From Briefing.com: 4:25 pm : The stock market spiked on Wednesday in response to a tamer-than-expected inflation reading, but after testing highs reached earlier in the month, stocks gave up the majority of their gains on technical-based selling interest.
In the end, the S&P 500 posted a modest advance, with nine of the ten economic sectors in positive territory. The Nasdaq saw a steeper retreat from its session high -- after being up 1.3%, it ended the session with a paltry 0.1% gain.
On the economic front, the April Consumer Price Index (CPI) rose 0.2%, while core CPI, which excludes food and energy, rose 0.1%. Economists expected a higher increase in prices, pegging a 0.3% increase in CPI and a 0.2% increase in core CPI. Compared to last year, total CPI is up 3.9% and core CPI up 2.3%. This matches the Fed's view that inflation should moderate, and is a positive report for the stock market.
The better-than-expected CPI data garnered the majority of the market's attention on Wednesday, but several corporate items also attracted some interest.
Department store operator Macy's (M 24.93, +0.87) reported an unexpected first quarter profit and reaffirmed its full year guidance. As a result, its stock rose 3.6% and spurred buying interest within the S&P 500 Retailing Index (+1.6%).
Shares of Freddie Mac (FRE 27.25, +2.29) spiked 9.2% after the company reported a first quarter loss of $151 million, or $0.66 per share, which was better than the expected loss of $0.93. The company also announced plans to raise $5.5 billion in capital. The financial sector advanced 0.9% on the day, outperforming the broader market.
Hewlett-Packard (HPQ 45.64, +1.37) was the best-performing S&P 500 component after its stock rebounded 3.1% from its recent 10% decline. Traders felt the sell-off in HP's stock over the buyout of Electronic Data Systems (EDS 24.34 unch) was overdone. Enthusiasm regarding HP's stock did not translate to other large-cap tech names, with the Nasdaq 100 ending the day down 0.2%.
Meanwhile, Deere (DE 81.25, -8.94), Electronic Arts (ERTS 52.78, -1.78) and Whole Foods (WFMI 28.96, -4.68) all saw their stocks get clipped after market participants responded negatively to their respective earnings reports.
Separately, the government's weekly energy report showed a smaller-than-expected increase in crude stockpiles. However, crude oil prices were unable to find support on the report, falling 1.3% to $124.11 per barrel. The dip in prices weighed on the energy sector (-0.9%), which was the sole sector to post a loss. DJ30 +66.20 NASDAQ +1.58 NQ100 -0.2% R2K -0.1% SP400 +0.4% SP500 +5.62 NASDAQ Dec/Adv/Vol 1443/1451/2.12 bln NYSE Dec/Adv/Vol 1246/1843/1.19 bln
4:08PM Agilent beats by $0.03, beats on revs; guides Q3 EPS in-line, revs in-line; guides FY08 EPS in-line, revs in-line (A) 32.53 : Reports Q2 (Apr) earnings of $0.51 per share, ex items, $0.03 better than the First Call consensus of $0.48; revenues rose 10.3% year/year to $1.46 bln vs the $1.43 bln consensus. Co issues in-line guidance for Q3, sees EPS of $0.52-0.56 vs. $0.55 consensus; sees Q3 revs of $1.44-1.49 bln vs. $1.46 bln consensus. Co issues in-line guidance for FY08, sees EPS of $2.07-2.15 vs. $2.08 consensus; sees FY08 revs of $5.82-5.93 bln vs. $5.83 bln consensus. Co said,"We continue to anticipate tough conditions in U.S. markets and mixed conditions in Europe and Japan... while Asian markets are expected to remain quite robust."
2:23PM Research In Motion and IBM mobilize web 2.0 capabilities (RIMM) 143.44 +2.50 : The co and IBM (IBM) taking mobile work far beyond email by delivering to mainstream business professionals the full line of Web 2.0-powered IBM Lotus collaboration software and information on demand on the BlackBerry platform. The joint initiative enables customers to securely manage their communications, contacts and schedules and collaborate and network through social software, all from within the familiar, intuitive interface of their BlackBerry smartphones.
10:44 am Applied Materials (AMAT)
Continued weakness in the chip market weighed on the second quarter results of Applied Materials (AMAT 19.66, -0.20 ). The company unveiled a drop in sales, new orders, and earnings after yesterday's close, then provided a disappointing outlook for its third quarter.
The company reported revenues decreased 15% year-over-year to $2.15 billion. Analysts were expecting sales of $2.13 billion.
New orders for the quarter totaled $2.41 billion, which is 9% lower than last year. The decline was limited to the company's silicon segment, in which new orders were nearly halved from the prior year.
Earnings per share dipped more than 20% from the same quarter last year, falling to $0.26 per share. Still, the drop was less severe than analysts were expecting. On average, analysts estimated that earnings would total $0.22 per share for the quarter.
Chip orders are expected to continue their decline. According to Reuters, the company forecast a 25% to 35% decline for chip equipment spending this year, which is worse than the 5% to 15% drop previously expected.
Reflecting the weakness, Applied Material forecast third quarter earnings of just $0.10 to $0.14 per share during its quarterly conference call. The outlook fails to meet the $0.25 per share that analysts forecast.
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