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From Briefing.com: Weekly Recap - Week ending 06-Mar-09

It was a rough week for the stock market as a slew of negative economic data and continued concerns over the state of financials weighed on investor sentiment. In the end, the S&P 500, Nasdaq and Dow dropped 7.0%, 6.1% and 6.2%, respectively, for the week. All three of the major indices fell to multi-year lows, with the S&P 500 trading at its lowest level in 12 years. Selling pressure was broad-based, although financials saw the brunt of the decline, dropping 19.2% for the week.

The negative tone started off Monday with AIG (AIG) reporting a massive $61 billion quarterly loss, the largest in U.S. corporate history. In turn, the struggling insurer received an additional $30 billion in government aid. Also adding to the bearish sentiment was a sharp sell-off overseas after HSBC (HBC) reported a steep drop in profits. The UK-based bank said it will raise capital in a dilutive stock offering, pare its U.S. operations, cut 6,100 jobs and reduce its dividend.

Financials were in focus throughout the week, mostly in a negative light as Fed Chairman Bernanke and Treasury Secretary Geithner testified before House and Senate finance panels on Tuesday and Wednesday. Meanwhile, U.S. Bancorp (USB) and Wells Fargo (WFC), which are widely considered among the better run banks, both announced that they will cut their dividends by roughly 85% to $0.05 per share in an effort to save capital. Shares of USB dropped 38.4% for the week.

At the same time, General Electric (GE), which slashed its dividend last week, got hammered on capital concerns. The company moved to shore up investor confidence as several corporate insiders made stock purchases, and the CFO went on CNBC to reassure the market. Still, concerns remained over the health of GE Capital Finance -- which accounts for 83.5% of GE's assets -- sending the stock down 17.0% for the week.

The financial sector did get one piece of positive news, however. On March 12, the House Financial Services Committee will meet to discuss mark-to-market rules. Some analysts believe a repeal of the mark-to-market rule will help alleviate the pressures on financials.

Economic news added to concerns of the state of the U.S. economy. The ADP report showed 630,000 private job losses in February, foreshadowing the official government release on Friday.

The number of jobs lost totaled 651,000, which matched expectations, although previous months were revised downward to show sharper losses. The unemployment rate, however, rose to 8.1% from 7.6%, which was worse than the expected reading of 7.9%.

With job losses mounting, many homeowners are unable to stay current on their mortgage payments. In turn, mortgage delinquencies as a percentage of total loans totaled 7.88% in the fourth quarter. That was up from the 6.99% delinquency rate in the third quarter. Meanwhile, January pending home sales dropped 7.7%, which was worse than the expected decline of 3.5%.

The negative economic data was reflected in the Fed's latest economic forecast in the Beige Book. The Fed reduced its economic outlook, saying it doesn't expect economic recovery until late 2009 or 2010.

Meanwhile, Europe is facing a sharp downturn in economic activity on its own. As a result, the European Central Bank lowered its target interest rate 50 basis points to 1.50%, as expected. The Bank of England lowered its target interest rate to 0.50% from 1.00%, in-line with expectations. The Bank of England also announced it will begin buying assets in order to increase the country's money supply.

In corporate news, Retailers had an ugly session on Thursday after a large number of companies reported poor same-store sales for February. Gap (GPS), Abercrombie & Fitch (ANF), American Eagle (AEO), and Nordstrom (JWN) all reported double-digit declines. However, companies catering to more cost-conscious consumers reported increased same-store sales -- Wal-Mart (WMT) same-store sales rose 5.1% and raised its dividend.

Auto sales also plummeted. Ford Motor (F) reported February sales in North America fell 48%, which is steeper than the 42% drop that was expected. General Motors (GM) reported February sales sank nearly 53%, exceeding the 45% drop that was forecast. As a result, concerns regarding a GM bankruptcy were elevated. GM shares dropped 35.6% for the week.

Warren Buffett's annual letter to shareholders reflected the gloomy economic outlook, saying he was certain "the economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond -- but that conclusion does not tell us whether the stock market will rise or fall." But, optimistic as ever, Buffett said, "Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead."

--Ryan McShane, Briefing.com

 
 Index      Started Week Ended Week Change % Change YTD % 
 DJIA	     7062.93	 6626.94  -435.99   -6.2  -24.5 
 Nasdaq	     1377.84	 1293.85   -83.99   -6.1  -18.0 
 S&P 500	      735.09	  683.38   -51.71   -7.0  -24.3 
 Russell 2000  389.02	  351.05   -37.97   -9.8  -29.7

09:39 am Marvell upgraded to Buy at AmTech Research: . AmTech Research upgrades MRVL to Buy from Hold. The firm notes that near-term end-markets remain challenging, but the firm believes that the worst of the inventory cycle and number cuts are behind the co and note that valuation appears attractive at these levels. The firm notes that they could be early with their upgrade, but they would buyers here or on weakness

08:17 am Marvell Technology (MRVL)

Marvell Technology (MRVL 7.52) reported better-than-expected earnings for its fourth quarter, but the semiconductor company said it doesn't expect the current economic climate to substantially improve and is cutting costs and jobs in response.

For the fourth quarter, Marvell reported earnings of $0.05 per share, $0.04 better than the First Call consensus of $0.01.

Revenues plunged 35.2% year-over-year to $512.9 million; the consensus expected $510.7 million.

Marvell said it plans to reduce its global workforce by 15%, or approximately 850 employees. Marvell estimates that the restructuring charges associated with the reduction in force and consolidation of facilities taken to date will be approximately $20 million, including approximately $14 million related to severance and other employee benefit payments and approximately $6 million related to facility consolidation. The company expects the expense reduction actions in the plan to be implemented through calendar year 2009.

On its conference call, Marvell said it expects first quarter earnings between $0.03 and $0.05, ahead of the First Call consensus that expected a breakeven quarter. Marvell's revenue expectations also top the consensus, as the company expects Q1 revenues from $490 million to $530 million; the consensus stands at $471.2 million.

Shares of MRVL are more than 7% higher in premarket trade.