Markets Lower, Closing News 9/9/11

Markets closed lower after a German official at the ECB resigned from his post, and the President’s address on jobs did not satisfy investors. The Dow rebounded off of the day’s lows, but down over 300 points, breaking below 11,000.  For the week the Dow was down 2.2% and the S&P 500 was down 1.6%.

Juergen Stark, the top German Official at the European Central Bank announced he will resign for personal reasons, although speculation is that Stark is resigning because of opposition to the bank’s bond buying policies. Stark will remain in his post until a replacement is appointed, but many are concerned that this could erode support in Germany for Angela Merkel’s legislation to support Euro-zone bailouts. In response to the news, the Euro slid 1.56% against the dollar, trading lower on the day.

President Obama unveiled his highly anticipated job’s plan last night in an address to a joint session of congress. The $447 billion plan came with a higher price tag than the $300 billion that many people had been expecting, and while not detailing how, the President assured that everything in the bill will be paid for. The plan included infrastructure products, tax breaks for businesses that hire, and increase taxes on the wealthiest Americans. Investor sentiment was somewhat soured by the plan because of concerns that political gridlock would stop any form of the bill from passing.

Wholesale Inventories for July rose 0.8% from 0.6% increase reported in June, and higher than the 0.7% increase that economists had forecasted. Inventories rose despite sales in July remaining flat, a sign that could indicate GDP growth in the third quarter.

As we approach the tenth anniversary of the September 11th terrorist attacks on Sunday, take the time to give thanks for the many blessings and freedom we have, and remember those who have sacrificed to protect those freedoms.

Have a good weekend!

Market Indices/Statistics:

  • Dow closed down 303.68 pts/-2.69% to 10,992.13
  • S&P closed down 31.67 pts/-2.67% to 1,154.23
  • Nasdaq closed down 61.15 pts/-2.42% to 2,467.99
  • All 30 Dow stocks closed lower
  • All 10 S&P 500 sectors closed lower
  • Energy was the worst performing sector (-3.24%)
  • The VIX was up 4.33 points to 38.67
  • Oil is down $1.89 to $87.17
  • Nat Gas is down $0.063 to $4.005
  • Gold is down $1.20 to $1,856.80
  • Euro vs. Dollar down $0.0220 to $1.3662
  • Dollar vs. Yen up $0.06 to $77.54

Companies in the News:

Valeant Pharmaceuticals traded lower (-4.21% to $40.91) after announcing the mailing of an offer and take-over bid for all of the outstanding shares of Afexa Life Sciences Inc. to Afexa’s shareholders. The offering is for C$0.71 per share, and expires on October 17, 2011.

Shares of McDonald’s were also down on the day (-4.04% to $85.03) after reporting August comparable sales. McDonald’s reported that sales in the U.S. grew 3.9% and global sales were up 3.5%, but shares fell because analysts had been forecasting for U.S. growth of 4.5% and global growth of 5%.

Prologis, Inc. announced the sale of eight wholly owned assets as well as its interest in the Prologis Korea Fund yesterday after the closing bell. Shares of PLD fell (-4.36% to $25.65) in today’s trading.

Earnings:

Supermarket and convenience store operator, The Kroger Co. traded lower (-5.70% to $22.02) after reporting Q2 results before the opening bell this morning. Kroger reported Q2 earnings per share of $0.46, on $20.9 billion in revenue, beating analysts’ estimates of $0.43 per share on $20.5 billion in revenue. Shares traded lower because FY guidance was reported at $1.85-1.95 per share, missing expectations of $1.97 per share.

Texas Instruments Inc. traded higher (+1.09% to $26.08) despite lowering its forecast for the third quarter. TXN now sees earnings per share for Q3 to be $0.56-0.60, revised from $0.55-0.65 per share, and revenue to be $3.23-3.37 billion, down from $3.40-3.70 billion. Shares traded higher because of a note from Stern Agee saying the pullback in semiconductors could provide a good entry point for investment.

Shares of Korn Ferry International tumbled today (-15.54% to $12.66) after reporting Q1 earnings after the closing bell yesterday. The executive search firm reported Q1 earnings per share of $0.33 (in-line with expectations) on revenue of $206 million, ahead of forecasts which had predicted revenue of $201 million. Shares were under pressure because the Q2 outlook of $0.30-0.36 per share was lower than the consensus estimate of $0.35 per share.

Coming Monday:

Economic Reports: None; Earnings from Brady Corp.