A Wal-Mart downgrade holds the Dow back

The blue chips fall 5 points. Techs, metals and energy shares boost the S&P 500 and the Nasdaq. Netflix jumps more than 6%. Gold moves higher; crude oil pulls back. Is a hostile bid for the parent of the NYSE coming?

By Charley Blaine Feb 14, 2011 1:51PM
Charley BlaineUpdated: 5:37 p.m. ET

Techs were strong today. So were energy and metals shares. The rest of the market, frankly, didn't do much.

Some of what was happening was investors cashing in recent profits after stocks finished Friday at their best levels in at least 2 1/2 years. Some was wariness about the coming budget war in Washington -- most Washington watchers see no chance of President Obama's budget proposal coming to pass.

Wal-Mart Stores (WMT) was an issue all day after JPMorgan Chase downgraded the stock to neutral. Analyst Charles Grom said in a report to investors that a decline in U.S. same-store sales may last several years, in part because Wal-Mart isn't dealing well with deep discounters like Family Dollar (FDO), nor with niche grocery players. So, Wal-Mart shares were down 1.6% to $54.80.
Wal-Mart's decline subtracted 6.7 points from the Dow Jones Industrial Average ($INDU), which closed off 5 points to 1,268. The Standard & Poor's 500 Index ($INX) was up 3 points to 1,332. The close was just short of double the S&P 500's March 6, 2009 intraday low of 666.79. And, thanks especially to gains for Apple (AAPL) and Netflix (NFLX), the Nasdaq Composite Index ($COMPX) added 8 points to 2,817.

Crude oil settled down 77 cents to $85.81 a barrel in New York. Gold settled up $4.70 to $1,364.10 an ounce. Interest rates were mostly lower, with the 10-year Treasury yield at 3.614%, down from Friday's 3.646%. The dollar was higher against the euro and the yen. The U.S. Dollar Index, which measures the greenback against a basket of currencies, was up 15.2 cents to $78.72.

Article continues below.


Tuesday's market may be pressured lower after FedEx (FDX) cut its fiscal-third-quarter outlook to earnings of 70 cents a share from earlier guidance of 95 cents. The package-shipping company said winter weather disrupted operations; so did higher fuel costs. Shares were off 0.3% to $93.74 from a regular close of $93.99.

But the pressures facing FedEx may be offset by strong earnings and guidance from Limelight Networks (LLNW) and Marriott International (MAR). Limelight shares were up 9.6% to $7.08 after hours. In regular trading, the shares had risen 7.7% to $6.46.

Marriott shares rose 4.2% after hours to $42.72 after a regular close of $41. The company sees revenue per available room rising 6% to 8% in 2011. It also plans to spin off its time-share and development businesses into a new publicly traded company.

Apple, Netflix see solid gains
Among tech stocks, Apple was up 0.7% to $359.18, in part because investors liked reports in The Wall Street Journal and elsewhere that the company is developing smaller and cheaper iPhones to combat the competition from devices using Google's Android operating system.

Separately, the Korean Economic Daily newspaper said Apple is about to contract for $7.8 billion in component purchases from Samsung. Apple would become Samsung's largest customer. This might have repercussions for Samsung's Galaxy line of products, growing quickly to compete with the iPhone and iPad.

Netflix jumped 7.1% to $247.55, tops among Nasdaq-100 ($NDX.X) stocks and second-best among S&P 500 stocks. The stock was the only paid service among Nielsen's top 10 video web services list. (Time spent watching videos overall grew 45% between January 2010 and January 2011, Nielsen said.)

In addition, Caris & Co. boosted its price target for Netflix shares to $316 from $224. Last week, investor Whitney Tilson surrendered in his efforts to short the stock. 

The Nasdaq-100, which tracks the largest Nasdaq stocks, was up 6 points to 2,386.

Meanwhile, Freeport-McMoRan Copper & Gold (FCX) was up 4.9% to $56.14, and Cliffs Resources (CLF), a big mining company, added 5.9% to $92.67 as China reported a surprising surge in copper imports. Aluminum giant Alcoa (AA) was up 1.3% to $17.59.

