Stock Market Wrap Mar. 22
A day after the Fed's comments sparked an aggressive late-day rally, stocks vacillated close to unchanged as investors took profits, further digested the Fed's remarks, and reacted to a profit warning and management shakeup at tech giant Motorola (NYSE: MOT - News). The result was a fairly tame day of trading in which all three major indexes stayed close to unchanged. The Dow closed up slightly, while the Nasdaq and S&P 500 were modestly lower on the day.
While investors initially seemed to interpret yesterday's Fed statement as opening the door for a rate cut later in the year, the market backed off that enthusiasm somewhat today. With inflationary pressure still very much on the Fed's radar, today's jump in the price of crude oil served as a reminder that high energy costs may underpin further inflation and limit the Fed's willingness to cut rates. Crude oil spiked higher, approaching $62 a barrel as refineries prepare to ramp up production ahead of the summer driving season.
Shares of Motorola plunged -7% and hit a new 52-week low after the company announced that it now expects to report a Q1 profit between breakeven and 2 cents per share, well below the 17 cents per share expected by analysts. The company's revenue outlook for the quarter was similarly slashed. Motorola blamed the lowered outlook on a poor performance in its mobile devices segment, where a lack of blockbuster handsets has hurt the company's margins and eroded market share. Motorola also shook up its executive ranks and announced the retirement of its CFO.
The Motorola news rippled elsewhere as well. Palm (Nasdaq: PALM - News), bid up all week as a potential buyout target for Motorola and others, gave back -9% on the news, but was up slightly in after-hours trading after beating earnings estimates after the bell. Semiconductors that supply Motorola also felt the fallout, and RF Micro Devices (Nasdaq: RFMD - News) and Skyworks Solutions (Nasdaq: SWKS - News), both the subject of Motorola-related analyst downgrades, dropped sharply on the day. Rival handset maker Nokia (NYSE: NOK - News), meanwhile, saw a modest gain in the wake of Motorola's warning.
Several earnings reports grabbed headlines as well, including the FQ1 report from homebuilder KB Home (NYSE: KBH - News), where profit plunged compared to a year ago but exceeded lowered expectations. The company said that difficult conditions in the housing market are likely to extend through the rest of the year. KB did, however, say that it was taking measures to reduce exposure to subprime loans while also cutting back on inventory.
A pair of food companies also reported earnings. ConAgra (NYSE: CAG - News) managed to beat both top- and bottom-line estimates for FQ3 despite a far-reaching recall of its peanut butter products. ConAgra now expects to lose as much as $150 million in sales as its peanut butter will stay off of shelves for at least several more months. General Mills (NYSE: GIS - News) beat estimates for its FQ3, while also raising guidance for the year. The upbeat outlook came in spite of rising prices of the crops used to make its cereals.
By the BullMarket.com Staff
While investors initially seemed to interpret yesterday's Fed statement as opening the door for a rate cut later in the year, the market backed off that enthusiasm somewhat today. With inflationary pressure still very much on the Fed's radar, today's jump in the price of crude oil served as a reminder that high energy costs may underpin further inflation and limit the Fed's willingness to cut rates. Crude oil spiked higher, approaching $62 a barrel as refineries prepare to ramp up production ahead of the summer driving season.
Shares of Motorola plunged -7% and hit a new 52-week low after the company announced that it now expects to report a Q1 profit between breakeven and 2 cents per share, well below the 17 cents per share expected by analysts. The company's revenue outlook for the quarter was similarly slashed. Motorola blamed the lowered outlook on a poor performance in its mobile devices segment, where a lack of blockbuster handsets has hurt the company's margins and eroded market share. Motorola also shook up its executive ranks and announced the retirement of its CFO.
The Motorola news rippled elsewhere as well. Palm (Nasdaq: PALM - News), bid up all week as a potential buyout target for Motorola and others, gave back -9% on the news, but was up slightly in after-hours trading after beating earnings estimates after the bell. Semiconductors that supply Motorola also felt the fallout, and RF Micro Devices (Nasdaq: RFMD - News) and Skyworks Solutions (Nasdaq: SWKS - News), both the subject of Motorola-related analyst downgrades, dropped sharply on the day. Rival handset maker Nokia (NYSE: NOK - News), meanwhile, saw a modest gain in the wake of Motorola's warning.
Several earnings reports grabbed headlines as well, including the FQ1 report from homebuilder KB Home (NYSE: KBH - News), where profit plunged compared to a year ago but exceeded lowered expectations. The company said that difficult conditions in the housing market are likely to extend through the rest of the year. KB did, however, say that it was taking measures to reduce exposure to subprime loans while also cutting back on inventory.
A pair of food companies also reported earnings. ConAgra (NYSE: CAG - News) managed to beat both top- and bottom-line estimates for FQ3 despite a far-reaching recall of its peanut butter products. ConAgra now expects to lose as much as $150 million in sales as its peanut butter will stay off of shelves for at least several more months. General Mills (NYSE: GIS - News) beat estimates for its FQ3, while also raising guidance for the year. The upbeat outlook came in spite of rising prices of the crops used to make its cereals.
By the BullMarket.com Staff
posted by Stock Administrator @ 8:26 PM
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