Facebook’s revenue rose 53 percent during the second quarter amid continued gains in mobile advertising revenue share, the company reported Wednesday.
Sales for the quarter ended June 30 were US$1.81 billion, up 53 percent compared to $1.18 billion during the same period last year. Financial analysts polled by Thomson Reuters had forecast second-quarter sales of $1.62 billion.
The company’s advertising revenue was $1.6 billion, representing 88 percent of total revenue, the company reported, and a 61 percent increase from the same quarter last year.
The company posted profits, meanwhile, of $333 million, at $0.13 per share, compared to a net loss of $157 million for the second quarter of 2012, at $0.08 a share.
By Matthew Fuller, Contributor Retail-cash inflows into bank loan mutual funds and ETFs totaled $1.71 billion for the week ended July 17, according to Lipper FMI, a division of Thomson Reuters. This is by far the largest inflow into the asset class on record, topping $1.55 billion for the week ended March 20. …read more
A rebound for IBM failed to materialize in the second quarter, as profit and sales declined along with a slump in revenue from hardware and services.
However, in its quarterly financial report Thursday, the company raised its forecast for earnings per share, excluding restructuring charges, for the year.
Second-quarter net income declined 17 percent from the year-earlier period to US$3.2 billion, while revenue declined by 3 percent to $24.9 billion. Adjusting for currency fluctuations, revenue was down 1 percent.
Revenue was under the forecast of $25.37 billion from analysts polled by Thomson Reuters. However, operating earnings per share, excluding restructuring charges, was $3.91, above the analyst forecast of $3.77.
NEW YORK — This week marks the first big week of second-quarter earnings, and it is sure to bring both joy and misery to Wall Street.
Investors will concentrate on market fundamentals after weeks when Federal Reserve policies have dominated the market. If they see companies are still struggling, stocks could take a fall.
Even after Fed Chairman Ben Bernanke scared markets in June by telling investors the Fed is likely to reduce monetary stimulus in the coming months, stocks have recovered, with both the Dow Jones industrial average and S&P 500 climbing to all-time highs. In an appearance earlier this week, the Fed chairman said monetary policy was likely to be accommodative for some time.
“We’re in the terminal stages of a Bernanke-driven bubble,” said Walter Zimmerman, a technical analyst at United-ICAP in Jersey City, N.J. “While a lot of damage has been done to the bear case, eventually bad news like weak earnings growth will start to bear fruit.”
To be sure, the Fed, which has shown a much friendlier face to investors lately, will not be out of the picture. Bernanke will appear before congressional committees Wednesday and Thursday to deliver the semiannual testimony about monetary policy. However, few surprises are expected.
The S&P’s 17.8 percent advance in 2013 is largely attributable to the central bank’s accommodative policies. The major indexes made impressive gains in the week: the Dow (^DJI) up 2.1 percent, the S&P 500 (^GSPC) 3 percent higher and the Nasdaq (^IXIC) up 3.5 percent. It was the third straight week of gains for all three, and the best week for the S&P and Nasdaq since early January.
“The Fed has been able to prevent a big sell-off so far, but eventually the economy will have to catch up to the market or the market will fall back to match the economy,” said Scott Armiger, who helps oversee $5.6 billion as portfolio manager at Christiana Trust in Greenville, Del.
More Focus on Earnings
That analysts are now turning their focus to earnings, believing the Fed’s power to buoy stocks is waning, may not be a positive if the rally is going to continue.
Earnings are seen growing 2.8 percent in the second quarter, according to Thomson Reuters data, a far cry from the 8.4 percent growth forecast by analysts Jan. 1. Revenue is now seen increasing 1.5 percent.
For every company that has said it expects positive earnings, 6.5 have lowered their forecasts, the worst positive-to-negative ratio since the first quarter of 2001.
United Parcel Service (UPS), the world’s largest package delivery company, tumbled Friday after giving a weak profit outlook, citing economic conditions as one …read more
Morgan Stanley (NYSE: MS) reported first-quarter 2013 results before markets opened this morning. The bank reported adjusted diluted quarterly earnings per share (EPS) of $0.50 on revenues of $8.2 billion. In the same period a year ago, Morgan Stanley reported an adjusted EPS loss of $0.05 on revenues of $6.9 billion. First-quarter results also compare to the consensus estimates for EPS of $0.57 on revenues of $8.35 billion.
