Jim Cramer Blog

Stocks traded lower on the day following mixed earnings reports, ending the overall market's potent two-day Fed-induced rally. At the close, the Dow dropped -49 points, while the Nasdaq lost -12 points and the S&P slumped -10 points. Crude oil continued its northward movement, ending the day at yet another record, jumping $1.39 to finish at $83.32 a barrel. The price of Gold also continues to impress, adding $10.40 to end the session at $739.90 a troy ounce.
Two Wall Street investment banks reported their earnings today. Goldman Sachs (NYSE: GS - News) reported a blowout third quarter, recording net income of $2.85 billion, or $6.13 a share, up considerably from $1.59 billion, or $3.26 a share, in the same period a year ago. Revenues rose an astonishing 63% to $12.3 billion. Goldman said the strong earnings were a result of betting correctly on falling mortgages, in addition to a $900 million gain related to the disposition of Horizon Wind Energy. The street was looking for a profit of $4.35 a share on revenue of $9.57 billion. Shares have been on a tear in recent weeks, but finished the day lower by -1.0%. Subscribers can read our analysis of Goldman Sachs in today's issue.
Fellow rival Bear Stearns (NYSE: BSC - News), meanwhile, reported a -61% decline in third-quarter net income on a drop in fixed-income trading and $200 million in hedge fund losses. For the quarter, net income totaled $171.3 million, or $1.16 a share, down sharply from $437.6 million, or $3.02 a share, last year. Total revenue fell -37% to $1.64 billion. During the quarter, the company took a $700 million writedown related to the diminishing value of its mortgage and leveraged loan portfolios.
Transportation and logistical giant FedEx (NYSE: FDX - News) reported mixed news on the day. The company posted net income of $494 million, or $1.58 a share, up 4% from 2006 levels due to strong international growth. Revenues came in 8% higher to $9.2 billion, and were above analyst estimates of $9.07 billion. The overall positive quarter was dampened when the company forecasted that its current quarter will only see earnings of $1.60-$1.75 a share and that full-year earnings would be $6.70-7.10 a share, down from its previous guidance of $7.00-$7.40 a share. The company cited "uncertain economic clarity" for the lower earnings. Investors sent the shares down -2.9% on the news. Subscribers can read our analysis of FedEx in today's issue.
Electronics retailer Circuit City (NYSE: CC - News) saw its shares get clobbered -18.2% after the retailing chain posted a wider-than-expected loss for its most-recent quarter. For the second quarter, the company lost -$62.8 million, or -38 cents a share, compared to a profit of $10 million, or 6 cents a share, in the year-ago period. Sales fell to $2.6 billion from $2.8 billion last year. Same-store sales in the period fell -7.9%. The company cited a decrease in sales in addition to lower margins on TVs for its loss. The company additionally warned of further losses ahead.
In M&A news, Nasdaq Stock Market (Nasdaq: NDAQ - News) reached a deal with the Borse Dubai wherein Nasdaq will get control of Nordic markets operator OMX while giving the Dubai exchange a 20% stake in the Nasdaq. Under the terms of the proposed deal, Nasdaq will sell its 20% stake in the London Stock Exchange to Borse Dubai as well. Already, government officials announced that the deal will be heavily scrutinized. Nasdaq shares gained 1.4% on the news.
By the BullMarket.com Staff

Labels: BSC, CC, FDX, GS, NDAQ