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From Briefing.com: Weekly Recap - Week ending 24-Apr-09 The major indices ended the week mixed following volatile trade that was dominated by earnings reports, including 13 Dow components, and speculation regarding the government's "stress-test" on financial institutions.

In the end, the Dow and S&P 500 finished with losses of 0.7% and 0.4% respectively, with the Nasdaq outperforming with a 1.3% gain thanks to some better-than-expected results from tech companies. Five of the ten sectors advanced, led by materials (+2.2%) and tech (+2.0%). Defensive sectors healthcare (-3.7%), consumer staples (-2.8%), telecom (-2.4%) and utilities (-2.0%) underperformed.

As a whole, first quarter earnings reports were poor, although relative to estimates, EPS was generally better-than-feared, though sales did fail to live up to expectations.

For the week, 143 S&P 500 companies reported and although EPS fell ~40%, roughly 80 companies reported better-than-expected, while 40 were worse-than-expected. Revenue declined 10.6%, with roughly 30 posting positive results and 70 reporting sales that were worse-than-expected.

Of the13 Dow components that reported EPS, 10 were upside or in-line with estimates and three downside, though growth fell 26% with only two showing positive growth. Sales rose 3.5%, though gains were concentrated to only two components.

Some of the more notable companies that beat or met earnings estimates include IBM (IBM), DuPont (DD), Caterpillar (CAT), AT&T (T), McDonald's (MCD), Microsoft (MSFT), American Express (AXP), Apple (AAPL), eBay (EBAY), Amazon.com (AMZN), and Ford (F), among others.

Companies that missed include Amgen (AMGN), 3M (MMM), Boeing (BA), Capital One (COF), Merck (MRK), and Morgan Stanley (MS).

Financials (+-1.3%) saw of the largest movements in reaction to earnings. Bank of America (BAC) reported better-than-expected first quarter earnings, but investors showed concern after the company's first quarter credit loss provisions totaled $13.4 billion, up almost $5 billion from the fourth quarter. Meanwhile, Morgan Stanley (MS) reported a larger-than-expected loss and cut its dividend.

Also driving volatility within the financial sector and the broader market was the Treasury's stress test of financial institutions. The preliminary results of the Fed's first stress test states that most U.S. banking organizations have capital levels well in excess of amounts necessary to be well capitalized, but details were lacking with no indications if any banks failed the stress test. The release on Friday sparked some volatility, but financials settled the session largely unchanged from prereport levels. The results will reportedly be made public May 4.

There were some notable M&A items. Sun Microsystems (JAVA) rallied 37.5% on the week after Oracle (ORCL) announced it will acquire the company for $9.50 per share, which marked a premium of more than 40% above JAVA's closing price last week. IBM, which had earlier been interested in buying JAVA, is no longer interested, according to reports. Separately, PepsiCo (PEP) will purchase remaining stakes in Pepsi Bottling Group (PBG) for $29.50 per share and PepsiAmericas (PAS) for $23.27 per share, which translates to respective premiums of roughly 17% over last week's closing prices. PepsiCo also announced better-than-expected first quarter adjusted earnings per share results.

In economic news, existing home sales in March declined 3.0% to an annualized rate of 4.57 million units. According to the National Association of Realtors, distressed sales accounted for just over half of all transactions in March. First-time buyers were behind 53% of transactions. Notably, the median sales price increased 4.2% from February to $175,200, which is 12.4% below the year-ago level and slightly below the level seen in December.

New home sales for March were at a seasonally adjusted annual rate of 356,000, easily beating the the consensus estimate of 337,000. February sales, however, were revised up to 358,000 from an originally reported level of 337,000. Sales fell -0.6% +/- 19% from February. Median prices were down 3.5% from February to $201,400, which is down 12.2% from the year-ago period.

Though the housing market has the benefit of low interest rates and increased affordability, rising unemployment, steep levels of inventory and tighter credit conditions continue to act as a notable drag.

March durable orders fell 0.8%, topping the consensus estimate that called for a decline of 1.5%. Excluding transportation, orders declined 0.6%, which was also better than expected (consensus -1.2%). Shipments were down1.7% after a 0.8% decline in February. That won't factor well for Q1 GDP. Meanwhile, the continued weakness in business investment was evident with a 1.7% drop in nondefense capital goods, excluding aircraft. This report is mixed news at best as far as expectations are concerned and it isn't particularly good news as far as the economy is concerned.

New unemployment claims for the week ended April 18 matched the consensus estimate of 640,000, representing a 4.4% increase from the 613,000 claims in the prior week. The Easter holiday looks to have influenced the two-week swing in initial claims. But continuing claims continue to trend in the wrong direction. They jumped 1.5% to another new record level of 6.137 million, underscoring the difficulty in finding a new job.

In the coming week earnings will remain in focus, as will the FOMC policy statement Wednesday, and economic data with first quarter GDP set for release Wednesday.

 
 Index        Started Week Ended Week Change % Change YTD % 
 DJIA	       8131.33	   8076.29  -55.04    -0.7  -8.0 
 Nasdaq	       1673.07	   1694.29   21.22     1.3   7.4 
 S&P 500	        869.60      866.23   -3.37    -0.4  -4.1 
 Russell 2000	479.37	    478.74   -0.63    -0.1  -4.1

08:24 am Microsoft (MSFT)

Microsoft (MSFT 18.92) reported fiscal third quarter earnings that matched analyst expectations, but revenues were a bit short and the company's CFO said "we expect the weakness to continue through at least the next quarter."

Microsoft reported fiscal third quarter earnings of $0.39 per share, excluding $0.06 in charges. The results were exactly in-line with the First Call consensus of $0.39. The $0.06 in charges consisted of $290 million in severance charges related to Microsoft's previously announced plan to eliminate 5,000 jobs and $420 million of impairments to investments.

Revenues slipped 5.6% year-over-year to $13.65 billion, short of the $14.09 billion consensus.

Microsoft said revenue in Client, Microsoft Business Division, and Server & Tools was negatively impacted by weakness in the global PC and server markets. Revenue from enterprise customers remained stable during the quarter.

On the company's conference call, CFO Chris Liddell said, "Geographically mature markets slowed noticeably, while emerging markets, which has historically been sources of strong revenue growth for us reported even deeper declines than mature markets."

Looking ahead, Microsoft said it expects operating expenses for the full year ending June 30 to range from $26.7 billion to $26.9 billion, including severance charges. Operating expenses were $24.7 billion in the prior year.

Shares of MSFT held up well after-hours in the wake of the report and are nearly 5% higher in Friday's premarket trade.