Excluding adjustments for debt valuation, the bank’s revenues totaled $8.9 billion and EPS totaled $0.61. The adjustment for debt valuation totaled $317 million in the quarter, compared with a $2 billion adjustment in the first quarter of 2012.
Morgan Stanley demonstrated solid momentum across the Firm this quarter, consistent with the strategic objectives we laid out at the beginning of the year. … Looking forward, while the global environment continues to have moments of fragility, we believe the broad economic outlook for the next several years is stronger than in the recent past.
The bank said its Basel I Tier 1 capital ratio is about 13.9% and its Tier 1 common ratio is about 11.5%.
Morgan Stanley had no comments in its release regarding guidance. The consensus estimates for the second quarter calls for EPS of $0.51 on revenues of $8.03 billion. For the full year, EPS is expected to total $2.09 on revenues of $32.32 billion.
Shares are down about 1% in premarket trading this morning, at $21.25 in a 52-week range of $12.26 to $24.47. Thomson Reuters had a consensus analyst price target of around $23.90 before today’s results were announced.
Filed under: 24/7 Wall St. Wire, Banking & Finance, Earnings, Financial Stocks Tagged: MS
Philip Morris International Inc. (NYSE: PM) reported first-quarter results before markets opened this morning. The tobacco products firm posted adjusted diluted earnings per share (EPS) of $1.29 on revenue of $7.6 billion. In the same period a year ago the company reported EPS of $1.25 on $7.45 billion in revenues. Thomson Reuters had consensus estimates for EPS of $1.34 and revenue of $7.52 billion.
On a GAAP basis, EPS totaled $1.28. The company also said that currency exchange rates cut earnings by $0.07 a share.
Cigarette shipment volume fell 6.5% year-over-year globally and by 42.5% in the Philippines, where a new excise tax cut shipments by 10 billion units. European volume fell 10.1% and Asian shipments fell 10.4%. Only the Eastern Europe, Middle East and Africa posted a gain, and that a small one of 1.4%. The company was able to make up some of the decrease by raising prices.
The company lowered its full fiscal year EPS guidance to a range of $5.55 to $5.65, compared with full-year 2012 EPS of $5.22. The forecast includes a $0.19 per share reduction due to currency exchange rates. The consensus estimate had called for full-year EPS of $5.73 on revenues of $32.37 billion.
Our first quarter was relatively difficult, with our headline results marred by a number of known factors, including inventory movements, the 2012 leap year effect, currency and a slowly improving – but nevertheless substantial erosion in our – volume in the Philippines. Despite this apparent weakness, our pricing actions and market share momentum provide us with the confidence to reiterate our annual constant-currency adjusted diluted EPS growth rate target of 10-12%.
What makes tobacco companies so attractive to investors is their dividend, and Philip Morris pays a quarterly dividend of $0.85. The company repurchased 16.7 million shares of its own stock in the first quarter at a cost of $1.5 billion. Philip Morris plans to spend $18 billion on share repurchases in a three-year program that began in the third quarter of last year. So far the company has spent $4.35 billion on share buybacks.
The company’s shares closed down about 1% last night, at $94.04 and are inactive so far this morning. The stock‘s 52-week range is $81.10-$96.60. Thomson Reuters had a consensus analyst price target of around $97.60 before today’s report.
Citigroup Inc. (NYSE: C) reported first-quarter results before markets opened this morning. The bank posted adjusted diluted quarterly earnings per share (EPS) of $1.29 on revenues of $20.8 billion. In the same period a year ago, Citigroup reported adjusted EPS of $0.69 on revenues of $18.7 billion. First-quarter results also compare to the consensus estimates for EPS of $1.17 on revenues of $20.17 billion.
On a GAAP basis, excluding credit/debit valuation adjustments, revenues for the first quarter totaled $20.5 billion and first-quarter EPS totaled $1.23, reflecting higher revenues and lower net credit losses. Credit losses in the first quarter totaled $319 million before taxes, compared with $1.3 billion in the first quarter a year ago.
