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Wow, how gracious of the oil traders and speculators to drop oil prices by a whopping 25 cents a barrel today considering their Iran BS lead to an immediate 15 cent a gallon raise in my area last week. Your Greed amazes me. In my book, you are no better than a common thief because you are stealing from all of us. Go ahead and keep raising your prices and I guarantee you that your big market is going to blow up in your face. You will only push us so far and than we will once again cut back on spending and that will lead to no growth. If you were not so Greedy, you would realize that the whole economy benefits from lower fuel costs.

 

Jan 9, 2012 4:59PM
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Sr. Akimoto is also Fat Cat ... likes to think they are throwing everybody off as to their real identity
Jan 9, 2012 5:32PM
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demand is down and china seems to be over producing?  and alcoa is cutting back plants.  good signs ahead!  (not)

 

The fact this stock which is considered a bellweather indicator of the manufacturing sector has not rebounded only further reflects the state of our manufacturing outlook for aluminum products etc. along with our economic conditions.
Jan 9, 2012 6:31PM
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If I hear one more moron complain about the PRICE of gasoline...   Gasolline closed today without taxes at 2.76/gallon.   These same complainers are the same people that voted for Obama...  You know the guy against DRILLING.  AGAINST building new refineries, The guy whose answer to gasoline prices being high is to tell you to buy a Government Motors Electric car... 

 

How about this, invest in oil companies and reap the bigger dividends.  Stop DRIVING as much.   Get a more fuel efficent car...  Or better yet follow 'Hope and Change' and run out and buy that electric car...

 

You got what you voted for, quit complaining...

Jan 9, 2012 5:58PM
avatar
Just read the MSN article....White House, is trying to gather up the foreclosures of American homes, and they will now be rented to Americans. Welcome the socialism, we are about to experience. If I were an American, that had lost my home to the government, I would fight this like crazy!!! Shame on this administration, shame!
Jan 9, 2012 5:49PM
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brent011 - Exactly.  Gas prices were low the entiire month of December to get people to go out and spend. Feels like a conspiracy really. Now, a camel farts in Iran or any excuse and gas jumps 10 cents a gallon overnight.  You're right, this greed by  inflating gas prices will only backfire when the cost of doing business once gain puts a strain on the family budget.  If gas reaches $4/gallon, watch for another tumble in the economy.  Big oil and speculators could play such a signifcant part in the economic recovery by keeping prices low, but instead they continue to be part of the problem.

Jan 9, 2012 8:50PM
avatar
 Replace  All  Incumbent Politicians        

  Been a few elections where I wish this box was available to check on my ballot.                       

                   

            
Jan 9, 2012 6:55PM
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Kleinfeld guessed that a third of China's production is being made at a loss.
If you want to see who allows, and subsidizes, the Chinese to produce at a loss, go pull up a picture of Washington DC on your computer.   I wonder if we're ever going to stop being chumps for China?   It really is disgusting.
Jan 9, 2012 7:40PM
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