Dow up 57 despite Google, Bank of America, gold
Stocks move higher as improving consumer moods offset higher consumer prices. Gold nears $1,500; oil tops $109. Google's new CEO underwhelms analysts. Cirrus Logic has a problem.
The good news about stocks today was this: The major averages finished nicely higher, despite a whole lot of despites.
Despite gold's jumping to a new intraday high of $1,488.60 an ounce. Despite higher inflation readings in China, Europe and the United States. Despite disappointment with Bank of America's (BAC) earnings. Despite higher oil prices. Despite a downgrade of Ireland's debt.
And despite disappointment with Google (GOOG). Well, not so much Google as with Google CEO Larry Page, whose brief appearance on Thursday's earnings call was panned by analysts.
The Dow Jones industrials ($INDU) closed up 57 points to 12,342. The Standard & Poor's 500 Index ($INX) was up 5 points to 1,320, and the Nasdaq Composite Index ($COMPX) was up 4 points to 2,765.
What offset all those despites was a stronger-than-expected consumer sentiment survey reading. The preliminary University of Michigan consumer sentiment index climbed in April from a 16-month low, indicating job gains are helping Americans cope with rising fuel costs.
Gold settled at a new high of $1,486 an ounce, up $13.60 from Thursday after hitting that new intraday high. Gold was up 1% for the week and is up 3.2% this month.
Gold was higher in part because of a downgrade of Irish debt and worries that Greece will default on its debt. Plus, March consumer prices in China were up 5.4% from a year ago. And the Consumer Price Index in the United States was up 0.5% in March, with higher food and fuel prices the major reasons for the increase.
Crude oil settled up $1.55 to $109.66 a barrel in New York. Brent crude was up $1.45 to $123.45 a barrel. Meanwhile, the U.S. national average price of gasoline reached $3.815 a gallon, AAA's Daily Fuel Gauge said. The pump price for gas has hit $4 a gallon in California, Nevada, Hawaii, Alaska, Illinois, Indiana, Michigan, New York and Connecticut.
Interest rates were lower, with the 10-year Treasury yield falling to 3.41% from 3.485% on Thursday. The dollar was higher against the euro and British pound. The U.S. Dollar Index, which measures the greenback against a basket of six currencies, was up slightly at $75.028. It hit a 16-month low with Thursday's close of $74.89.
Next week is a monster for earnings with Apple (AAPL), Wells Fargo (WFC), Citigroup (C), Intel (INTC), AT&T (T) and General Electric (GE) among companies set to report.
|Markets for the week|
|4/15/2011||4/8/2011||% chg.||YTD chg.|
|U.S. Dollar Index||75.03||75.27||-0.33%||-5.37%|
|(per troy ounce)|
S&P, Nasdaq fall for a second straight week
Today's rally wasn't enough to lift the major averages to gains for the week. The Dow finished down 0.3%. The S&P 500 and Nasdaq slid 0.6% each and were off for their second week in a row.
The Dow is looking at a 0.2% gain for the month, which would be its fifth straight monthly gain. The S&P 500 and Nasdaq are looking at small losses.
Twenty of the 30 Dow stocks were higher today, led in percentage terms by Merck (MRK), DuPont (DD) and Procter & Gamble (PG). In point terms, the catalysts were Chevron (CVX), up 1.3% to $106.24, and IBM (IBM), up 0.8% to $166.21. They contributed nearly 20 points of the blue chips' gain.
Meanwhile, 76 Nasdaq-100 stocks were higher, led by toymaker Mattel (MAT), up 4.1% to $26.80 after reporting strong revenue growth in the first quarter. Rival Hasbro (HAS) was up 0.9% to $44.80.
How Larry Page sinned
Google CEO Page dismayed so many analysts that they cut ratings and price targets on Google's stock, which was down 8.3% to $530.70, its biggest percentage decline since Dec. 1, 2008, and the sixth-biggest one-day loss since the company went public in 2004.
Google was a big reason why technology was the market's weakest major sector.
Page, who co-founded Google with Sergey Bren, has taken over as Google CEO from Eric Schmidt. Page was on Thursday's earnings call for all of maybe two minutes and said so little about where he sees Google headed that Citigroup analyst Mark Mahany downgraded the stock to hold and cut his price target on the stock from $750 to $650.
There was already concern about Google before the call started. Reason: While earnings were up some 20% from a year ago, revenue was up 27%. Operating expenses were up 54%.
Mahany cut his target because the expense jump "with limited management disclosure suggests lack of discipline in a growth/competitive environment that simply isn’t as open-ended as it was for (Google) prior to the recession."
Also cutting price targets, according to Barron's, were Oppenheimer & Co. (to $650 to $715) and Credit Suisse (to $700 from $750).
Google shares are off 9.6% this month and 10.7% for the year. Today's price decline reduced the company's market capitalization from $186 billion to $172 billion, a decline of $13.9 billion.
|Energy prices -- New York close|
|Fri.||Thur.||Month chg.||YTD chg.|
|(per mil. BTU)|
|(per gallon; AAA)|
Cirrus Logic's problem may hit Apple
Cirrus Logic (CRUS) shares were slumping today, down 7% to $16.84, despite a 46% jump in estimated fiscal-fourth-quarter revenue to $91.4 million. The problem was that the company expects its gross-profit margin to drop to 50%. It had projected a 54% to 56% margin. It will reduce fourth-quarter earnings by about 6 cents a share.
The problem was, the company said obliquely, "a production issue with a new audio device that entered high volume production in March 2011."
