Bullmarket.com Market Wrap Jan. 17
One of the nation's largest banks reported strong earnings results, but mixed economic numbers that suggested it is unlikely the Federal Reserve will cut interest rates in the foreseeable future put a damper on the market. Stocks traded unevenly for most of the day and ultimately closed lower. Technology stocks were particularly weak in today's action. After hitting a 20-month low early in the trading session, crude oil futures prices mounted a modest rally to close above $52 a barrel, while the 10-year Treasury note slipped.
The Federal Reserve said that industrial production rose by 0.4% in December after two-consecutive months of -0.1% declines. The Labor Department, meanwhile, reported that wholesale prices rose 0.9% in December, which was a stronger gain than the 0.6% increase Wall Street was expecting. Core producer prices, excluding food and energy, rose 0.2%, which was in line with expectations. The government's reports on consumer prices, housing starts, building permits, and leading economic indicators are all scheduled for release tomorrow.
The Fed also announced that its latest survey of economic activity around the country, known as the "beige book," revealed that most regions of the country are experiencing modest economic growth despite the weak housing market. The central bank's report, which reflects survey data collected from the regional Federal Reserve banks about business activity, is one of the tools the bank uses to formulate interest rate policy. The next Fed meeting on rates is set for January 30th and 31st.
On the earnings front, J.P. Morgan Chase (NYSE: JPM - News) reported a 68% surge in net income. The nation's #3 bank said its Q4 net income rose to $4.5 billion, or $1.26 a share, from $2.7 billion, or 76 cents a share, a year earlier. The results included a $622 million after-tax gain on the sale of its corporate trust business along with another 10 cents a share from a tax-related gain. Strong results from investment banking activities offset a decline in retail banking. Despite the generally strong results, J.P. Morgan ended little changed, reflecting weakness in the banking sector as a whole.
The tech-heavy Nasdaq was weighed down by a -6% decline in Intel (Nasdaq: INTC - News), which reported results after yesterday's close. The semiconductor maker reported a -39% drop-off in its Q4 earnings on a -5% decline in revenue. The revenue results were better than analysts expected, but news that its ongoing price war with Advanced Micro Devices (NYSE: AMD - News) has yet to cease rattled investors. Also weighing on the stock was the company's projection that its closely watched gross profit margin would be lower in the current quarter than in Q4, which surprised investors.
In merger-related news, shares of Cablevision Systems (NYSE: CVC - News) added 3% after its board firmly rejected the latest bid from its controlling shareholders, the Dolan family. James Dolan is the company's CEO, while his father Charles serves as chairman. A two-person committee of outside directors, appointed to evaluate the Dolan's bid on behalf of non-family shareholders, said the family's latest $30-a-share offer still undervalues the company. The Dolans control 70% of the voting stock through a two-tier share system, so they can block any competing bid.
Caremark Rx (NYSE: CMX - News) added 4% after CVS (NYSE: CVS - News) sweetened its bid for the company. The drug store operator is adding a one-time cash dividend of $2 a share after the deal closes, and plans to retire about 10% of the combined company's outstanding stock, which amounts to a $5 billion buyback. CVS is trying fight off a challenge to its merger plan from Express Scripts (Nasdaq: ESRX - News), which shows no signs of backing away from the fight.
After the bell, Apple (Nasdaq: AAPL - News) reported that earnings for the quarter ended December 31st grew 78% to $1.0 billion, or $1.14 a share, soaring past estimates of 78 cents a share. Revenue rose 25% to $7.1 billion. iPod sales also easily surpassed expectations. Earnings and revenue guidance for the current quarter, however, were below Wall Street expectations. Soft guidance in prior quarters didn't hurt the stock, and with the stock up after hours, it appears that could be the case again this time around.
The Federal Reserve said that industrial production rose by 0.4% in December after two-consecutive months of -0.1% declines. The Labor Department, meanwhile, reported that wholesale prices rose 0.9% in December, which was a stronger gain than the 0.6% increase Wall Street was expecting. Core producer prices, excluding food and energy, rose 0.2%, which was in line with expectations. The government's reports on consumer prices, housing starts, building permits, and leading economic indicators are all scheduled for release tomorrow.
The Fed also announced that its latest survey of economic activity around the country, known as the "beige book," revealed that most regions of the country are experiencing modest economic growth despite the weak housing market. The central bank's report, which reflects survey data collected from the regional Federal Reserve banks about business activity, is one of the tools the bank uses to formulate interest rate policy. The next Fed meeting on rates is set for January 30th and 31st.
On the earnings front, J.P. Morgan Chase (NYSE: JPM - News) reported a 68% surge in net income. The nation's #3 bank said its Q4 net income rose to $4.5 billion, or $1.26 a share, from $2.7 billion, or 76 cents a share, a year earlier. The results included a $622 million after-tax gain on the sale of its corporate trust business along with another 10 cents a share from a tax-related gain. Strong results from investment banking activities offset a decline in retail banking. Despite the generally strong results, J.P. Morgan ended little changed, reflecting weakness in the banking sector as a whole.
The tech-heavy Nasdaq was weighed down by a -6% decline in Intel (Nasdaq: INTC - News), which reported results after yesterday's close. The semiconductor maker reported a -39% drop-off in its Q4 earnings on a -5% decline in revenue. The revenue results were better than analysts expected, but news that its ongoing price war with Advanced Micro Devices (NYSE: AMD - News) has yet to cease rattled investors. Also weighing on the stock was the company's projection that its closely watched gross profit margin would be lower in the current quarter than in Q4, which surprised investors.
In merger-related news, shares of Cablevision Systems (NYSE: CVC - News) added 3% after its board firmly rejected the latest bid from its controlling shareholders, the Dolan family. James Dolan is the company's CEO, while his father Charles serves as chairman. A two-person committee of outside directors, appointed to evaluate the Dolan's bid on behalf of non-family shareholders, said the family's latest $30-a-share offer still undervalues the company. The Dolans control 70% of the voting stock through a two-tier share system, so they can block any competing bid.
Caremark Rx (NYSE: CMX - News) added 4% after CVS (NYSE: CVS - News) sweetened its bid for the company. The drug store operator is adding a one-time cash dividend of $2 a share after the deal closes, and plans to retire about 10% of the combined company's outstanding stock, which amounts to a $5 billion buyback. CVS is trying fight off a challenge to its merger plan from Express Scripts (Nasdaq: ESRX - News), which shows no signs of backing away from the fight.
After the bell, Apple (Nasdaq: AAPL - News) reported that earnings for the quarter ended December 31st grew 78% to $1.0 billion, or $1.14 a share, soaring past estimates of 78 cents a share. Revenue rose 25% to $7.1 billion. iPod sales also easily surpassed expectations. Earnings and revenue guidance for the current quarter, however, were below Wall Street expectations. Soft guidance in prior quarters didn't hurt the stock, and with the stock up after hours, it appears that could be the case again this time around.
posted by Stock Administrator @ 5:35 PM
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