During the quarter, we benefitted from seasonally strong results in our markets businesses, sustained momentum in investment banking, continued year-over-year growth in loans and deposits in Citicorp, and a more favorable credit environment. However, the environment remains challenging and we are sure to be tested as we go through the year.
At the end of the first quarter, the bank’s Basel I Tier 1 capital ratio was 13.1% and the common ratio was 11.89%. Citigroup’s estimated Basel III Tier 1 common ratio at the end of the quarter was 9.3%.
Net credit losses in all the bank’s divisions totaled about $3 billion, which though not a small amount was substantially better than a year ago. At Citi Holdings, net credit losses in the first quarter totaled $930 million, compared to $1.73 billion a year ago. And at the bank’s global consumer banking division, credit losses fell from $2.28 billion in the first quarter a year ago to $2 billion this year.
Shares are up about 1.7% in premarket trading this morning, at $45.55 in a 52-week range of $24.61 to $47.92. Thomson Reuters had a consensus analyst price target of around $51.70 before today’s results were announced.
Filed under: 24/7 Wall St. Wire, Banking & Finance, Earnings Tagged: C
You should stock up for the coming economic collapse, because American businesses aren’t. A just-released Commerce Department report adds to the growing list of indices pointing to a major economic decline coming our way. February inventories rose just 0.1%, well below the 0.4% increase economists had anticipated and much worse than the downwardly revised 0.9% increase seen in January.
When companies slowly rebuild their inventories, as they are now, it means factories produce less, lowering overall economic output. And if we look at the Institute for Supply Management’s inventory survey for March, we get a sense that when Commerce releases its own figures for the month, it’s going to look ugly. The ISM survey showed a 2% decline in March inventories to 49.5, an indication that things are contracting at an accelerated rate.
The down escalator That’s on top of a collapse in consumer confidence, the non-participation rate in the labor market hitting Depression-era levels, unadjusted weekly unemployment claims jumping again, vehicle sales missing estimates, and a whole slew of other economic indicators coming in below expectations.
Clothing and accessories retailers had their best showing in February, as inventories gained 3% from January. Yet as we saw just recently, March retail sales contracted, so the uptick that was enjoyed is apparently over already, and coupled with a gloomy consumer outlook, those tax increases implemented at the start of the year are beginning to weigh down the economy.
Try this on for size While some clothing shops such as Gap beat analyst expectations on same-store sales last month, the fact that they were down 1% anyway is hardly a source of confidence. TJX was down 2.2%, while Ross Stores was up 2%, actually beating expectations, but far below the 10% jump it experienced a year ago.
Although some of the sales declines in March were the result of lower gas sales, Americans also spent less on other goods. Even among big-box retailers, the results were disappointing. Costco reported that same-store sales rose 4% in March, but they were significantly below the 5.2% analysts were anticipating. Overall, the Thomson Reuters index of retailers showed that comps grew just 2.2% last month, its lowest showing since September 2009.
Running off the road One of the bright spots of the economy has been automakers, but there, too, car sales fell 1.3% in March to an annual pace of 15.3 million, down from 15.4 million the month before. Where Ford, General Motors, and Chrysler all reported sales gains, they couldn’t make up for the losses at many foreign manufacturers, and it’s showing, as car sales are steadily falling.
Many analysts point to the increase in taxes at the start of the year, particularly payroll taxes, as the lead cause for the slack showing up. The economy appears to be ratcheting down rather abruptly, following Europe‘s epic slide into a double-dip recession that even China couldn’t stanch.
Perhaps we don’t need to act like doomsday preppers, but then again, stocking up for a potentially
U.S. retailers are reporting modest sales gains for March as consumers held back due to cold weather during the month and continued worry about the economy.
Overall, 14 retailers reported on Thursday that revenue at stores open at least a year — a key indicator of retail health — rose an average of 0.6 percent. That number comes from the research firm Retail Metrics.
L Brands, formerly Limited Brands Inc., the parent of Victoria’s Secret and Bath and Body Works, says the revenue figure was flat, above analyst expectations for a drop, according to Thomson Reuters.
Costco Wholesale Corp.’s revenue figure rose 4 percent in March, short of expectations for a 5.2 percent rise.
Economists monitor consumer spending because it accounts for more than 70 percent of economic activity.
