From Briefing.com: 4:20 pm : Profit takers attempted to reverse early gains that were spurred by better-than-expected economic data, but an underlying bid helped stocks rebound to finish at their best levels in months.
The latest ADP Employment Report estimated that 491,000 jobs were cut from private payrolls in April. Though that is certainly a high number, it isn't nearly as bad as the 645,000 job cuts that were expected. It is also down substantially from the 708,000 job losses recorded for the prior month, which fits the idea that the economy is bottoming.
The idea that the economy has started to bottom has lured money in from the sidelines in recent weeks. Recently released data indicate that the end of March brought the biggest sequential inflow of funds into mutual fund assets on a percentage basis since April 2003, and the biggest inflow of absolute funds since April 2008.
The inflow of money has compounded gains in recent weeks, taking the stock market up 38% from its March 6 low. That has many market watchers anticipating a pullback.
However, there is a persistent bid that seems to stymie downside moves from gaining traction. Just so, this session's early gains were reversed by profit takers, but that gave way to a rebound that gathered momentum as participants looked to scoop up financials.
Financials were under pressure in premarket trading, but actually rallied into the open after reports quelled concern that major banks may need to raise outside capital in order to satisfy the government's bank stress tests. The Wall Street Journal reported JPMorgan Chase (JPM 37.22, +2.40) does not need additional capital and Citigroup's (C 3.86, +0.55) capital hole is considerably smaller than Fed officials initially identified, while separate reports indicated that Bank of America (BAC 12.69, +1.85) needs only to convert its capital to a larger proportion of common stock.
The official findings of the bank stress tests aren't due until after tomorrow's close, but leaking the news should help mitigate against any shock that would result from unveiling the results all at once.
Financial stocks won additional favor after news sources reported that the Senate has approved an amendment that could make it less costly to exit the TARP program. Shares of diversified banks and regional banks both finished 12.7% higher. The broader financial sector closed near its session high with an 8.1% gain.
Energy stocks climbed 3.6%, contributing to the broader market's advance. Energy stocks were bolstered by higher oil prices, which advanced 4.6% to settle at a five-month closing high of $56.34 per barrel. The move was helped largely by the notion that demand will improve with economic conditions in the back half of this year. Crude's advance was also helped along by relatively bullish inventory data, which indicated oil inventories for the week ending May 1 increased by 605,000, far less than the 2.5 million barrel build that was widely expected.
With oil prices on the rise, shares of oil and gas explorers advanced 7.1%, while oil and gas equipment companies climbed 4.0%, and drillers gained 2.6%. Offshore specialist Transocean (RIG 74.59, +1.62) was able to win additional support by posting this morning better-than-expected quarterly results.
United Technologies (UTX 52.29, +0.46) reaffirmed its full year 2009 guidance, but General Electric (GE 13.67, +0.57) was the primary leader among industrial stocks. Industrials finished with a 1.7% gain.
Despite the early efforts of profit takers, the S&P 500 spent the entire session in positive territory. Though it encountered some resistance when it approached the 920 level, the stock market still closed at its best level since early January.
The move was supported by strong trading volume. Nearly 1.9 billion shares traded hands on the NYSE this session; that's the most in a single session since mid-April, and above recent averages. DJ30 +101.63 NASDAQ +4.98 NQ100 +0.0% R2K +0.5% SP400 +0.9% SP500 +15.73 NASDAQ Adv/Vol/Dec 1504/2.91 bln/1193 NYSE Adv/Vol/Dec 2171/1.88 bln/898
4:33PM Action Semi reports EPS in-line, beats on revs; guides Q2 revs in-line (ACTS) 2.03 +0.04 : Reports Q1 (Mar) loss of $0.02 per share, in-line with the First Call consensus of ($0.02); revenues fell 24.2% year/year to $12.2 mln vs the $8.6 mln consensus. Co issues in-line guidance for Q2, sees Q2 revs of $9-12 mln vs. $9.24 mln consensus.
4:31PM California Micro misses by $0.01, reports revs in-line; guides Q1 EPS in-line, revs in-line (CAMD) 2.94 -0.16 : Reports Q4 (Mar) loss of $0.15 per share, $0.01 worse than the First Call consensus of ($0.14); revenues fell 38.7% year/year to $9.2 mln vs the $9.2 mln consensus. Co issues in-line guidance for Q1, sees EPS of ($0.12)-($0.14) vs. ($0.13) consensus; sees Q1 revs of $8.5-10.0 vs. $9.55 mln consensus.
4:29PM ON Semiconductor beats by $0.10, beats on revs; guides Q2 revs above consensus (ONNN) 6.09 -0.01 : Reports Q1 (Mar) earnings of $0.03 per share, $0.10 better than the First Call consensus of ($0.07); revenues fell 22.4% year/year to $379.1 mln vs the $362.4 mln consensus. Co issues upside guidance for Q2, sees Q2 revs of $395-410 mln vs. $372.60 mln consensus. Sees gross margin in the range of 31.5-32.5%; operating expenses $130-135 mln.
4:22PM Cisco Systems continuing to grind higher, now at $20.80 (CSCO) 19.61 -0.02 :
4:09PM Cisco Systems beats by $0.05, beats on revs (CSCO) 19.61 -0.02 : Reports Q3 (Apr) earnings of $0.30 per share, excluding non-recurring items, $0.05 better than the First Call consensus of $0.25; revenues fell 16.6% year/year to $8.16 bln vs the $8.07 bln consensus. Cash and cash equivalents and investments were $33.6 billion at the end of the third quarter of fiscal 2009, compared with $26.2 billion at the end of fiscal 2008, and compared with $29.5 billion at the end of the second quarter of fiscal 2009. Co said, "Cisco delivered solid financial performance despite a challenging global economy and period of evolving market dynamics... These results demonstrate our ability to drive operational excellence and manage profitability across varying economic cycles. We will use this period of market transition to align and optimize resources, make strategic investments, move into market adjacencies and enhance relationships with our customers. As we exit the quarter with a compelling financial position and an innovation engine from both a products and business model perspective, we believe we are well-positioned for the eventual economic recovery."
09:33 am Atmel downgraded to Neutral at AmTech Research: . AmTech Research downgrades ATML to Neutral from Buy following earnings. They believe ATML is too broadly exposed to expect a strong snap-back this year, even if key MCU business continues to gain share. Given the steeper trough, they believe ATML is now properly priced at $3.50-$4.00, as additional leverage and ASIC sale upside are not likely to move the stock higher at this time.
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