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From Briefing.com: Weekly Recap - Week ending 01-May-09

The major indices resumed their two-month advance this week, albeit modestly, with the bulk of gains coming on Wednesday -- S&P 500 +1.3%, Dow +1.7%, Nasdaq +1.5%, Russell 2000 +1.7%. It was a choppy, volatile week of trade due to a myriad of catalysts, beginning with swine flu on Monday and ending with the announcement on Friday of a delay for the release of the government's bank stress tests.

Investors got into work Monday morning with equity futures sharply lower on reports of a swine flu outbreak. On Sunday, Janet Napolitano, U.S. Homeland Security Secretary, declared a "public health emergency" in the U.S. as about 20 people at the time were confirmed to have been infected, though none seriously ill. The influenza remained a headline throughout the week, and by Friday the World Health Organization announced that the worldwide total for confirmed cases of the virus had risen to 331, up from 257 the prior day. Mexico has officially reported seven deaths from the virus and the U.S. has reported one, while no other countries have reported deaths.

A number of industries have felt the effects of the outbreak, most notably the pork industry. The travel industry was also under pressure this week, including airlines and cruise operators. Hotels were under pressure early in the week, but managed to regain most of their losses on a number of better-than-expected earnings releases. There were benefactors, however, particularly the drugmakers.

Switching gears, economic data based on surveys have been strong over the last couple of weeks, and that trend continued this week. On Tuesday, Consumer Confidence came in at a better-than-expected 39.2 for April, well above the 29.7 consensus estimate. On Thursday it was Chicago PMI's turn, as it came in at a better-than-expected 40.1 for April vs. the 35.0 consensus. Finally on Friday, ISM Manufacturing came in at a better-than-expected 40.1, above the 38.4 consensus.

That's not to say all economic data have been positive. Wednesday's Advanced reading for first quarter GDP came in at a much weaker-than-expected -6.1% (consensus -4.7%), in part because inventory contraction sliced a whopping 2.8% off the change. Real PCE rose at a stronger-than-expected 2.2% annual rate, but the business data were terrible -- investment in software and equipment fell at a 33.8% annual rate, while nonresidential construction spending fell at a 44.2% annual rate. Residential construction spending continued to plunge, and was down at a 38.0% annual rate, while government spending fell at a 3.9% annual rate as state and defense spending contracted.

However, Wednesday proved to be the market's big day as stocks shrugged off the GDP figure and rallied ahead of the FOMC's rate decision and policy statement that afternoon. The FOMC kept its key interest rate in a range of 0.00%-0.25%, as expected, and seemed to carefully word its policy statement so as not to spook the market. But as always, the release was followed by volatility, with the major indices spiking to new highs shortly after, only to see aggressive profit taking in the final hour of trade. In the end, the S&P gained 2.1%.

Thursday was another volatile session for the market, as it got off to an impressive start, only to lose those gains after reports confirmed Chrysler would declare bankruptcy. Talks between the Treasury Department and lenders aimed at keeping the automaker out of bankrupcty broke down Wendesday evening, particularly with a group of hedge funds that owned approximately 30% of the company's debt and voted no to the government's offer.

Friday proved to be an extremely slow, but modestly higher session. The big headline of the day came late morning when a government source said it would announce information on the bank stress tests late afternoon on Thursday, May 7, later than the original date of May 4. This follows a slew of headlines on the tests throughout the week. They began on Tuesday when reports indicated regulators had told Bank of America (BAC) and Citigroup (C) that they may need to raise additional capital based on early results of the tests. Reportedly, Bank of America's capital hole is in the billions, while it wasn't clear how big a capital deficit Citigroup faces. Speculation continued throughout the week until today's announcement.

Looking ahead to next week, earnings results will continue to come out at a fast pace, but note a number of the bigger companies have already reported. Economic data will be light until Friday's (5/8) Nonfarm Payrolls report for April. And before that, as mentioned above, investors will finally see the results of the government's bank stress tests late afternoon on Thursday (5/7).

  
 Index     Started Week Ended Week Change % Change YTD % 
 DJIA	     8076.29	8212.41	  136.12   1.7   -6.4 
 Nasdaq	     1694.29	1719.20	   24.91   1.5    9.0 
 S&P 500	      866.23	 877.52	   11.29   1.3	 -2.8 
 Russell 2000  478.74	 486.98	    8.24   1.7	 -2.5

4:08PM Pericom Semi beats by $0.01, reports revs in-line; guides Q4 revs above consensus (PSEM) 8.63 -0.28 : Reports Q3 (Mar) earnings of $0.01 per share, $0.01 better than the First Call consensus of ($0.00); revenues fell 40.8% year/year to $24.4 mln vs the $24.6 mln consensus. Co issues upside guidance for Q4, sees Q4 revs of $27.0-30.0 mln vs. $25.27 mln consensus. Gross margin of 35.5% improved 63 basis points on a sequential basis and decreased 205 basis points year-over-year. "Over the past two quarters we have experienced a sharp decline in revenue, which was consistent with declining end-market demand and inventory reduction initiatives across the supply chain. As a result, we have taken steps to reduce our operating expenses to better match lower revenue expectations for our business... We believe the inventory reduction initiatives have been or will soon be completed. Our bookings began improving towards the end of the March quarter and resulted in our having an improved backlog as we entered the June quarter. We believe our revenues reached a low point in the March quarter, and we expect to see significantly improved revenues this quarter as demand levels more closely align with end user demand."

7:48AM SIA says March chip sales rebound slightly from February : Worldwide sales of semiconductors were $14.7 billion in March, a gain of 3.3% from the prior month when sales were $14.2 billion, the SIA reported. Sales for the first quarter of 2009 amounted to $44.0 billion, a 29.9% decline from the first quarter of 2008 when sales were $62.8 billion. Sales declined by 15.7% from the fourth quarter of 2008 when sales were $52.2 billion. Sales in all geographic regions except Japan showed month-to-month gains. Sales in Japan were sharply lower, reflecting a drop in the country's economic output. All geographic regions reported lower first-quarter sales compared to the same period of 2008. "The modest sequential rebound in worldwide sales in March suggests that demand has stabilized somewhat, albeit at substantially lower levels than last year," said SIA President George Scalise. "While all major product sectors showed month-on-month growth, there continues to be limited visibility in end markets. There are some bright spots such as 'smart phones' and 'netbook' PCs, but there are no clear signs of early firming of demand in other major end markets such as automotive, corporate information technology, and consumer electronics.