That almost certainly means a chip that was going to be used by Apple's (APPL) iPad 2, which came out in March. Apple is Cirrus' largest single customer, news reports say.
It's not clear if the issue will affect Apple's fiscal-second-quarter results. The company is scheduled to report after Wednesday's close. Apple is expected to earn $5.35 a share, up 61% from a year ago. Revenue may jump as much as 72% to $23.3 billion.
Apple was off 1.5% to $327.46. Shares are off 2.3% this week and 6% this month.
Bank of America's gloomy report
The other big story came from Bank of America, whose shares fell 2.4% to $12.82, their lowest close since Dec. 20.
The largest U.S. bank by assets reported a 36% decline in profit in the first quarter as revenue fell sharply across the majority of its businesses. But the profit -- $2.1 billion, or 17 cents a share, down from $3.18 billion, or 28 cents -- was the first after three quarters of losses.
Revenue declined 16% to $27.1 billion.
CEO Brian Moynihan told Bloomberg Television that the bank had about $3 billion of one-time costs in the first quarter and is cutting about 3,500 jobs tied to mortgage lending.
The changes, and the continued lack of revenue production, show that Moynihan faces multiple challenges in fulfilling his pledge to return the company to its prior condition of strength. After a full-year 2010 loss, Moynihan had called that year "a necessary repair and rebuilding year" and insisted the bank took the losses to put its problems behind it.
Bank of America shares have dropped about a third in the last year, the worst performance in the 24-company KBW Bank Index ($BKX). The worry is that claims from investors and homeowners for faulty mortgages and foreclosures will cost more than the company expects.
The company replaced Chief Financial Officer Chuck Noski after less than a year with Chief Risk Officer Bruce Thompson. Noski was forced to step aside because of illness in his family. The company also named Gary Lynch, the former former Securities and Exchange Commission enforcement director, as global chief of legal, compliance and regulatory relations.
CPI rises for the 9th straight month
The cost of living in the U.S. rose in March for the ninth consecutive month, led by increases in food and fuel costs that haven't yet reached other goods and services.
The consumer price index increased 0.5% for the second month, the Labor Department said. That was in line with economists' estimates. Excluding volatile food and energy, the so-called core gauge rose 0.1%, less than forecast and held back by lower clothing expenses and smaller gains in medical care.
Falling wages adjusted for inflation and 8.8% unemployment mean retailers and service providers will have a hard time passing price increases along to customers. Rising food and gasoline prices are limiting consumer purchases of other goods and are slowing the economic recovery.
The CPI report was actually not as bad as the Producer Price Index report on Thursday. That suggested inflation pressures are hitting manufacturers.
There was good news today, starting with the University of Michigan confidence report. In addition, the Federal Reserve Bank of New York’s general economic index rose to 21.7 from 17.5 in March. Figures greater than zero signal factory expansion in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut.
|Short hits from the markets -- New York close|
|Fri.||Thur.||Month chg.||YTD chg.|
|13-week Treasury bill||0.060%||0.070%||-33.33%||-50.00%|
|5-year Treasury note||2.123%||2.211%||-4.58%||5.31%|
|10-year Treasury note||3.490%||3.485%||-1.27%||3.18%|
|30-year Treasury bond||4.468%||4.541%||-0.89%||2.43%|
|U.S. Dollar Index||75.028||74.888||-1.37%||-5.37%|
|(in U.S. $)|
|U.S. $ in pounds||£0.612||£0.611||-1.81%||-4.45%|
|Euro in dollars||$1.442||$1.449||1.77%||7.79%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.693||€ 0.690||-1.74%||-7.23%|
|U.S. $ in yen||83.333||83.470||0.00%||2.42%|
|U.S. $ in Chinese||6.555||6.527||-0.24%||-0.90%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
The primary reason the market is up today is because the Federal Reserve dumped another $6 Billion into the market this morning at 10 AM. The POMO and QE2 are the only thing keeping this market going.
I saw a headline few moments ago that read IMPROVING JOB MARKET HELPS CONSUMERS COPE WITH HIGHER GAS PRICES. Those 50,000 McDonald's jobs must really pay good to do that. The headline should have read CONSUMER SAVINGS AT AN ALL TIME LOW DUE TO RISING GAS PRICES.
Nice 'sucker punch' today by the speculators to the little guy...buy up in the morning then sell off in the afternoon...wonder how long people are going to let themselves be 'chumped' by these slimeballs.
Wall Street is Pathetic!
Corporate stocks up? NO! But gold, oil and food commodities sure are. Anyone with gold fillings better keep vigilant at all times.
Time for a snack and my favorite "Golden Nuggets" cereal.
The Michigan Consumer Confidence survey is conducted by randomly calling 500 in 48 of 50 states ( 55 of 57 if you by our POTUS). I suspect they get their list form roles of welfare recipients and the Democratic Party voting register.
The only reason manufacturing is up is because of stimulus purchase or direct government buying. The CPI like the Unemployment figures are a complete lie. You will never get any negative news from MSNBC or other like affiliates owned by GE because GE owns BO.
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[BRIEFING.COM] The stock market maintained a narrow trading range on Thursday before ending the session essentially where it began. The S&P 500 added less than a point, while the small-cap Russell 2000 (-0.2%) underperformed.
Equity indices displayed early strength thanks in part to an overnight boost from better than expected economic data in China and Europe. Specifically, China's HSBC Manufacturing PMI surged to an 18-month high (52.0 from 50.7), while Eurozone Manufacturing PMI ... More
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