NEW YORK — U.S. retailers are reporting a key revenue figure rose slightly in March, as shoppers held back on spending because of the cold weather across the nation, particularly the Midwest and East Coast, and continued fears about the economy.
Overall, 14 retailers reported on Thursday that revenue at stores open at least a year — a key indicator of retail health — rose an average of 0.6 percent, according to research firm Retail Metrics. Including drugstores, the number was slightly higher, up 1.5 percent.
“While clearly that’s not a great number by any stretch, it could have been worse,” said Ken Perkins, president of Retail Metrics. “Wintry weather conditions persisted deep into March depressing spring apparel, home and garden, and seasonal merchandise sales.”
He expects April to be stronger, as the weather improves and customers respond to strong fashion trends such as colorful jeans. An earlier Easter, which meant one less selling day in March, will also help April results, he said.
The number of retailers reporting monthly sales figures has been shrinking. Big names like Target Corp. (TGT), Macy’s Inc. (M) and Nordstrom Inc. (JWN) have recently stopped reporting. Walmart Stores Inc. (WMT), the world’s largest retailer, hasn’t reported monthly sales figures in several years.
Revenue in stores open at least one year is a key measure of a retailer’s financial health, because it excludes stores that open or close during the year.
Retailers who do report had a mixed month, with those with more stores on the East Coast, where the weather was cold and wet, faring worse than stores on the West Coast.
TJX Cos. (TJX), which operates TJX and Home Goods stores, said revenue in stores open at least one year fell 2 percent, while analysts expected a 1 percent drop. The company said that the drop was due to the weather and the Easter shift, and they expect a stronger April.
“Overall business trends improved as the weather became warmer,” said CEO Carol Meyrowitz. “April is off to a good start, our inventories are in great shape, and we are seeing an enormous amount of desirable product in the marketplace.”
L Brands, formerly Limited Brands Inc. (LTD), the parent of Victoria’s Secret and Bath and Body Works, says the revenue figure was flat, above analyst expectations for a drop, according to Thomson Reuters.
Warehouse club operator Costco Wholesale Corp.’s (COST) revenue figure rose 4 percent in March, short of expectations for a 5.2 percent rise.
Department store operator Stein Mart Inc. (SMRT) said revenue at stores open at least a year dropped 2.8 percent in March, falling short of Wall Street predictions. The company said sales were hurt by cold
Huron Consulting Group Announces First Quarter 2013 Earnings Release and Webcast
CHICAGO–(BUSINESS WIRE)– Huron Consulting Group Inc. (NAS: HURN) , a leading provider of business consulting services, will announce its financial results for the first quarter ended March 31, 2013 after the market closes on Thursday, April 25, 2013.
James H. Roth, chief executive officer and president, and C. Mark Hussey, chief financial officer, will host a conference call to discuss the Company’s financial results on Thursday, April 25, 2013 at 5:00 p.m. Eastern Time (4:00 p.m. Central Time).
The conference call is being webcast by Thomson Reuters and can be accessed at Huron Consulting Group‘s website at http://ir.huronconsultinggroup.com. A replay will be available approximately two hours after the conclusion of the webcast and for 90 days thereafter.
In addition, the webcast is also accessible through Thomson’s investor portals. Individual investors can listen to the call at www.earnings.com, Thomson’s individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson’s password-protected event management site, StreetEvents (www.streetevents.com).
About Huron Consulting Group
Huron Consulting Group helps clients in diverse industries improve performance, comply with complex regulations, reduce costs, recover from distress, leverage technology, and stimulate growth. The Company teams with its clients to deliver sustainable and measurable results. Huron provides services to a wide variety of both financially sound and distressed organizations, including leading academic institutions, healthcare organizations, Fortune 500 companies, medium-sized businesses, and the law firms that represent these various organizations. Learn more at www.huronconsultinggroup.com.
Magnetek, Inc. to Announce Its Fiscal 2013 First Quarter Results on May 8th
MENOMONEE FALLS, Wis.–(BUSINESS WIRE)– On May 8, 2013, before commencement of trading on the NASDAQ, Magnetek, Inc. (“Magnetek” or “the Company”) (NAS: MAG) will announce the results of its fiscal 2013 first quarter, which ended on March 31, 2013. A conference call with Magnetek management will follow at 11:00 a.m. Eastern Time.
