Legion of Angels News Archive

NEW YORK (CNNMoney.com) – Stocks slumped Tuesday as mixed corporate earnings reports gave investors a reason to retreat after the previous session’s big rally.

The Dow Jones industrial average (INDU) lost 231 points or 2.5%. The Standard & Poor’s 500 (SPX) index lost 3.1% and the Nasdaq composite (COMP) lost 4.1%.

Lending rates continued to improve, helping to reassure investors that the efforts of world governments to try and stabilize financial markets are starting to work. But relief about the credit markets was countered by broader fears about a recession and the health of American corporations.

“The credit market is improving, which is good, but the problem is that everyone is focused right now on earnings as a representation of the economy,” said Greg Church, founder and president of Church Capital. “And while there will be exceptions, the overwhelming number of earnings reports won’t be positive.”

With 21% of S&P 500 companies already having reported results, third-quarter profits are currently on track to have fallen almost 10% from a year ago, according to the latest estimates from Thomson Reuters.

After the close, Yahoo (YHOO, Fortune 500) reported earnings of four cents a share, versus 11 cents a year ago and short of analysts’ forecasts for a profit of 9 cents per share. The company also said it will cut at least 10% of its workforce, or around 1,500 people, through the end of the year as a result of the weak economy.

Looking forward, Yahoo warned that 2008 revenue won’t meet its earlier forecasts. However, shares gained 7% in extended-hours trading.

Also after the close, Apple (AAPL, Fortune 500) reported fourth-quarter sales and earnings that jumped from a year ago due to strong sales of its new iPhone. Earnings topped forecasts, while sales missed expectations.

Looking forward, Apple forecast fiscal first-quarter sales and earnings that are short of analysts’ projections. The company said forecasting the December quarter was a challenge because of the weak economy. Shares gained 4% in extended-hours trading.

The Dow gained 413 points Monday on improved lending rates and comments from Federal Reserve Chairman Ben Bernanke that supported a second fiscal stimulus package. It was the Dow’s eighth-biggest one-day point advance ever, but did not spark a follow-up rally Tuesday.

“I think the tone in the stock market has been a little better recently with the credit spreads coming down,” said Robert Loest, portfolio manager at Integrity Funds. “But I’m reluctant to get too optimistic because the economy is going to continue to deteriorate both in the U.S. and abroad.”

Earnings: Dow component American Express (AXP, Fortune 500) reported weaker quarterly profit after the close of trade Monday. However, the results were better than expected and shares gained 8.4% Tuesday. (Full story)

Four other Dow components reported results Tuesday morning, including 3M (MMM, Fortune 500), which reported higher quarterly sales and earnings that topped estimates. Shares gained 4.8%.

DuPont (DD, Fortune 500) reported a big drop in earnings due to manufacturing disruptions in the wake of Hurricane Ike. The chemical giant also warned that full-year results won’t meet forecasts. Shares fell 8%.

Caterpillar (CAT, Fortune 500) reported lower earnings and higher revenue versus a year ago, and shares fell 5%. Pfizer (PFE, Fortune 500) reported higher quarterly earnings that topped estimates. Shares were little changed.

Texas Instruments (TXN, Fortune 500) reported reduced third-quarter profit after the close Monday and forecast fourth-quarter revenue would fall sharply, missing estimates. The chipmaker also said it is looking to sell part of its wireless operations. Shares fell 6.3% Tuesday.

Among other companies releasing results, troubled bank National City (NCC, Fortune 500) reported a bigger-than-expected loss Tuesday and said it was cutting 4,000 jobs. However, investors lifted the shares, which have been battered soundly over the last few months on fears about the firm’s solvency. The stock added 3%.

Citigroup (C, Fortune 500) slumped 6% in tune with the broader selloff and also in response to Goldman Sachs’ reinstatement of its sell rating on the company.

In other company news, Kirk Kerkorian’s Tracinda is dumping 7.3 million shares of Ford Motor (F, Fortune 500) and could end up selling the rest of his 6% stake in the automaker. Ford shares lost 6.9%.

A number of stocks that had led the advance Monday retreated Tuesday, including oil services firms Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500), ConocoPhilips (COP, Fortune 500) and BP (BP).

Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by over two to one on volume of 1.16 billion shares. On the Nasdaq, losers beat winners by five to two on volume of 2.17 billion shares.

Credit market: Lending rates continued to improve Tuesday, extending the weeklong recovery.

Libor, the overnight bank-to-bank lending rate, fell to 1.28% from 1.51% Monday, according to Bloomberg.com. That set the rate below the Fed’s benchmark lending rate of 1.5%, a good sign for the credit market. Libor hit a record 6.88% earlier this month at the height of the market panic.

The 3-month Libor rate, which banks charge each other to borrow for three months, fell to 3.83% from 4.06% late Monday.

The TED spread, which is the difference between what banks pay to borrow from each other for three months and what the Treasury pays, narrowed to 2.63% from 2.97% late Monday. The spread hit a record 4.65% earlier this month. The narrower the spread, the more willing banks are to lend to each other.

The improvement in bank lending over the last week is critical and analysts say it must continue to improve in the months ahead. Credit froze up in the wake of the housing market collapse, the subprime lending fallout and contraction in the bank sector.

The lack of available credit has punished the already weak economy, making it hard for businesses to function on a daily basis and for consumers to get loans.

The Federal Reserve and banks around the world have made potentially trillions of dollars available to lending institutions. On Tuesday, the Fed said it will start buying commercial paper from money market mutual funds. Commercial paper is a short-term funding source that companies need for daily operations.

Treasury prices rallied, lowering the yield on the 10-year note to 3.70% from 3.84% late Monday. Treasury prices and yields move in opposite directions.

The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, rose to 1.19% from 1.05% late Monday as investors began to pull money out of the safer investment and put it back in stocks.

Last week, the 3-month fell to below 0.2%. Last month, it reached a 68-year low around 0% as investor panic hit its peak.

Other markets: In global trade, Asian markets ended higher and European markets ended lower.

U.S. light crude oil for November delivery fell $3.36 to settle at $70.89 a barrel on the New York Mercantile Exchange after hitting a 13-month low last week.

Oil prices have been slowing since crude peaked at an all-time high of $147.27 a barrel on July 11. But the decline has been a mix of speculators leaving the market and investors betting that a slowing global economy means weaker oil demand. As a result, the falling oil prices haven’t helped stock investor sentiment much.

Gasoline prices fell another 3.4 cents overnight, to a national average of $2.889 a gallon, according to a survey of credit-card activity by motorist group AAA. It was the 34th consecutive day that prices have decreased - in the past month alone, they’re down more than 93 cents a gallon.

COMEX gold for December delivery fell $22 to $768 an ounce.

In currency trading, the dollar rose against the euro and yen.

Source — CNN

NEW YORK - Stocks pulled off their lows Thursday as investors fled financial stocks and pumped money into the materials, transportation and consumer discretionary sectors. The major indexes fluctuated between modest gains and losses.

Investors dumped shares of Lehman Brothers Holdings Inc. and other financial names over worries it is becoming harder for them shore up their balance sheets.

Gains in other corners of the market helped pare Wall Street’s losses and at times led the major indexes to show modest gains. Among materials stocks, Monsanto Co. rose 4.6 percent. Railroad CSX Corp. helped transport stocks with a 8.2 percent gain and consumer discretionary stocks like Amazon.com Inc. advanced 2.2 percent.

Still, Wall Street’s discomfort with the financial sector checked a broader advance. The nervousness follows Lehman’s announcement Wednesday that it plans to sell its investment management unit and spin off its commercial real estate assets. The company is seeking to raise cash after making bad bets on holdings tied to real estate.

Traders and analysts appeared unimpressed with the steps outlined by the nation’s No. 4 investment bank, punishing the stock. Citigroup and Goldman Sachs lowered their ratings on the stock to “hold” from “buy.” Lehman fell $2.31, or 32 percent, to $4.94.

Other marquee financial names on Wall Street logged steep declines as investors worried about the health of balance sheets. American International Group Inc. fell $2.23, or 13 percent, to $15.28 and Washington Mutual Inc. lost 20 cents, or 8.2 percent, to $2.12. Among other financials, Merrill Lynch & Co. fell $3.13, or 13 percent, to $20.17 and Morgan Stanley declined $1.19, or 3.1 percent, to $37.73.

