Stocks recover after tsunami hits Japan

An 8.9 earthquake rocks Asian and European markets. Crude oil falls below $100. US retail sales rose in February. Consumer sentiment comes in lower than expected.

By TheStreet Staff Mar 11, 2011 8:36AM

Image: Wall Street sign (© Comstock Images/age fotostock)TheStreetBy Shanthi Bharatwaj, TheStreet

 

Updated at 1:13 p.m. ET

 

U.S. stocks were moving higher Friday after a massive earthquake and tsunami struck Japan, triggering a sell-off in Asian and European stocks and putting nations across the Pacific and the U.S. West Coast on high alert.

 

At 1:13 p.m., the Dow Jones Industrial Average ($INDU) was up 22 points, or 0.2%, at 12,006. The S&P 500 ($INX) was up 5.3 points, or 0.4%, at 1,300 and the Nasdaq ($COMPX) was rising 8.9 points, or 0.3%, at 2,709.

 

3M (MMM), Walt Disney (DIS) and Chevron (CVX) were gaining on the Dow. Coca Cola (KO)AT&T (T) and Verizon (VZ) were laggards.

 

An 8.9 magnitude earthquake rocked Japan on Friday afternoon, causing a 13-foot tsunami. At least 200 people have been reported dead and aftershocks continue to be felt in Tokyo, The Associated Press reported. Tsunami alerts have been issued across the Pacific, with Russia, Indonesia and Hawaii among the regions on high alert.

Investors are questioning whether the earthquake, one of the biggest in Japan’s history, could derail the country’s economic recovery.

 

Asian stocks plunged, with the Nikkei diving 1.7% and Hong Kong’s Hang Seng Index shedding 1.5%.

 

Phil Orlando of Federated Investors said that while the earthquake had a devastating impact on lives and property, Japan’s economy itself might prove more resilient, as the government invests in rebuilding the economy. “There is an economic multiplier associated with infrastructure investment,” said Orlando.

 

The Bank of Japan said Friday that it had set up a disaster management team and was willing to supply adequate liquidity to the money markets. "The Bank will continue to do its utmost, including the provision of liquidity, to ensure the stability in financial markets and to secure the smooth settlement of funds, in the coming week," it said in an emergency statement.

 

Most Japanese American Depositary Receipts, or ADRs, were trading lower on U.S. exchanges Friday in the earthquake’s aftermath. Japanese automakers Toyota (TM) and Honda Motor (HMC) were each down more than 2%. Sony (SNE) was lower by 2.4%, Panasonic (PC) fell 1.7%, Nippon Telegraph & Telephone (NTT) was off 0.7%, and Canon (CAJ) slipped 0.4%.

 

Germany’s DAX was losing 0.9%, while the U.K’s FTSE was off by 0.3%.

 

The April crude oil was losing $2.06 to $100.64. Crude oil prices dropped below $100 earlier in the morning for the first time in over a week, as Japan's refiners shut down processing. Japan consumes 4.42 million barrels of oil per day, according to data from the International Energy Agency.

 

The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report Friday that February output rose 110,000 barrels per day to 30.02 million, the highest since December 2008. The organization said it could add as much as 6 million barrels per day if necessary.

 

Investors will continue to keep an eye on the developments in Saudi Arabia, where pro-democracy protesters have called for a “day of rage” rally on Friday.

 

There will be plenty of data for investors to digest as well. China said Friday that inflation stayed at 4.9% in February, far above the government’s target of 4%.

 

The Census Bureau said February retail sales jumped 1%, the strongest in four months. Retail sales rose 0.3% in January, according to consensus estimates from Briefing.com.

 

The University of Michigan’s initial reading of consumer sentiment came in at 68.2, much lower than 76.5 economists were expecting.

 

The Commerce Department said business inventories climbed 0.9% in January, a tenth higher than expectations. The report said inventories rose 1.1%  in December, higher than the 0.8%  estimated earlier.

 

“The Michigan Sentiment Index was probably the least important of the data we had today,” said Orlando. “I would argue that it reflects the psychological impact of a spike in oil.”

 

”Retail sales for February showed a nice healthy snap back from what was thought as a weather-related impact on January. Meanwhile January’s number was revised up. So consumers are continuing to spend. Business inventory was stronger than expected, showing manufacturers are cranking up as well,” said Orlando

 

In company news, Chevron (CVX) agreed to sell assets in the U.K. and Ireland to Valero Energy (VLO). Shares of Chevron were up 1%. Valero stock was rising 6% to $27.90.

 

Aeropostale (ARO) stock was plunging 6.3% to $23.07 after it fourth-quarter net income fell to $83.8 million, or 95 cents a share, from $96.6 million, or 99 cents, a year ago.