The conference call will be webcast on the Investor Relations page of Magnetek’s website at www.magnetek.com. Management’s presentations will be supplemented by slides appearing on the Company’s website. Listeners are encouraged to view these materials in conjunction with the call. Replays of the call will be available on the website for a limited time.
The webcast is also being distributed through the Thomson Reuters StreetEvents Network. Individual investors can listen to the call at www.earnings.com, Thomson Reuters‘ individual investor portal. Institutional investors can access the call at www.streetevents.com, Thomson Reuters‘ password-protected event management site.
About Magnetek, Inc.
Magnetek, Inc. provides digital power and motion control systems used in overhead material handling, elevator, and mining applications. The Company is North America‘s largest supplier of digital drive systems for industrial cranes, hoists, and monorails. Magnetek provides Energy Engineered® drives, radio remote controls, motors, and braking and collision avoidance subsystems to North America‘s foremost overhead material handling crane builders. The Company is also the world’s largest independent builder of highly integrated digital motion control systems for high-rise, high-speed elevators and is a leading independent supplier of digital motion control systems for underground coal mining applications. Magnetek is headquartered in Menomonee Falls, Wis., in the greater Milwaukee area and operates manufacturing facilities in Pittsburgh, Pa., and Bridgeville, Pa., as well as Menomonee Falls.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the timing of the Company’s announcement of fiscal 2013 first quarter results.These forward-looking statements are based on the Company’s expectations and are subject to risks and uncertainties that cannot be predicted or quantified and are beyond the Company’s control. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying these forward-looking statements. Other factors that could cause actual events and results to differ materially from
WASHINGTON, April 10 (Reuters) – U.S. law enforcement officials have reversed a decision to wind down an investigation into how news agencies handle the release of economic data to investors, concerned some sensitive information may have leaked into financial markets, a person familiar with the probe said on Wednesday. The Wall Street Journal reported earlier on Wednesday that Thomson Reuters Corp, the parent of Reuters News, Bloomberg LP and Dow Jones & Co., a unit of News Corp, were among the media companies under investigation. The source who spoke to Reuters declined to provide details. Reuters and the Wall Street Journal reported in January that law enforcement authorities had conducted an investigation into whether media companies facilitated insider trading by prematurely releasing market-sensitive data, but decided not to bring charges. Media organizations are provided sensitive economic data during “lockups” in which they are not supposed to transmit any information until a set embargo time has lifted. The Wall Street Journal reported on Wednesday that the FBI had been frustrated the Commodity Futures Trading Commission had not provided data sought by investigators. Citing officials familiar with the probe, it said the CFTC had since agreed to provide trading data and analysis to help the investigation. “We are not aware of a current investigation nor any embargo violations,” said Ty Trippet, a spokesman for Bloomberg LP. A spokeswoman for Dow Jones, Paul Keve, said the government had not contacted Dow Jones about any criminal investigation. Thomson Reuters spokesman David Girardin declined to comment. The FBI and CFTC did not immediately respond to requests for comment, while the SEC declined to comment.
The Dow Jones Industrial Average hit yet another record high today, as stocks had a late-day run for the second session in a row today. The buying activity seems to indicate increased optimism about earnings season as the blue chips finished at 14.673, up 60 points or 0.4%, momentarily climbing above 14,700. Investors have now had a two-day breather from any significant economic reports or macroeconomic events, and stocks have made solid gains both days. Despite the continuing bull run, however, there have been 4.7 times as many negative pre-announcements as positive ones, the worst proportion since 2001, according to Thomson Reuters, indicating that there may be reason to fear earnings season.
Tech stocks led the Dow today, as Microsoft and Intel both moved up more than 3%. The Windows maker joined a group of tech companies including Oracle and Nokia filing a complaint against Google in the European Union, which accused the search giant of anti-competitive behavior in its Android strategy. One of the group’s lawyers called Android “a Trojan horse used to deceive partners, monopolize the mobile marketplace, and control consumer data.” Google has become a major rival of Microsoft’s in recent years, as Google vies for dominance in software with its Chrome Internet browser and Google Docs office products. Microsoft, on the other hand, has challenged Google’s search leadership with Bing and is also gunning for a piece of the smartphone and tablet market.
