From Briefing.com: 4:25 pm : Renewed financial and economic concerns spurred an unrelenting selling effort that took stocks to multimonth lows and kept them there for virtually the entire session. Both the blue chip Dow Jones Industrial Average and the broader S&P 500 closed the session at its lowest point since registering bear market lows in November.
The major indices are back at key technical levels after climbing above them last week. Revisiting the support levels has led to conjecture whether stocks will find support at technical levels and rally, or break to new bear market lows. There S&P found some support at 790 during the session, but still closed below that level.
Weakness was deep and broad-based. All 10 of the major sectors in the S&P 500 spent the entire session in the red. Approximately 98% of all the companies in the S&P 500 closed lower.
Financials were the worst performing sector. The sector closed 9.8% lower with particular weakness in consumer finance (-11.9%), diversified financial companies (-12.2%), and diversified banks (-13.1%). Financials registered a new 52-week intraday low and a new 52-week closing low.
The financial sector's drop reflects continued concerns that bank balance sheets may still be under pressure amid waning capital.
Such was the case in Europe, where word a Moody's report citing stress in Eastern Europe's banks undercut major European bourses. Meanwhile, Asian financial stocks fell in the wake news Woori Financial became South Korea's first lender to tap a bank recapitalization fund, and Japan's Mitsubishi UFJ Financial issued a larger debt offering than initially planned. The declines overseas helped fuel initial weakness in the U.S.
As part of an effort to distinguish strong banks and arrange a blend of public and private capital, regulators may begin stress-testing banks this week. Still, there is skepticism that such a move will have any immediate impact on restoring conditions in the financial system or the broader economy.
Investors also remain unimpressed by the $787 billion economic stimulus plan, which was signed into law this afternoon. The plan isn't expected to provide an immediate boost to conditions in the near term.
Weak economic conditions continue to weigh on oil prices. Crude oil futures fell nearly 7% to finish the session at $34.95 per barrel. Crude futures prices are now down 75% from their highs.
The general weakness this session has also led to buying in gold. Gold is up 3.2% to $971.30 per ounce. It has gained in four of the last five sessions.
Given the weight of concerns for the financial system and broader economy, a relatively positive batch of earnings data was generally treated with disinterest. Wal-Mart (WMT 48.24, +1.71) bested quarterly earnings estimates, and issued in-line guidance. It was the only Dow component to trade with a gain, but its report provided little support to the broader market. Teva Pharmaceuticals (TEVA 45.78, +1.77) posted better-than-expected results and increased its quarterly dividend. Medtronic (MDT 34.56, +1.75) also topped expectations. Illinois Tool Works (ITW 32.96, -2.16) issued in-line earnings guidance. Kraft (KFT 24.72, -0.48) and ConAgra (CAG 16.26, +0.04) both reaffirmed their earnings outlooks. DJ30 -297.81 NASDAQ -63.70 NQ100 -4.0% R2K -4.3% SP400 -4.2% SP500 -37.67 NASDAQ Adv/Vol/Dec 399/2.15 bln/2280 NYSE Adv/Vol/Dec 218/1.61 bln/2895
4:34PM Ultra Clean Holdings beats by $0.01, reports revs in-line; guides Q1 EPS below consensus, revs below consensus (UCTT) : Reports Q4 (Dec) loss of $0.16 per share, excluding non-recurring items, $0.01 better than the First Call consensus of ($0.17); revenues fell 48.8% year/year to $47.1 mln vs the $46.9 mln consensus. Co issues downside guidance for Q1, sees EPS of (0.25-0.36) vs. ($0.16) consensus; sees Q1 revs of $20-28 mln vs. $39.17 mln consensus.
4:31PM Photronics misses by $0.01, misses on revs (PLAB) 1.35 -0.08 : Reports Q1 (Jan) loss of $0.21 per share, excluding items, $0.01 worse than the First Call consensus of ($0.20); revenues fell 14.7% year/year to $88 mln vs the $90 mln consensus.
4:08PM Agilent misses by $0.08, misses on revs (A) 17.65 -0.82 : Reports Q1 (Jan) earnings of $0.20 per share, ex-items, $0.08 worse than the First Call consensus of $0.28; revenues fell 16.0% year/year to $1.17 bln vs the $1.26 bln consensus. Co states, "Forecasting in the current environment is almost futile, as visibility is virtually nil. Our current best guess is that second quarter revenues and operating earnings, which are normally seasonally stronger, will be roughly in line with first quarter results..."