 

AnnTaylor Stores (ANN) shares were up 12.3% to $27.20 after it reported better than expected fourth-quarter results. The company's earnings stood at $8 million, or 14 cents a share, compared with $41,000, or breakeven per share, a year ago. On an adjusted basis, it earned 19 cents a share. Analysts, on average, were expecting it to earn 17 cents a share.

 

Shares of 99 Cents Only (NDN) jumped 17.7% to $19.64 after it received a buyout offer for $19.09 per share from private equity firm Leonard Green and the Schiffer-Gold family.

 

Reinsurers and insurers were experiencing pressure after the massive earthquake hit Japan. Aflac (AFL) was falling 0.5% to $55.42 and Berkshire Hathaway was falling 1.1% to $84.02. Reinsurers such as Swiss Re (SWCEY) and Hannover (HVRRY) were experiencing pressure overseas as the devastating impact of the event unfolded.

 

The April gold contract was gaining $3.40 at $1,415.90 an ounce.

 

The benchmark 10-year Treasury was up by 2/32, with the yield dropping to 3.354%. The dollar strengthened against a basket of currencies with the dollar index up by 0.2%.

 

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93Comments
Mar 11, 2011 10:06AM
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If the sun flamed out and we all perished from the loss, Deklen's last post would be that it was the republican's fault. 
Mar 11, 2011 11:38AM
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A rebellion in a small desert country against a long time dictator blows up a few oil producing sites and the market dive for days on end....Japan the worlds second largest economy is hit with disastrous temblors, tsunami and possible nuclear meltdown and the market barely flinches...

 

Go figure...

Mar 11, 2011 9:49AM
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Dekles, I see you are back at " work".

 

The nightmare has been the last 2 years. $trillions of others people's money  spent, 13 jobs created.

Mar 11, 2011 1:03PM
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Someone mentioned about an hour ago that the Japanese are  100% nuclear in generating electrical power.  The Brits & French are also largely dependent on nuclear  power generation.

 

If those folks can solve the problems attached to that practice, then why can't we?  This question is addressed to Harry Reid and US citizens concerned with our carbon footprint.

Mar 11, 2011 12:00PM
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I wonder, after this earthquake, if Palin can see Japan from her house now.

Don't know about that, but Obama might be catching a glimpse his 57th state as the country fractures under his "community organization" skills. Where is he in this? Good Lord, the last thing we need now is the president to take a powder.
Obama is going to spend his second day in row discussing how bad bullying is in school.  There is nothing going on in the US or world that is more important.  Maybe Obama thinks community organizer and US Pres are the same thing.  Maybe he is just going to put his head in the sand hoping that everything goes away so he does not have to get his hands dirty or actually take a stand on an issue.
Mar 11, 2011 10:14AM
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If the sun flamed out and we all perished from the loss, Deklen's last post would be that it was the republican's fault. 
Um heh heh ...
Mar 11, 2011 11:14AM
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Comrade Jarlax, I promise I will not blame Team Obama for the sun's problems...

 

I will only blame him for 1.64 Trillion dollar deficits, polices that drove the unemployment rate from 7.1% to 9.8% (8.9% now in fairness), boosting the national debt from 10.2 Trillion to 14.6 Trillion, and passing his jobs destroying Obamacare that we cannot afford...

 

:)

 

 

Mar 11, 2011 12:15PM
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I think we should tax the poor for not producing enough wealth to tax. Just like I think I should get to rough up the no good drunk that wiped out one of my cars and three others on one of his nightly outings and has only repaid me $70.00 over the last three and one half years. Life just isn't fair now is it? We all get the same education paid for by the government. and some actually pony up and pay more to do more and some graduate and can barely hold a job.
Mar 11, 2011 11:09AM
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Good morning everyone Happy Friday!  GOD BLESS AMERICA  LAND OF THE FREE   HOME OF THE BRAVE!!!  A moment of Silence for those lost in Japan.
Mar 11, 2011 1:52PM
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This market pump is a total head fake sucker ramp by the big trading desks (read: BAC, JPM, GS, C, MS, etc).  It's complete bs!
Mar 11, 2011 11:24AM
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Sigh... Can we at least agree to not discuss politics based upon race, religion, creed, sexuality (unless it involves an off color joke), and only bash each other based upon policitics related to the economy?   personally I could care less if you want to marry a goat, or cook the AFLAC duck...
Mar 11, 2011 10:17AM
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We can always count on deklen for one dimensional thinking.