Energy shares moved up with oil prices. Gasoline refiner Tesoro (TSO) was the top S&P 500 stocks, up 7.9% to $23.66. Exxon Mobil (XOM) was the top performer among the 30 Dow stocks, up 2.5% to $84.91.

Chevron (CVX) was up 1.3% to $96.95, despite getting hit with an $8 billion judgment from an Ecuadorean court in a prolonged environmental battle. Chevron may never pay the fine; an arbitration panel recently suspended Ecuador's ability to enforce any judgments against the oil giant.

Oil services comapny Schlumberger (SLB) was up 2.4% to $92.24 and hit a 52-week high of $92.34.

General Electric (GE) agreed to buy the well-support unit of the U.K.'s John Wood Group for roughly $2.8 billion to expand its oil and gas businesses. GE's shares added 0.8% to $21.50.

A hostile bid for the NYSE?
That's what Charles Gasparino of Fox thinks. He reported today that CME Group (CME), the dominant player in U.S. futures markets, may make a hostile takeover bid for NYSE Euronext (NYX), the parent of the New York Stock Exchange.

NYSE Euronext is expected to announce a merger agreement, perhaps Tuesday, with Deutsche Boerse (DBOEF).

The report pushed NYSE shares up 3% to $39.45 -- but they were trading lower after hours. CME was off 2% to $302.57. Deutsche Boerse was off 0.4% to $83.65 in New York.

Energy prices -- New York close



Mon.   Fri.  Month chg.  YTD chg.
Crude oil 

$84.81

$85.58

-8.01%

-7.19%
(per barrel)

 

 

 

 
Heating oil

$2.7504

$2.6958

0.37%

8.13%
(per gallon)

 

 

 

 
Natural gas 

$3.9250

$3.9100

-11.20%

-10.90%
(per mil. BTU)

 

 

 

 
Unleaded gasoline

$2.5174

$2.4652

0.69%

2.62%
(per gallon)

 

 

 

 
Retail gasoline

$3.1260

$3.1280

0.87%

1.76%
(per gallon; AAA)












Elsewhere in the market: Echostar-Hughes and more earnings
EchoStar (SATS) agreed to buy broadband satellite network provider Hughes Communications (HUGH) for $2 billion, including debt. EchoStar shares were up 3.2% at $30.84. Hughes shares were down 3.7% at $59.47.

Shares of MGM Resorts International (MGM) were down 3% to $15.07 after the casino operator said it lost $139 million, or 29 cents a share, including one-time items. Analysts had expected a loss of $107.1 million, or 22 cents. Sales of $1.5 billion met expectations. 

Shares of Emergency Medical Services (EMS) were down 11% to $62.92 after it agreed to be acquired by private-equity firm Clayton, Dubilier & Rice for $64 a share, or $3.2 billion, plus debt.

China is the No. 2 economy; military takes control in Egypt
China surpassed Japan to become the world's second-largest economy in 2010, after the U.S. On Monday, the Japanese government said its economy contracted at a 1.1% annual rate during the fourth quarter, putting 2010 gross domestic product at $5.47 trillion, compared with China’s GDP of $5.88 trillion.

The Egyptian military is stepping in to rule Egypt after weeks of demonstrations forced President Hosni Mubarak out after 30 years in power. The military will remain in control until a government is formed through general elections set for September. Egypt’s stock exchange, which has been closed for more than two weeks, was scheduled to resume trading on Sunday.

Banks and financial markets remained closed today, but the Market Vectors Egypt Index (EGPT) exchange-traded fund was up 3.8% to $19.31.

Short hits from the markets -- New York close
 
 Mon.  Fri.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.110%

0.120%

-21.43%

-8.33%
5-year Treasury note 

2.351%

2.364%

20.44%

16.62%
10-year Treasury note

3.614%

3.646%

6.99%

9.35%
30-year Treasury bond

4.666%

4.713%

2.08%

6.97%
Currencies











U.S. Dollar Index

78.717

78.565

1.09%

-0.72%
British pound

$1.6038

$1.6005

0.13%

2.77%
(in U.S. $)











U.S. $ in pounds

£0.623

£0.625

-0.13%

-2.70%
Euro in dollars

$1.349

$1.353

-1.52%

0.81%
(in U.S. $)