2:03PM Research In Motion announces settlement with the SEC (RIMM) 44.77 -3.74 : Co announces that RIMM and four of its officers, Jim Balsillie, Mike Lazaridis, Dennis Kavelman and Angelo Loberto, have entered into settlements with the Securities and Exchange Commission that resolve the previously-disclosed SEC investigation of RIMM's historical stock option granting practices. RIMM previously disclosed a management-initiated, voluntary review of its historical stock option granting practices that had commenced in 2006 and had been self-reported to the SEC and the Ontario Securities Commission. In the settlement with the SEC that was filed today, RIM consented, without admitting or denying allegations in a complaint filed by the SEC, to the entry of an order enjoining it from violations of certain provisions of the U.S. federal securities laws, including the antifraud provisions. RIM is not required to pay disgorgement or a monetary penalty.
8:25AM Canadian Solar sees Q4 revs of $66-$71 mln vs $69.29 mln First Call consensus (CSIQ) 5.00 : Co issues in-line guidance, sees Q4 revs of $66-$71 mln vs $69.29 mln First Call consensus. Co expects gross margin in Q4 to be negative, reflecting the weak Euro, a decline in module pricing in December, and an inventory revaluation provision that resulted from a rapid decline in the raw material pricing in December, 2008. Co says it "believes it was successful in achieving its cash management objectives: For the end of the fourth quarter, we anticipate reporting a cash position in excess of $130 million. Our accounts receivables are expected to be in the range of $56 to $64 million as of December 31, 2008, compared to $153 million net at the end of the third quarter, 2008. During the fourth quarter, we chose to pay down approximately $78 million of short-term and related party debt, which brings our outstanding short-term loan balance to approximately $92 million at the end of 2008."
Xilinx (XLNX) announced that the Board of Directors has elected Philip Gianos to serve as its Chairman to succeed Willem Roelandts in that role effective February 12, 2009...
7:35AM STMicroelectronics announces FINRA awards STMicroelectronics $406 mln against Credit Suisse Securities (STM) 5.61 : Co announced that an arbitration panel of the Financial Industry Regulatory Authority (FINRA) awarded STMicroelectronics, in connection with the sales by Credit Suisse Securities to the Company of unauthorized "auction rate securities," an amount of ~$406 mln comprising compensatory damages, as well as interest, attorney's fees, and consequential damages, which were assessed against Credit Suisse. In addition, co is entitled to retain the about $25 mln interest award which had already been paid. Over time, as the credit market negatively developed, the co recorded other-than-temporary impairment charges for a cumulated amount of $173 mln. Payments by Credit Suisse pursuant to the arbitration award will result in a further strengthening of financial position by increasing current liquidity by about $406 mln, against a $242 mln less balance in Non Current Assets. At collection, co will transfer ownership of its portfolio of unauthorized "auction rate securities" with Credit Suisse, and should be able to record a pre-tax gain of about $163 mln to reverse impairment losses accrued in Income Statement of prior periods.
7:09AM Trina Solar sees total net revs for Q4 exceeding previous guidance range of $190-$210 mln (consensus is $194.1 mln) (TSL) 8.54 : Co announces the following selected estimated financial results for the quarter and the full year ended December 31, 2008. For 4Q08, it expects: 1) total net revenues for Q4 to exceed its previous guidance range of $190-$210 mln (consensus is $194.1 mln); 2) Q4 positive net operating cashflow to be approximately $60 mln; 3) short-term debt to be reduced by approximately $41 mln to $249 mln; and 4) a non-cash inventory provision between $16 mln and $18 mln. The Company also announced that it anticipates a non-cash inventory provision between $16 mln and $18 mln mainly due to the revaluation of its silicon inventory linked to notable market price declines in the fourth quarter of 2008. The provision is expected to have a negative gross margin impact of 7% to 8%. With this provision, the Company expects its fourth quarter gross margin to be in the range of 9% to 10%, compared to its earlier previous guidance of 13% to 15%. The Company also expects its operating and net margins would be correspondingly affected.
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