From Briefing.com: 4:20 pm : Stocks started the session in the red as participants reacted negatively to further selling pressure overseas, but a jump in oil prices helped the energy sector lead a turnaround that took the broader market to a solid gain above near-term resistance levels. Participation remains unimpressive, though.
The dour mood among global participants left investors unimpressed with better-than-expected earnings from Deere (DE 43.73, -1.36) and Dow component Hewlett-Packard (HPQ 43.83, -0.13) and, instead, focused on Deere's pessimistic outlook and Hewlett-Packard's reaffirmed guidance. While shares of HPQ pared losses, DE spent the entire session markedly lower, which weighed on the industrial sector and left it to finish fractionally lower.
Financials also finished fractionally lower and made up the only other major sector to settle in negative ground.
Comments from renowned investor Warren Buffett in a New York Times article offered a reminder that the U.S. economy is on a slow path to recovery. With that in mind, the mood on trading floors started to change as chatter began to circulate that a second fiscal stimulus plan could be possible, but that was downplayed when a White House spokesman said in a Bloomberg.com article that there is no imminent economic announcement.
However, market participants jumped into the energy sector following news that weekly oil inventories showed a draw of roughly 8.40 million barrels in the face of calls for an inventory build. Oil prices had been down in early pit trade, but settled 4.7% higher at $72.42 per barrel. Energy stocks were able to recover from a loss of roughly 1% to finish with a 1.9% gain, better than any other major sector.
The run up in oil prices helped provide leadership to other commodities, which gave the CRB Commodity Index 1.5% gain -- its best performance in two weeks.
The improved tone among participants helped stocks build on the previous session's gain. In turn, stocks are down less than 1% week-to-date after Monday's 2.4% drop, which marked the stock market's worst single-session percentage loss in six weeks. The back-to-back gains have also taken stocks above near-term resistance levels, which stood just above 990.
Trading volume was exceptionally low again, however. For the second straight session fewer than 1 billion shares exchanged hands on the NYSE, suggesting that there hasn't been much conviction behind the recent moves.DJ30 +61.22 NASDAQ +13.32 NQ100 +0.6% R2K +0.9% SP400 +0.7% SP500 +6.79 NASDAQ Adv/Vol/Dec 1683/1.98 bln/928 NYSE Adv/Vol/Dec 1848/988 mln/1141
4:13PM Network Appliance beats by $0.02, beats on revs; sees 2Q10 non-GAAP gross margin of 62.5-63.0% vs the 61.0% consensus (NTAP) 22.89 +0.04 : Reports Q1 (Jul) earnings of $0.22 per share, excluding non-recurring items, $0.02 better than the First Call consensus of $0.20; revenues fell 3.5% year/year to $838 mln vs the $828.3 mln consensus. Co sees Q2 non-GAAP gross margins to be between 62.5-63.0% vs the 61% consensus. "Given the economic backdrop, NetApp performed well in the first quarter. With year over year revenue growth roughly flat on a constant currency basis, our revenue performance clearly outpaced the storage industry at large. Our operating income and operating margin both increased year over year, and we produced our highest gross margin percentage in over five years."
09:57 am Analog Devices (ADI)
Analog Devices (ADI 26.94, -0.28) reported fiscal third quarter earnings that beat the consensus estimate and provided upside earnings guidance for its fiscal fourth quarter.
Analog Devices reported fiscal third quarter earnings of $0.22 per share, excluding nonrecurring items, $0.02 better than the First Call consensus of $0.20.
Revenues fell 25.3% year-over-year to $492 million but managed to top the $479.6 million consensus.
"There are near-term indications that business conditions are improving," said CEO Jerald G. Fishman. "Order rates strengthened throughout the third quarter and have remained strong during the first two weeks of August. Our book-to-bill ratio for the third quarter, as measured by end customer bookings, was above one, and our fourth quarter opening backlog was up from last quarter."
The improved business conditions prompted Analog Devices to issue upside guidance for its fiscal fourth quarter. The company expects Q4 earnings of $0.24 to $0.26 per share on revenues of $510 million to $530 million. The consensus expects earnings of $0.24 per share on revenue of $498.3 million.
08:44 am Hewlett-Packard (HPQ)
Hewlett-Packard (HPQ 43.96) reported fiscal third quarter earnings that topped expectations and said it expects fourth quarter earnings to come in ahead of current estimates as the company's business begins to stabilize.
Hewlett-Packard reported fiscal third quarter earnings of $0.91 per share, $0.01 better than the First Call consensus of $0.90. Non-GAAP operating profit of $3.0 billion excludes $568 million of adjustments on an after-tax basis, or $0.24 per diluted share, related primarily to amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
Revenues fell 2.1% year-over-year to $27.45 billion, in-line with the $27.25 billion consensus. Revenue grew 8% in the Americas but declined 12% in Europe, the Middle East and Africa and dipped 4% in Asia Pacific. Revenue from outside the U.S. accounted for 62% of HP's total revenue.
HP issued upside earnings guidance for the current quarter, saying it expects fiscal fourth quarter earnings of $1.12 per share; the consensus currently stands at $1.07. HP said Q4 revenues will be up 8% sequentially, which equates to revenue of $29.6 billion; the consensus stands at $29.82 billion.
"Business is stabilizing, and we are confident that HP will be an early beneficiary of an economic turnaround and will continue to outperform when conditions improve," said CEO Mark Hurd.
The Palo Alto, Calif.-based company reaffirmed its guidance for 2009, saying it expects revenues and earnings to be at the midpoint of its prior range. HP previously said it expects full year earnings to range from $3.76 to $3.88 per share and for revenue to decline 4-5%, which equates to $112.4 billion to $113.6 billion. The current consensus estimate is for earnings of $3.75 per share on revenue of $113.2 billion.
Shares of HPQ are 21% higher year-to-date but are in negative territory ahead of Wednesday's opening bell.
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