“The steps they’re taking are being seen by Wall Street as too little, too late,” said Arthur Hogan, chief market analyst at Jefferies & Co., referring to Lehman. “You’re looking at a company that was a $10 billion company last week that is a $3 billion company today.”

“They’ve got a very tough road ahead of them regardless of whether they get some assets sold off,” he said.

In midday trading, the Dow Jones industrial average fell 29.23, or 0.26 percent, to 11,239.69 after falling as much as 170 points in the early going.

Broader stock indicators were mixed. The Standard & Poor’s 500 index slipped 0.41, or 0.03 percent, to 1,231.63. The S&P’s decline left it not far above its July 15 trading low of 1,200.44 and its closing low of 1,214.91. A move below these levels could add to Wall Street’s pessimism.

The Nasdaq composite index rose 5.99, or 0.27 percent, to 2,234.69.

The indexes modest moves belied a broader pullback, however. Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where volume came to 654.8 million shares.

Bond prices showed little change. The yield on the benchmark 10-year Treasury note, which moves opposite its price, remained flat at 3.63 percent from late Wednesday. The dollar was higher against most other major currencies, while gold prices fell sharply.

Light, sweet crude fell 40 cents to $101.18 on the New York Mercantile Exchange as a strengthening dollar added to investors’ buying power. Still, the market kept at watchful eye on Hurricane Ike amid worries that it could damage energy installations in the Gulf of Mexico.

Investors also faced fresh concerns about consumers after the Labor Department reported that the number of people seeking jobless benefits dropped 6,000 last week to a seasonally adjusted 445,000. Analysts, on average, had expected a reading of 440,000. The four-week moving average rose slightly to 440,000.

The average number of claims remains at a level that some economists say is worrisome. And the report comes a week after the government said the nation’s unemployment rate rose to 6.1 percent in August, a five-year high. A shaky job market can be hard on consumers who also face tighter credit and a weak housing market. That worries investors because consumer spending accounts for more than two-thirds of U.S. economic activity.

In other economic news, the Commerce Department said the nation’s trade deficit jumped in July to the highest level in 16 months as oil imports reached a new high. That offset strong export growth.

Transportation names advanced as falling oil eased worries about fuel costs and after railroad CSX Corp. raised its 2008 and long-term financial forecasts. CSX rose $4.50 to $59.35.

UAL Corp.’s United Airlines advanced 32 cents, or 3.2 percent, to $10.29. And Continental Airlines Inc. rose $1.65, or 10 percent, to $17.72 after the company said it expects to draw more money from customers as it cuts costs and raises fees for checked bags.

General Motors Corp. rose 75 cents, or 6.6 percent, to $12.17 and was the biggest gainer among the 30 stocks that comprise the Dow industrials.

The Russell 2000 index of smaller companies fell 3.12, or 0.44 percent, to 714.04.

Overseas, Japan’s Nikkei stock average fell 1.98 percent. Britain’s FTSE 100 fell 0.89 percent, Germany’s DAX index fell 0.51 percent, and France’s CAC-40 lost 0.81 percent.

Source — MSNBC

NEW YORK - Stocks capped a difficult week with steep losses Friday amid escalating worries about the financial and automotive sectors and a rebound in oil prices. The major indexes fell by more than 1 1/2 percent on the day, and the Dow Jones industrial average gave up more than 200 points to end at its lowest level in three months.

While investors have seen other triple-digit days in the past year since concerns about the economy began emerging, the Dow’s first finish under 12,000 since mid-March could deal Wall Street a psychological blow.

An afternoon downgrade of automakers helped draw out sellers in the stock market while Treasury prices rose as investors sought the safety of government debt.

A Merrill Lynch downgrade of regional banks added to the market’s initial anxiety, which ballooned Thursday when Citigroup Inc. warned of significant debt markdowns for the second quarter, Washington Mutual Inc. announced 1,200 job cuts and Moody’s Investors Service decided late in the day to downgrade the two biggest bond insurers.