Mar 11, 2011 12:53PM
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Toto...  If you had a dollar and your father gave you a dollar, how many dollars would you have...  "One Dollar"...  you don't know your arithmetic...  "You don't know my father"...

 

(borrowed from Moe, Larry and Curly, or the Modern day equivelent, Obama, Reid and Pelosi)....

Mar 11, 2011 11:30AM
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Besides Toto, if we gave you that 1.2 million FAXFREE, Deklen might have a heart atttack letting the super rich off without taking 44%....
Mar 11, 2011 11:53AM
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.Sigh... Can we at least agree to not discuss politics based upon race, religion, creed, sexuality (unless it involves an off color joke)

One of my favorite (only slightly off color) Jewish jokes. A son asks his father for $20.
The father replies "fifteen dollars!, I don't have ten dollars, why would I give you five dollars?!

Now that's negotiation!
Mar 11, 2011 12:50PM
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lol...  It is funny that the black community supports the party of Jefferson Davis and the party that founded the Klan.  Some would even say that the Democrat party wants to keep the Black community down by providing handouts and poor education to them.  You have to wonder if the NEA and teachers unions, with the huges expenditures per student of the city public schools, are helping...

 

Maybe it is a plan to insure government dependence.   What disturbs me more is that even with decades of set asides and affirmative action, black business ownership continues to decline...

Mar 11, 2011 4:08PM
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Energy Policy....  Lets be realistic...

 

Coal, there is no such thing as clean coal.  However, we generate over 55% of our energy needs with coal.  Lets work on burning the best clean coal we can.  Lets not shut down an industry until we have something to replace it at about the same cost. 

 

WindMills, good idea, clean, and viable.  However, we need to end the idea of "Not if they are visible from my property" ideas.  I mean really, wind energy is not tappable everywhere.  This is a powerful force even from the left.  When they wanted to put a windmill farm near the Kennedy compound, Senator Kennedy killed the idea, so the farm was not built.

 

Hyrdo, worth building wherever economically feasible.  I don't think FDR cared much about endangered species when they built Hoover Dam.  The EPA should not be allowed to take more than years opposing hyrdo-plants...

 

Nuclear energy...  A good source, if regualted for safety.  Can we not find a geologically stable area 100 miles from most people?  Somewhere deep in the Arizona/Nevada/Montana vastness would work.  Build all the plants there.  Makes them easier to guard as well...

 

Oil, we will need it for decades, may as well drill for it here.  We reduce foreign oil needs, and I am sure we can dril safer on land and sea.  However, I doubt government regualtors and oversight will ever work.  Regualtions have never prevented a disaster yet.  And certainly a few thousand more regulators reading porn and ignoring things will not work either...

 

How about this as a plan...   In the future, the government will grant TAX Free status to any company that finds a way to provide a changeover to hydrogen fuel and can insure safety in its use.   This would get private companies to explore and develop this at their cost.  Yet cost the taxpayers nothing right now. 

 

End all payments/subsidies to oil companies.  This is lunacy.  The government should not be providing payments to private enterprise.  All this does is insure the taxpayers fund all the failed initiatives, and recieve none of tyhe profits from successful ones...

Mar 11, 2011 11:30AM
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I wonder, after this earthquake, if Palin can see Japan from her house now.

Don't know about that, but Obama might be catching a glimpse his 57th state as the country fractures under his "community organization" skills. Where is he in this? Good Lord, the last thing we need now is the president to take a powder.
Mar 11, 2011 11:10AM
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Wavers??????ha....Just watch.The NYSE will make a buck off this. Its all speculation on computer and paper. Being Friday with the weekend hanging  up in the air, anything can happen for the worse over the weekend. Buy Mon-Thurs. Sell on Friday afternoon.Same old song and dance.
Oil will go up even though Japan won't be taking delivery on crude due to refineries shutting down for a bit. Price SHOULD go down per barrel.But it won't since the Market is rigged.
Now I guess the rebels in Libya is gonna have to take a backseat to the Tsunami.
Now Charlie Sheen's home was searched overnight, guess the NYSE is gonna go up.They'll probably list it on the market as "WINing".

Mar 11, 2011 10:42AM
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MG by your argument then means that the US economy is not in dire straits as is being spun. The treasury does have a large amount of gold so when you talk debt you talk what is owed minus all assets (including gold) What is the price of the Govt gold holdings?

 

Then again why would Bernake hold on to it. Loose monetary policy, loose fiscal policy the only option left is to OMG Sell gold and there you have it no interest payments buy when it gets back to 150-300 range. Gold movements are part of monetary policy.

 

Hell open the oil reserves and sell it on the open market its a commodity buy when its back to 45/bbl This is capitalism at its best.

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