Intel, meanwhile, finished up 3.1% after it unveiled its new Thunderbolt interface technology yesterday, which runs at twice the speed of the previous model. The top chipmaker also said that it had begun shipping samples of a system-in-a-chip, known as “Avoton,” to Hewlett-Packard to be used in its new Moonshot servers. HP also finished the day up 1.5%.
One other sector flying high today was solar as First Solar jumped 46% after acquiring TetraSun, a Silicon Valley start-up, and providing an outlook way above Wall Street‘s estimates. The TetraSun acquisition, for an undisclosed amount, gives First Solar access to the higher-efficiency solar-panel market that its own panels are not suited for. The company also estimated EPS for the year to come in between $4 and $4.50, while Wall Street had projected just $3.51. The rally led other solar stocks up as well, as Yingli Green Energy finished up 21% and Trina Solar gained 15%.
On the other side of the spectrum, J.C. Penney dropped 12% as investors reacted to Ron Johnson‘s dismissal and replacement with Mike Ullman, the retailer’s former CEO. Johnson’s termination marks the end of a misadventure that included a new shops-within-the-shop strategy as well as the elimination of discounts that caused sales to drop by more than 25% last year. First-quarter same-store sales are also down 10% at Penney so far, according to The Wall Street Journal, indicating that the pain is far from over. What Mike Ullman‘s plans for the department-store …read more
LOS ANGELES–(BUSINESS WIRE)– Ducommun Incorporated (NYS: DCO) (“Ducommun” or the “Company”) today announced that it plans to release the Company’s 2013 first quarter financial results after the market closes on Monday, May 6, 2013. Anthony J. Reardon, the Company’s chairman, president and chief executive officer, and Joseph P. Bellino, the Company’s vice president and chief financial officer, will host a call that day, May 6, at 2:00 p.m. PT (5:00 p.m. ET) to review these results. To participate in the teleconference, please call 866-318-8613 (international 617-399-5132) approximately ten minutes prior to the conference time. The participant passcode is 63802830. Mr. Reardon and Mr. Bellino will be speaking on behalf of the Company and anticipate the meeting and Q&A period to last approximately 45 minutes.
This call is being webcast by Thomson Reuters and can be accessed directly at the Ducommun website at www.ducommun.com. Conference call replay will be available after that time at the same link or by dialing 888-286-8010, passcode 86133277.
About Ducommun Incorporated
Founded in 1849, Ducommun Incorporated provides engineering and manufacturing services to the aerospace, defense, and other industries through a wide spectrum of electronic and structural applications. The company is an established supplier of critical components and assemblies for commercial aircraft and military and space vehicles as well as for the energy market, medical field, and industrial automation. It operates through two primary business units – Ducommun AeroStructures (DAS) and Ducommun LaBarge Technologies (DLT). Additional information can be found at www.ducommun.com.
Ducommun Incorporated Joseph P. Bellino Vice President and Chief Financial Officer 310-513-7211 or Chris Witty Investor Relations 646-438-9385 cwitty@darrowir.com
Click on the April 25 webcast link on the home page
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A replay of the conference call webcast may be accessed after the conclusion of the live broadcast. To access the replay, go to the Realty Income website and click on the April 25 webcast link on the home page. (The replay will be available approximately two hours after the call.)
Telephone Replay:
Shareholders may also access a telephone replay of the First Quarter 2013 Operating Results Conference Call by calling 1-800-406-7325 and entering the access code 4612430. The telephone replay will be available through May 9, 2013.
The webcast replay will be available until April 25, 2014. No access code is required for this replay.
Realty Income is The Monthly Dividend Company®, a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. To date the company has paid 512 consecutive monthly dividend payments throughout its 44-year operating history and has increased the monthly dividend for 62 consecutive quarters. The monthly dividend is supported by the cash flow from over 3,500 properties owned under long-term lease agreements with leading regional and national chains and other corporate entities. The company is an active buyer of net-leased commercial properties nationwide.
Stephen Morton/Bloomberg via Getty ImagesAlcoa Inc. employee Stephen Tally makes a line on the rod of a carbon anode before it is set into place at the company’s Mt. Holly production plant in Goose Creek, South Carolina.