Troubling news about the financial sector piled up all week, sending stocks to steep losses. Early on, the investment banks posted profit declines, Fifth Third Bancorp said it need to raise $2 billion in capital and two Bear Stearns hedge fund managers were charged with lying to investors - causing many investors to flee from stocks.

Quincy Krosby, chief investment strategist at The Hartford, said Friday’s session saw a confluence of the worries that investors have been grappling with as they try to determine where the economy is headed.

“I liken it to the GPS system saying ‘recalculating,’” she said, referring to the market’s uncertainty. “There’s no clarity, there’s no confidence.”

Krosby added: “The crosscurrents are coming at a time when the backdrop for the economy appears to be stabilizing. And yet the headline risk is unrelenting.”

The headlines Friday helped send the Dow down 220.40, or 1.83 percent, to 11,842.69. The blue chips haven’t closed below 12,000 since March 17, when the market was worried about Bear Stearns Cos. collapsing. Friday’s pullback left Coca Cola Co. as the only advancer among the 30 stocks that comprise the Dow.

Broader stock indicators also dropped. The Standard & Poor’s 500 index fell 24.90, or 1.85 percent, to 1,317.93, and the Nasdaq composite index fell 55.97, or 2.27 percent, to 2,406.09.

Declining issues outnumbered advancers by about 5 to 1 on the New York Stock Exchange, where consolidated volume came to a heavy 5.15 billion shares compared with 4.44 billion shares traded Thursday. Volume was heavy in part because of “quadruple witching” - the simultaneous expiration of four types of options contracts.

For the week, the Dow fell 3.78 percent, the S&P 500 lost 3.1 percent and the Nasdaq declined 1.97 percent.

Bond prices rose Friday as stocks sank. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.17 percent from 4.21 percent late Thursday.

Concerns over further tensions between Israel and Iran added to investors’ worries and pushed oil prices higher.

“That introduces dramatic uncertainty,” Krosby said of the investors’ reaction to unease in the Middle East.

Crude oil futures jumped $2.69 to settle at $134.62 a barrel on the New York Mercantile Exchange, recovering some of Thursday’s drop of nearly $5 per barrel on news of a fuel price hike in China.

Investors are awaiting the weekend’s meeting in Saudi Arabia of oil producers and consumer nations, which could bring some relief to the problem of soaring oil prices. But many analysts believe the gathering might end up being a mere finger-pointing session.

The concerns made for a difficult market.

“There has to be reticence about getting back in,” said Stephen Carl, principal and head of equity trading at The Williams Capital Group. “It’s definitely an ugly end to the week.”

Bond insurer MBIA Inc. fell 86 cents, or 13 percent, to $5.59, while competitor Ambac Financial Group Inc. edged up 2 cents to $2.05, after losing their “AAA” rating from Moody’s.

Another ratings move hit stocks of automakers. Standard & Poor’s Ratings Services placed the corporate credit ratings of General Motors Corp., Ford Motor Co. and Chrysler LLC on watch with negative implications. The classification means ratings have a one-in-two chance of being downgraded in the next three months. S&P believes high fuel costs will hurt the U.S. auto market through 2009.

GM fell $1, or 6.7 percent, to $13.79, while Ford lost 51 cents, or 8.1 percent, to $5.81.

The dollar fell against most other major currencies, while gold prices rose.

The Russell 2000 index of smaller companies fell 12.10, or 1.64, to 725.73.

Overseas, Japan’s Nikkei stock average dropped 1.33 percent. Britain’s FTSE 100 fell 1.53 percent, Germany’s DAX index declined 2.12 percent, and France’s CAC-40 fell 1.79 percent.

The Dow Jones industrial average ended the week down 464.66, or 3.78 percent, at 11,842.69. The Standard & Poor’s 500 index finished down 42.10, or 3.10 percent, at 1,317.93. The Nasdaq composite index ended the week down 48.41, or 1.97 percent, at 2,406.09.

The Russell 2000 index finished the week down 7.88, or 1.07 percent, at 725.73.

The Dow Jones Wilshire 5000 Composite Index - a free-float weighted index that measures 5,000 U.S. based companies - ended Friday at 13,415.89, down 374.77 points, or 2.70 percent, for the week. A year ago, the index was at 15,291.15.

Source — Forbes