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.

By Charley Blaine Apr 15, 2011 1:01PM
Charley BlaineUpdated: 7:12 p.m. ET

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.
Dow industrials

12,341.83

12,380.05

-0.31%

6.60%
S&P 500

1,319.68

1,328.17

-0.64%

4.93%
Nasdaq 

2,764.65

2,780.42

-0.57%

4.21%
Russell 2000

834.98

840.89

-0.70%

6.55%
Crude oil 

$109.66

$112.79

-2.78%

20.00%
(per barrel)

 

 

 

 
U.S. Dollar Index 

75.03

75.27

-0.33%

-5.37%
10-yr. Treasury

3.41%

3.57%

-4.48%

3.18%
Gold

$1,486.00

$1,474.10

0.81%

4.54%
(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. Google

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.
Crude oil 

$109.66     $108.11     2.75%     20.00%
(per barrel)

 

 

 

 
Heating oil

$3.2242     $3.1890     4.35%     26.75%
(per gallon)

 

 

 

 
Natural gas 

$4.2040     $4.2120     -4.22%     -4.56%
(per mil. BTU)

 

 

 

 
Unleaded gasoline

$3.2892

$3.2347

-4.22%

-4.56%
(per gallon)

 

 

 

 
Brent crude

$123.45     $122.00     5.36%     30.29%
(per barrel)











Retail gasoline

$3.8150

$3.8120

5.80%

24.19%
(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. Bank of America

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.
Treasury yields




 





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%
Currencies











U.S. Dollar Index

75.028

74.888

-1.37%

-5.37%
British pound

$1.6332

$1.6356

1.85%

4.65%
(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%
yuan











Canada dollar

$1.039

$1.041

0.77%

3.55%
(in U.S. $)











U.S. dollar 

$0.963

$0.960

-0.76%

-3.43%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,486.00

$1,472.40

3.20%

4.54%
(per troy ounce)

 

 





Copper

$4.258

$4.284

-1.16%

-4.26%
(per pound)











Silver

$42.571

$41.664

12.36%

37.61%
(per troy ounce)











Wheat 

$7.4425

$7.4250

-2.46%

-6.26%
(per bushel)











Corn

$7.4225

$7.5425

6.82%


18.96%
(per bushel)











Cotton 

$1.9552     $1.9604     -2.35%     35.02%
(per pound)











Crude oil 

$109.66

$108.11

2.75%

20.00%
(per barrel)












39Comments
Apr 15, 2011 1:57PM
avatar
The last time gas prices hit $4/gallon a barrel of oil was $140.  Now we are back to $/gallon but a barrel is $110.  I seriously doubt the cost of refining that barrel has risen $30 in the past three years.
Apr 15, 2011 1:42PM
avatar
Well i guess the stock market wants to bring down the US economy by making there fat dollar amounts on oil. When are these people going to realize that its the middle class that make them money. If we are putting it all in our tanks how are people going to get back to work if the american people are not buying anything?
Apr 15, 2011 2:59PM
avatar

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.

 

 

Apr 15, 2011 2:02PM
avatar
how can the market be up today despite bac,goog,ireland,higher oil,inflation,gold.did the consumer sentiment survey offset all that?
Apr 15, 2011 2:28PM
avatar
they will continue to raise the price of gas as long as we buy it.We ned to cut back on our trips to the stores.They don't car if our saving accounts go dry.I will not continue to have to make a choice. Do I eat or put gas in my truck. The truck will stay where it is and I'm not driving it. I use to drive 6 days a week,now i'm driving only 3 days a week. If the gas keeps going up it will be only 1 day a week. i'm on disability and i can't get a job anywhere. Its not my fault. But,it is my fault if I keep buying their gas. Think about it, and try to consolidate your trips if you can.Don't let them cripple all of us.
Apr 15, 2011 2:15PM
avatar
The market will have another black monday and the second recession will hit, maybe sooner than later.  As soon as the "big playas" can overflow their coffers and then yank the chain.  Jobs, real estate, food, gas and you name it is going  up faster than the idiots in our gooberment can count.  Unemployment will be at least 15% forever.  China is flattening us like a pancake.  Bow to your new leaders.......
Apr 15, 2011 2:44PM
avatar
I guess there is much I do not understand about economics. We are teetering on the verge of collapse. Yet the stock market acts like all is well WTF? I am living the economy not at the ground level and it is apparent that things are bad. I have made what preps I can for it to get worse. I am starting to believe that I am either completely crazy or the wall street guys are just clueless to what most people would say is a doom and gloom picture of our econom9c future. Thats the real economic article that needs to be written.
Apr 15, 2011 4:38PM
avatar
The CPI (Consumer Price Index) is the inverse of the LPI (Lying Politician Index)... While the CPI is at 0.1%, the LPI is at 99.9%
Apr 15, 2011 3:54PM
avatar

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!

Apr 15, 2011 5:58PM
avatar
It amazes me how many columnists play dumb on the amount of money the feds pump into the market every day to pump it up or slow down a decline. Manna from heaven in their eyes, i guess.  It's just that a hint of basic honesty on what's really driving the market would be a nice change of pace.
Apr 15, 2011 4:15PM
avatar
First thing this morning they said the exact 180% opposite, then as it was artificially raised they reversed it again. These criminals make my physically ill and make me want to VOMIT.!!!
Apr 15, 2011 5:06PM
avatar
I'am sick of the BASTARDS on wall street jacking up the prices for their personal gain.They are killing the working people who have jobs,and the unemployed God help you.The only thing we can do with the stock traders who keep jacking up the prices is strap them to tomahawk missiles and fire them into the Liberian desert and maybe in a million years we can get a hundred dollars a barrel for them.
Apr 15, 2011 6:15PM
avatar
The working families in this country do not stand a chance. They must think that we are stupid when they say inflation is not here. It makes no difference now on how much we cut back on oil and even if the reserves are open it will not go down because the Big Boys are pumping billons ino oil futures to keep the price high. If the Government does not either take oil off the commodity market or pass legislation to regulate unfair oil trading, we are headed for the poor house compliments of Wall Street Pigs. This country is running on Greed and it has to stop before it is too late.
Apr 15, 2011 2:01PM
avatar

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.

 

 

Apr 15, 2011 2:39PM
avatar

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.

Apr 15, 2011 2:54PM
avatar
I think I may start leverage buying next week. Now that I know I won't be prosecuted thePonzi scheme scheme to riches is  definitelythe way  to go. Come on everyone its a modern day gold rush, what the worst that can happen a bailout?
avatar
Well the rich get richer and the poor get their healthcare taken away. How can the country be broke and the stock market soar? There's something wrong with this picture.  
Apr 15, 2011 2:46PM
avatar
Just think a few hours ago the reports here were doom and gloom....Guess the Wall Street intern got mixed up on the BS that was supposed to submitted....His handlers liked this fictional account better.
Apr 15, 2011 5:53PM
avatar
I hope the stack market crashes with the biggest boom ever heard!!! you greedy skuzz buckets are ruining the country!!
Apr 15, 2011 6:34PM
avatar
How many congress men and women purchase oil stocks? If they do, isn't that a conflict of interest??? Devil
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