Earnings season could be the next big hurdle for stockmarket investors.
As usual, Alcoa (AA) kicks off the earnings season after today’s closing bell. Even though its ticker symbol is AA, this is not done alphabetically.
For many years, Alcoa was viewed as a trendsetter, not just because it’s first, but because it was seen as a proxy for the broader economy. That’s not as true now; Alcoa has become more of a commodities play. And with aluminum prices slumping, the company is expected to post flat to slightly lower earnings.
Later this week we’ll hear from banking giants JPMorgan Chase (JPM) and Wells Fargo (WFC). Wells, a leading provider of home mortgages, could provide a look at whether the housing industry is still on the upswing.
And next week, the earnings calendar fills up. We’ll get a slew of quarterly reports. Overall, first quarter earnings are expected to be relatively weak, after strong gains the past few years.
That’s part of the problem: Those big gains we saw in 2011 and 2012 came off of the Great Recession, so the comparisons were very easy. That’s no longer the case. Thomson Reuters projects earnings to rise by just 1.6 percent in the first quarter, and other forecasts are even weaker. Bloomberg’s survey of analysts points to a 1.8 percent decline in profits at S&P 500 companies. That would be first decrease since 2009.
Some of the weakness is due to international issues. Analysts point to the recession in Europe and the economic slowdown in China. A number of multinationals have already lowered their earnings forecasts, citing problems overseas. Ford (F), FedEx (FDX) and Caterpillar (CAT) have all cut their outlooks. Cat could report back-to-back declines for the first time since 2009.
But there’s some optimism in other sectors. Consumer products companies such as Procter & Gamble (PG) and Clorox (CLX) have remained positive about their results, and analysts say retailers also should do well.
And results for the first quarter could be the low spot for the year. Most analysts expect earnings growth to improve as the year rolls on. Right now, the expectation for the fourth quarter is for earnings growth of about 13 percent.
The Dow Industrials edged slightly lower last week, while the S&P 500 lost one percent and the Nasdaq dropped two.
Two Arkansas residents have filed a lawsuit against ExxonMobil (XOM). They’re seeking $5 million in damages, claiming a pipeline spill has caused a permanent drop in their property values.
General Electric (GE) is expanding its oilfield services business, agreeing to buy Lufkin Industries for $3.3 billion. Lufkin makes equipment used in oil and gas production.
Anheuser-Busch (BUD) says the Justice Department has accepted the company’s revised concessions, and will no longer block the company’s effort to acquire Mexican beer maker Modelo. The deal is valued at more than $20 billion. As part of the accord with antitrust regulators, Anhueser-Busch will sell more of Modelo’s assets to Constellation Brands.
UPS (UPS) plans to appeal a ruling by European regulators, who are blocking the company’s planned acquisition of Dutch rival TNT Express. That deal is valued at $6.7 billion.
You’ve probably never heard of CPI Corp. (CPI), but you’ve no doubt seen its work. For years the company provided the portraits sold at Sears (SHLD), Wal-Mart (WMT) and Babbies ‘R’ Us. But CPI abruptly closed it business on Friday. It had been a mainstay at Sears since 1959.
Earnings season begins after the market closes this afternoon. As usual, Alcoa (AA) will be the first major company to report. Analysts expect both sales and earnings to edge lower compared to a year ago because of slumping aluminum prices. Overall, Thomson Reuters expects corporate earnings to increase by only 1.5 percent for the quarter, while other analysts say that may be too optimistic.
And J.C. Penney (JCP) and Macy’s (M) are back in court today in their fight over the right to sell Martha Stewart‘s line of home goods. The court battle was suspended for a month to allow for mediation, but that has not produced a settlement.
LONDON — Stock index futures at 7 a.m. EDT indicate that the Dow Jones Industrial Average may open up by 0.28% this morning, while the S&P 500 may open 0.36% higher.
