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From Briefing.com: Weekly Recap - Week ending 18-Sep-09

U.S. equity markets picked up where they left off last week, rallying in four out of five sessions to close with solid gains. The S&P 500 rose 2.5%.

There were bullish developments, but for the most part this week's rally was just a continuation of the recent upward trend. With the possible exception of Wednesday's 1.5% advance, there were no sharp moves, just a slow upward drift with any market pullbacks limited in scope.

All ten sectors that make up the S&P 500 rose, led by Materials (+4.7%) and Financials (+4.5%).

Investors received good news on the economy this week. On Tuesday the Advance read on Retail Sales came in at 2.7% (consensus 1.9%), Sales ex-autos came in at 1.1% (consensus 0.4%) and Empire Manufacturing came in at 18.9 (consensus 15.0). That was followed by better-than-expected Industrial Production on Wednesday (0.8% vs. 0.6% consensus) and Philadelphia Fed business outlook survey on Thursday (14.1 vs. 8.0 consensus).

The Empire and Philly Fed numbers clearly signalled that the manufacturing sector is beginning to come on-line and we should expect strong manufacturing production over the next few months. Unfortunately it is still to early to declare how the increase in production will play out in GDP growth.

There was also positive commentary during the week. On Tuesday Federal Reserve Chairman Ben Bernanke stated that the recession is "very likely over". That same day reports circulated that investor Warren Buffett had returned to the market. Mr. Buffett confirmed it the next day, saying that while the economy "hasn't gotten worse" it also hasn't "gotten much better" over the past three months, and that he doesn't expect a 'double-dip' recession.

But not all of this week's headlines were positive. There was a slow trickle of earnings results that failed to live up to expectations, including Oracle (ORCL), Best Buy (BBY) and FedEx (FDX), although the latter was known after preannouncing results last week. Whether those expectations have been raised too far, reflecting more the equity markets' view of the economic recovery vs. reality, remains in question. Certainly, in our view, the concern next earnings season will be on the revenue line, which is where many companies fell short this week.

Looking ahead, next week will be extremely busy. There will be the usual economic data, most notably Existing Home Sales on Thursday, Sept. 24 and Durable Goods Orders on Friday, Sept. 25. But the Fed is up first on Wednesday, Sept. 23, with investors watching to see if the FOMC has changed its policy directive. Longer term Treasury auctions also return, including $43 billion of 2-years on Tuesday, Sept. 22, $40 bln of 5-years on Wednesday and $29 bln of 7-years on Thursday.

  
 Index     Started Week Ended Week  Change % Change  YTD % 
 DJIA	     9605.41	9820.20    214.79    2.2   11.9 
 Nasda        2080.90	2132.86	    51.96    2.5   35.2 
 S&P 500	     1042.73	1068.30     25.57    2.5   18.3 
 Russell 2000  593.59	 617.88	    24.29    4.1   23.7

12:49PM Palm 'CCC' Corporate Credit Rating placed on watch positive at S&P on planned stock sale announcement (PALM) 13.86 -0.57 :

Qualcomm (QCOM): Stock broke to new 2 month lows this morning on decent volume. The $44 level has a fair amount of support from the April and May highs while the 2004 highs are at ~$45. There is more support underneath at $43.50 and $43 from the lows of the June-July range. (44.31 -0.71)

Flextronics (FLEX) announces that it has completed the sale of its equity investment and note receivable in Aricent; total cash consideration received by Flextronics amounted to $255 mln.

09:33 am Hewlett-Packard: Stifel Nicolaus is buyer ahead of analyst day: . Stifel Nicolaus notes HPQ will be hosting its 2009 Analyst Day next Thursday. Firm would be a buyer of the shares ahead of this event. Firm expects mgmt to offer up a generally positive tone regarding the current PC and enterprise server/storage demand environment, though likely to remain reluctant in calling an overall demand recovery. Firm believes HPQ will provide evidence of a recovery in IPG supplies growth trends, comfort in a back-to-school PC sell-thru demand environment, and its thus far very successful integration of EDS.

09:55 am Palm (PALM)

Palm (PALM 13.95 -0.49) reported a first quarter loss after the close yesterday that was better than expected and provided mixed financial guidance. Separately, the company announced that it intends to offer approximately 16 million shares of common stock.

The company reported a first quarter loss of $0.10 per share, which was $0.15 better than the First Call consensus of a loss of $0.25. Revenue declined for the quarter by 1.6% on a year-over-year basis to $360.7 million vs. the $290.7 million. Gross margins were reported at 27.9% vs. the 25.6% consensus.

For the second quarter, the company issued revenue guidance of $240 million to $270 million, which is well below the $346.8 million consensus. For the fiscal year 2010, the company issued slightly upside revenue guidance of $1.6 billion to $1.8 billion vs. the $1.57 billion consensus.

The company shipped a total of 823,000 smartphone units during the quarter, representing a 134% increase from the fourth quarter of fiscal year 2009 and a year-over-year decrease of 30%. Smartphone sell-through for the quarter was 810,000 units, up 76% from the fourth quarter of fiscal year 2009 and down 21% year-over-year.

Palm's quarterly operating results are, and will continue to be, significantly impacted by the timing and size of product launches. The company's non-GAAP first quarter results reflected the scale of the launch of Palm Pre with Sprint at the beginning of the quarter and the subsequent launch of Palm Pre with Bell Mobility in Canada.

The company issued second quarter non-GAAP adjusted revenue guidance in the range of $240 million to $270 million because of the timing and scale of expected product launches in Palm's second fiscal quarter compared to those which took place in Palm's first fiscal quarter and due to lower than anticipated demand for legacy products.

The company's planned product launches with additional carriers in the second half of its fiscal year, together with continuing sales from products launched in the first half of its fiscal year, are expected to yield stronger operating performance.