Markets Down, Closing News 6/7/11

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Markets had looked poised to break the four session losing streak, trading as high as +90 points intraday, until Ben Bernanke began speaking around 3:45, driving the markets to ultimately close lower.

Ben Bernanke spoke this afternoon at the International Monetary Conference in Atlanta, and said that the recent weak labor data has been impacted by supply chain disruption caused by the Japanese earthquake. His outlook overall was negative however, warning Congress that strong budget cuts could derail the recovery efforts, and that long term unemployment remains a serious concern Boston Federal Reserve President, Eric Rosengren suggested this morning on CNBC that the recent string of disappointing economic data could change the Fed’s quantitative easing plans. While QEIII is not expected, Rosengren suggested that there is chance that QEII will be extended beyond the original end date of June 30.

The Labor Department announced its Job Openings and Labor Turnover survey this morning, continuing the streak of disappointing economic data. The “JOLTS” reported that hiring was down to 3.97 million open positions in April from 4.07 million in March, and that the hiring rate fell 0.1% from March to 3.0%.

The weaker dollar and the US forecast for increased oil demand were able to keep oil trading higher today despite the news that Saudi Arabia is planning to raise its oil supply by 500k barrels a day, and wants OPEC to follow suit when it meets tomorrow. The U.S. Energy Information Administration reported that it expects worldwide demand for oil to increase 1.96% this year to 88.43 barrels per day.

Make sure the batteries in your remote are charged tonight for a lot of channel surfing on a big night in the sports world: Game 4 of the NBA finals tips off, the first of a three game Yankees – Red Sox series, and the US Men’s soccer team kicks off their Gold Cup campaign against our neighbors from the north, Canada.

Market Indices/Statistics:

  • Dow closed down 19.15 pts/-0.16% to 12,070.81
  • S&P closed down 1.23 pts/-0.10% to 1,284.94
  • Nasdaq closed down 1.00 pt/-0.04% to 2,701.56
  • 15 of the 30 Dow stocks closed higher / 14 closed lower / Pfizer was flat
  • 6 of the 10 S&P 500 sectors closed lower
  • Materials was the best performing sector (up 0.32%)
  • Information Technology was the worst performing sector (down 0.36%)
  • The VIX is down 0.42 pts to 18.107
  • Oil is up $0.10 to $99.12
  • Nat Gas is down $0.016 to $4.811
  • Gold is down $1.80 to $1,545.30
  • Euro vs. Dollar up $0.0111 to $1.4685
  • Dollar vs. Yen down $0.02 to $80.06

Companies in the News:

Shares of Temple Inland surged (+40.36% to $29.49) today after announcing it has received a hostile tender offer from International Paper (+0.44% to $29.78) for $30.60 in cash.  The Board of Temple Inland has unanimously rejected the offer and announced a poison pill rights plan this morning.   Related companies also reacted to the proposed deal as Packaging Corp of America (+6.19% to $28.49), Weyerhaeuser (+5.02% to $21.53) and Boise Inc. (+5.62% to $7.89) all closed significantly higher today.

Bloomberg news is reporting that ING Groep has received bids for their U.S. online bank, a deal that could potentially be worth $9 billion and take place later this month.  Shares of ING closed 1.72% higher to $11.84 on the day.

Cablevision Systems announced that the board of directors has approved the spin-off of AMC Networks Inc. to Cablevision shareholders.  Cablevision closed 4.48% higher to $35.65 in today’s trading.

Earnings:

Talbots Inc. shares tumbled (-40.50% to $2.63) after reporting Q1 earnings per share of $0.01 against estimates of $0.03.  What really drove shares lower today was the announcement that TLB has already used $86 million of its $200 million credit line and that they are expecting promotional activities and markdowns to weigh on Q2 margins.

Pep-Boys also slid today (-17.04% to $11.20) after announcing their Q1 results after the closing bell yesterday.  PBY missed expectations, reporting earnings per share of $0.23 on revenue of $513 million vs. consensus of $0.30 per share on $537 million revenue.

FerrellGas Partners LP shares fell (-6.48% to $22.65) after reporting earnings per share of $0.32 vs. consensus of $0.55 per share.  FerrellGas Partners reported $732 million in revenue for the quarter, ahead of the $678 million expected, but margins were squeezed by litigation reserve funds and high commodities costs.

EI Du Pont De Nemours (+0.88% to $50.29) shares gained today after DD reaffirmed their FY11 guidance of $3.65-3.85 per share vs. analyst expectations of $3.84 per share.

Coming Wednesday:

Economic Reports: Mortgage Applications at 7:00 am and Crude Inventories at 10:30 am; Earnings from: Piedmont Natural Gas Company, Men’s Wearhouse, and Pall Corp.

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