Markets Lower, Closing News 4/4/12

Markets closed in negative territory again today though off intraday lows as investors remained discouraged that there seems to be waning appetite by the Federal Reserve to pursue additional quantitative easing measures since their view of the economy is that of improvement.  A disappointing bond auction in Spain extended concerns over the financial recovery in the Euro zone. 

Mario Draghi, said it is too soon for the ECB to consider a decline in its financial support for the region since unemployment is still high and inflation pressures remain.  To that end, the ECB Governing Council left its key lending rate unchanged at a record low 1%.

The ISM Non-Manufacturing Composite in the U.S. for March came in slightly lower than expected at 56.0 vs. expectations of 56.8 and at a slower pace than the 57.3 seen in February. Despite the pullback, respondents were mostly positive about business conditions.  Increased discretionary spending is a sign of growing optimism from consumers and businesses.  ADP Employment results showed a gain of 209,000 better than the 206,000 expected.  

The Dow was down 179 points at its low, making today the 2nd day in 2012 when the Dow closed down triple digits; March 6th was the last time.  Gold experienced its 8th worst dollar loss in history in reaction to yesterday’s Fed minutes.

Market Indices/Statistics:

  • Dow closed down 124.80 pts/-0.95% to 13,074.75

  • S&P closed down 14.42 pts/-1.02% to 1,398.96

  • Nasdaq closed down 45.48 pts/-1.46% to 3,068.09

  • 4 of the 30 Dow stocks closed higher

  • 1 of 10 S&P 500 sectors closed up

  • Telecom was the only positive sector (+0.03%); IT and Materials were the biggest declining sectors (-1.39% each)

  • The VIX was up 0.78 to 16.44

  • Oil is down $1.97 to $102.04

  • Nat Gas is down $0.049 to $2.138

  • Gold is down $49.70 to $1,622.30

  • Dollar vs. Euro is flat at $1.322

  • Dollar vs. Yen is down $0.010 to $82.82

Companies in the News:

American International Group (AIG, +$1.65/+5.3% to $32.52) shares were actively trading higher after a Bernstein upgrade; reports of a potential IPO for its ILFC Aircraft Leasing Unit, valued at $6-$8 billion; and speculation that the New York Fed is exploring a sale of some of the assets set up in Maiden Lane III, a vehicle established during the bailout of AIG in 2008.  A sale by the Fed means AIG will realize a portion of the profits from the sale and have access to its equity tied up in the Maiden Lane portfolio.

Delta Air Lines (DAL, +$0.16/+1.6% to $10.48) shares were higher on reports that the company may be considering a $100 million purchase of a ConocoPhillips (COP, -$0.13/-0.2% to $76.18) refinery in an attempt to lower fuel costs.

Sandisk Corporation (SNDK, -$5.58/-11.2% to $44.51) shares were lagging today after the company lowered its Q1 outlook to $1.2 billion from $1.3-$1.35 billion citing weaker than expected pricing and demand as well as lower than expected margins.  The company also received some analysts downgrades and price target cuts.

WebMD (WBMD, -$2.36/-9.2% to $23.29) shares were under pressure today after results of the company’s tender offer were released.  32% of shares outstanding were offered up in the tender at $26 which is close to 3 times the maximum number of shares that WebMD said it was offering to buy.  S&P Capital IQ stated that “investors will start to focus more on the challenged fundamentals and stretched valuation we see” for the company.

Yahoo Inc. (YHOO, +$0.04/+0.3% to $15.27) is laying off 2,000 employees or 14% of its workforce in an effort to cut costs and spur growth with a more efficient company.  The company has said that it expects to realize $375 million of annualized savings once the employee transitions are completed.


Acuity Brands Inc. (AYI, -$6.15/-9.7% to $57.50) reported 2Q adjusted EPS of $0.57 vs. expectations of $0.62; revenue was $457.7 million, slightly higher than the expected $455.4 million.  Q2 profit was impacted by higher material costs and acquisition expenses.  The company stated that it continues to expect ongoing volatility in customer demand and commodity costs. 

Monsanto Co. (MON, -$1.22/-1.5% to $80.58) announced Q2 adjusted EPS of $2.28 vs. expectations of $2.12; revenue was $4.75 billion, 15% higher than the $4.13 billion reported in the year ago period and better than the $4.53 billion expected by analysts.  Q2 results were higher on an early spring planting season leading to a 15% rise in sales.  While full year outlook was increased, the company sees a potentially flat second half and little room for price hikes in 2013, which put some pressure on the stock.

Coming Thursday:

Economic Reports:  March Challenger Job Cuts (+2.0% previously) at 7:30 a.m.; Jobless Claims (355k expected); March Chain Store Sales (+4.1% previously)  Earnings:  CarMax Inc. (est: $0.39), Constellation Brands Inc. (est: $0.38), MSCI Inc. (est: $0.46), Pier 1 Imports Inc. (est: $0.48), RPM Intl Inc. (est: $0.01), AZZ Inc. (est: $0.82)