Stock Market Wrapup Sept. 5th
Stocks suffered large losses across the board, ending a two day rally in the stock market as credit fears and poor housing data contributed to a broad sell-off. At the close, the Dow Jones and S&P 500 lost a little more than 1% on the session, while the Nasdaq gave up -0.92%. Crude oil was up yet again, rising 65 cents to $75.73 a barrel.
The Fed released the much anticipated Beige Book today which stated that economic activity continued to expand in most of the nation's twelve districts at a modest pace in the month of August. However, the pace of growth slowed in some notable regions. The report also noted that much of the turmoil in the credit markets appears to be contained.
On the housing front, the National Association of Realtors announced today that pending home sales dropped -12.2% in July, much worse than economists' estimates of a decline of -2.2%. In related news, a private report showed that investors bought the fewest commercial properties in more than a year. Additionally, apartment building acquisitions fell by -50% from June levels.
The London Interbank offered rate or LIBOR, which is the rate banks charge each other in dollar terms for three months, rose for the 10th straight day on concerns that losses on securities linked to U.S. subprime mortgage problems will increase. LIBOR rates increased to 5.72%, the highest level since early 2001.
In corporate news, several big box retailers came out with August same-store sales. Among them, Costco (Nasdaq: COST - News) reported same-store sales growth of 2%, well below the 5.6% that analysts had expected. Total sales in the month were $4.84 million, up from $4.56 billion last year. The company said the poor results were the result of lower tobacco sales and a lower price for gasoline. Investors were not sympathetic, sending the shares down -4.2%. Chief rival BJ Wholesale Club (NYSE: BJ - News) reported a 1.4% rise in same-store sales for the month and total sales climbed 6.4% to $661.7 million.
Food giant Kraft Foods (NYSE: KFT - News) pleased investors today when it upped its earnings forecast for the full year to $1.60-1.62 a share, up from its previous range of $1.50-1.52 a share. Excluding items, it expects to report EPS for the year of $1.80-1.82 a share. Analysts were expecting $1.80. The company cited strength in its growth initiatives and a lower tax rate for the improved outlook. Shares rose 1.4%. Subscribers can read our analysis of Kraft in today's issue. Also in the food sector, meat producer Tyson Foods (NYSE: TSN - News) chopped its yearly profit forecast as it is facing a tougher-than-expected fourth quarter. The company sees EPS of 72-80 cents a share for the year ending September 30th. In July, the company had said earnings would be in a range of 82-92 cents a share. Rising cattle and hog costs coupled with disruption in the South Korean beef trade are to blame for the shortfall. Shares plunged by -13%.
Toymaker Mattel (NYSE: MAT - News) continues to have its problems in China, as the company announced for the third time that it will recall toys that contain a high level of toxic led paint. The company is recalling 844,000 toys, including popular Fischer Price and Barbie brands.
Finally, in the tech sector, Apple (Nasdaq: AAPL - News) once again grabbed investors' and consumers' attention with a big slate of product announcements, including a revamp of its popular iPod line. Most notably, the company unveiled the iPod Touch, a device with the same look and many of the same features as the iPhone, but lacking only phone capabilities. Apple also dropped the price on its 8GB iPhone to $399 and said it is phasing out the 4GB model completely. Investors "sold the news," sending the stock -5.1% lower.
By The BullMarket.com Staff
The Fed released the much anticipated Beige Book today which stated that economic activity continued to expand in most of the nation's twelve districts at a modest pace in the month of August. However, the pace of growth slowed in some notable regions. The report also noted that much of the turmoil in the credit markets appears to be contained.
On the housing front, the National Association of Realtors announced today that pending home sales dropped -12.2% in July, much worse than economists' estimates of a decline of -2.2%. In related news, a private report showed that investors bought the fewest commercial properties in more than a year. Additionally, apartment building acquisitions fell by -50% from June levels.
The London Interbank offered rate or LIBOR, which is the rate banks charge each other in dollar terms for three months, rose for the 10th straight day on concerns that losses on securities linked to U.S. subprime mortgage problems will increase. LIBOR rates increased to 5.72%, the highest level since early 2001.
In corporate news, several big box retailers came out with August same-store sales. Among them, Costco (Nasdaq: COST - News) reported same-store sales growth of 2%, well below the 5.6% that analysts had expected. Total sales in the month were $4.84 million, up from $4.56 billion last year. The company said the poor results were the result of lower tobacco sales and a lower price for gasoline. Investors were not sympathetic, sending the shares down -4.2%. Chief rival BJ Wholesale Club (NYSE: BJ - News) reported a 1.4% rise in same-store sales for the month and total sales climbed 6.4% to $661.7 million.
Food giant Kraft Foods (NYSE: KFT - News) pleased investors today when it upped its earnings forecast for the full year to $1.60-1.62 a share, up from its previous range of $1.50-1.52 a share. Excluding items, it expects to report EPS for the year of $1.80-1.82 a share. Analysts were expecting $1.80. The company cited strength in its growth initiatives and a lower tax rate for the improved outlook. Shares rose 1.4%. Subscribers can read our analysis of Kraft in today's issue. Also in the food sector, meat producer Tyson Foods (NYSE: TSN - News) chopped its yearly profit forecast as it is facing a tougher-than-expected fourth quarter. The company sees EPS of 72-80 cents a share for the year ending September 30th. In July, the company had said earnings would be in a range of 82-92 cents a share. Rising cattle and hog costs coupled with disruption in the South Korean beef trade are to blame for the shortfall. Shares plunged by -13%.
Toymaker Mattel (NYSE: MAT - News) continues to have its problems in China, as the company announced for the third time that it will recall toys that contain a high level of toxic led paint. The company is recalling 844,000 toys, including popular Fischer Price and Barbie brands.
Finally, in the tech sector, Apple (Nasdaq: AAPL - News) once again grabbed investors' and consumers' attention with a big slate of product announcements, including a revamp of its popular iPod line. Most notably, the company unveiled the iPod Touch, a device with the same look and many of the same features as the iPhone, but lacking only phone capabilities. Apple also dropped the price on its 8GB iPhone to $399 and said it is phasing out the 4GB model completely. Investors "sold the news," sending the stock -5.1% lower.
By The BullMarket.com Staff
posted by Stock Administrator @ 9:56 PM
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