U.S. $ in euros

€ 0.741

€ 0.739

1.55%

-0.80%
U.S. $ in yen 

83.472

83.450

1.50%

2.59%
U.S. $ in Chinese

6.620

6.587

-0.12%

0.07%
yuan











Canada dollar

$1.012

$1.013

1.17%

0.81%
(in U.S. $)











U.S. dollar 

$0.989

$0.987

-1.16%

-0.80%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,365.10

$1,360.40

2.35%

-3.96%
(per troy ounce)

 

 





Copper

$4.629

$4.536

3.81%

4.08%
(per pound)











Silver

$30.534

$29.995

8.40%

-1.30%
(per troy ounce)











Wheat 

$8.7200

$8.6700

3.72%

9.79%
(per bushel)











Corn

$6.9575

$7.0650

8.04%

11.77%
(per bushel)











Crude oil 

$84.81

$85.58

-8.01%

-7.19%
(per barrel)












10Comments
Feb 14, 2011 8:14PM
avatar
Hot are we just a quiet bunch today, or did y'all get so riled up that msn censured and deleted all of your posts?  do tell.
Feb 14, 2011 9:15PM
avatar

Bored with the same news over and over. Let's party...

Feb 15, 2011 2:09AM
avatar
Baring teeth  ha-ha beat that spam-filter yet again!!!!
Feb 14, 2011 8:55PM
avatar
Active- Shh!  They might be napping (it was a 142 post thread).  Have a good one.
Feb 14, 2011 9:17PM
avatar

Why is this guy, Blaine, always down on the market.  He's been predicting doom-n-gloom for months, but the market keeps going up.  What is his problem??  I don't understand why MSN keeps posting this guy's commentary.  His picture reminds me of a clowns face, rosy and happy on the outside, but gloomy and foreboding on the inside. 

 

MSN, do all of us, and yourself, a favor and find someone else to comment on the market, someone that has a clue as to where the market is heading....

Feb 15, 2011 3:11AM
avatar
Wal Mart
 http://www.market-forum.com Wink
Feb 15, 2011 2:08AM
avatar

Hot nice post w eda, your passion for helping others shines through. our small firm is in some cross-ways transition at this point and you provided some f ood for thought on shak ing up the troo ps. valuable info and format.

 

the only certain ty is cha nge these days.

 

 

Feb 14, 2011 10:59PM
avatar
Like all analysts, sooner or later he has to be right since there's only three options; up, down or sideways. 
Feb 14, 2011 8:51PM
avatar

MG- On your staffing issue, setting aside the fact that 8 of these folks just uprooted their lives to follow a job that will not exist (at the risk of being insensitive, shite happens), I would:

 

1. Notify the 3 perms of what you have decided and tell them you intend to retain them;

2.  Notify the the 8 non-selects of the now-temporary terms of their employment;

3.  Give the non-selects a specific date and severance terms to be offered at their termination (if they choose to do nothing until 06/30/12, sadly, that's their doing);

4.  If you're not already doing so, offer to cross-train all or at least the most promising of the non-selects and do so, at your sole discretion (helps you, helps them...  it's like a try out.  and some folks who are good at one task are simply not suited for some other tasks.);

5.  Give the most promising non-selects "first dibs" on positions created and/or that come open by attrition (I don't know your current staff size, attrition rate or projected future staffing needs, but you could fill 8 positions by this method, if you so chose to, over the next 1 year+);

6.  Offer the other resume, interview, etc. training and strong letters of reference (only to the stronger non-selects) mentioned in other response posts;

7.  Try to keep the door open to the most promising non-selects, should the need arise to re-staff / expand  down the road and they are still / become available (helps you, helps them).

 

I'd assume you have vetted the h**l out of the inspection system supplier (in my experience, some folks do not produce as promised and you are cutting staff loose, in reliance on that system).  Since some of these folks are 5+ year staffers and you couldn't possible be the guy you'd like us to believe you are, this can't be easy.  Hey, you even bothered to ask avowed socialists, communists, fascists, etc. for their ideas here, there could be hope for you yet.  Might be time to consider that ESOP, Tin Man.  You should know all of the above.  That's my two cents worth. 

Feb 15, 2011 3:17AM
avatar
Its Wal Mart
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