European stock markets have moved modestly higher this morning, recouping some of the losses they suffered after Friday’s disappointing U.S. jobs report. At 7:45 a.m. EDT, the FTSE 100 was up 0.35% and the German DAX was 0.28% higher, but there wasn’t much good news to support a sustained improvement. German industrial production rose by 0.6% in February, but January’s flat reading was revised down to -0.6%, and the year-on-year figure remains negative, down 1.8%. Italy remains without a new government, and Portugal‘s government came under renewed pressure at the weekend after a court vetoed proposed public-sector wage and pension cuts, meaning the cuts will now have to be made through further public-sector service cuts, possibly to health and education.
What support there is for European markets may be a consequence of Japan‘s newly enlarged quantitative-easing program. This morning, the Bank of Japan purchased 1.2 trillion yen of Japanese sovereign bonds with maturities of five years or more, triggering a further fall in the yen, which was trading at 98 to the dollar at 7 a.m. EDT.
In the U.S., the Chicago Fed is scheduled to release its Midwest Manufacturing Index for February at 8:30 a.m. EDT. No other economic reports are due, but tonight sees the start of earnings season, when traditional bellwether Alcoa reports its earnings for the most recent quarter after the closing bell. Expectations are low: The highest of the consensus forecasts is from Thomson Reuters, which is forecasting a 1.6% rise in earnings per share, while FactSet is predicting a 0.6% fall in earnings to $0.08 per share and a 1.6% drop in sales to $5.9 billion. Earnings growth across the S&P 500 has weakened over the last quarter, triggering speculation that the index — which hit new record highs in March — could be due for a correction.
Other companies whose stock may be actively traded today include AZZ Incorporated, which reported quarterly earnings of $0.50 per share this morning, beating expectations for earnings of $0.48 per share. However, AZZ missed revenue expectations, and its full-year guidance shows earnings per share falling below consensus estimates.
Finally, let’s not forget that the Dow’s daily movements can add up to serious long-term gains. Indeed, Warren Buffett recently wrote, “The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions.” If you, like Buffett, are convinced of the long-term power of the Dow, you should read “5 Stocks To Retire On.” Your long-term wealth could be transformed, even in this uncertain economy. Simply click here now to download this free, no-obligation report.
The stock market‘s robust rally was slowing even before Friday’s jobs report, but the red flag sent up by the weak payrolls data makes the path to more gains less secure.
It means the bulls will have to look to earnings for a way to keep the rally going. The S&P 500 hit an all-time closing high on Tuesday, but lately defensive stocks have been leading the charge, and notable growth indexes are slipping.
This rotation has many thinking the long-awaited market correction is nigh. A 3 percent decline in theRussell 2000 index last week seemed to be a confirmation of the trend.
“Momentum I think has been slowing a bit, and it would be interesting to see if this is just a one-session sell-off,” Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said about Friday’s decline.
In the first quarter, the benchmark’s healthcare index added 15.2 percent and utilities gained 11.8 percent, besting the broad S&P 500’s 10 percent gain.
The transition into defensive stocks may respond to investors’ taking into account the effect of higher payroll taxes this year and the $85 billion in government spending cuts that started to trickle at the beginning of the year.
The shift is “a rotation into sectors less affected by a short-term slowdown in the consumer,” said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.
Earnings Hold the Key
Earnings season starts in earnest this week, with the highlight coming from JPMorgan Chase & Co and Wells Fargo & Co on Friday. Details on Wells Fargo‘s earnings will be dissected for clues on the health of the housing market.
Overall, S&P 500 earnings are expected to have risen 1.5 percent last quarter, down from a 4.3 percent gain expected at the start of the year, according to Thomson Reuters data.
Investors “are really waiting for the earnings season on balance to disappoint,” Zaro said.
Companies have caught up on the lowered expectations, and negative outlooks have been predominant ahead of earnings season. In fact, the negative-to-positive guidance ratio from S&P 500 companies is at its highest since the third quarter of 2001, according to Thomson Reuters data.
At 4.7, the ratio is the sixth-highest among 69 readings dating to 1996.
“Companies understand that since the economy is weak there’s no reason to be a hero and give guidance you can’t beat,” said Nicholas Colas, chief market strategist at the ConvergEx Group in New York.
F5 Networks was the latest and one of the most dramatic examples of lowered earnings expectations. The network equipment maker partly blamed lower government sales for its profit warning late on Thursday, which erased almost a fifth of its market value on Friday.
In past quarters, revenue beats have taken the focus off the …read more
