Markets Lower, Closing News 2/29/12

Markets began the day in positive territory after a better than expected GDP report, however, the indexes gave up their gains after Fed Chairman Ben Bernanke failed to mention additional plans for more quantitative easing during his testimony to Congress. 

Gross domestic product grew at an inflation-adjusted annual rate of 3.0% in the fourth quarter which was better than the +2.8% expected by analysts.

Chairman Bernanke did confirm that we have seen some positive developments in the labor market, but unemployment levels remain unsatisfactory which may mean there will need to be additional stimulus measures taken.

The U.S. dollar moved higher on Bernanke’s comments which caused gold and silver to fall sharply.

A few key messages from the Beige Book report on January and early February released this afternoon included: hiring was slightly higher; manufacturing continued to expand; consumer spending was generally positive and residential real estate improved.

Market Indices/Statistics:

  • Dow closed down 53.05 pts/-0.41% to 12,952.07

  • S&P closed down 6.50 pts/-0.47% to 1,365.68

  • Nasdaq closed down 19.87 pts/-0.67% to 2,966.89

  • 9 of the 30 Dow stocks closed higher

  • 1 of the 10 S&P 500 sectors closed up

  • Consumer Staples was the only positive sector (+0.26%);  Materials was the biggest declining sector (-1.74%)

  • The VIX was up 0.47 to 18.43

  • Oil is up $0.32 to $106.87

  • Nat Gas is up $0.060 to $2.687

  • Gold is down $92.40 to $1,696.00

  • Euro vs. Dollar is down $0.0002 to $1.3323

  • Dollar vs. Yen is down $0.02 to $81.12

Companies in the News:

Apple (AAPL, +$7.23/+1.4% to $542.44) continued to have all eyes on it as the company again crossed the half a trillion dollar market cap level.  Did you know that if Apple were a country, it would have the 20th largest economy; Apple is bigger than Microsoft and Google combined; does it need its own industry sector – Apple is bigger than the Utilities and Materials sectors. 

Many of the pharmaceutical companies were under slight pressure today after the FDA stated that cholesterol lowering drugs, such as Lipitor, Crestor and Zocor, would now have to include warnings on the labels that the drugs may raise blood sugar levels and could cause memory loss. The agency did confirm that the statin drugs, the best selling drugs in history, have proven to be valuable in preventing heart disease and encouraged patients taking them to continue to do so with care and knowledge of their side effects. Pfizer (PFE, -$0.09/-0.5% to $21.13), AstraZeneca (AZN, -$0.19/-0.4% to $44.89), Merck (MRK, -$0.21/-0.6% to $38.17) and Abbott (ABT, -$0.43/-0.8% to $56.61) were all a bit lower today.

News Corporation (NWS, -$0.03/-0.2% to $20.29) announced that James Murdoch, Deputy COO, has stepped down from his position as CEO of News International amid a scandal involving phone hacking charges directed at several of the division’s high level employees as well as questions about James Murdoch’s knowledge of the hacking.  There have also been charges of police pay offs by staff members of one of News International’s publications.


Carter’s Inc. (CRI, +$4.88/+11.2% to $48.57) reported Q4 adjusted EPS of $0.63 vs. estimates of $0.44; revenue was $606.6 million, 22% higher than the $495.27 million reported in the year ago period and better than analyst estimates of $580.7 million.  Higher sales of the Carter’s and OshKosh B’gosh brands helped boost the company’s profits.  FYE 2012 forecast is $2.40-$2.50 vs. estimates of $2.32.

Liz Claiborne Inc. (LIZ, -$0.61/-5.9% to $9.78) announced Q4 adjusted EPS Of $0.10, in line with expectations; revenue was $447.1 million, 36% lower than the $703.7 million reported in the year ago period and lower than the $477.5 million expected by analysts.  Sales in the company’s biggest brand, Juicy Couture fell 15.4% in the fourth quarter which hurt the company’s results.  The company did try to reassure investors about the success of the brand stating that the declines are lessening with comparable stores sales down only 2% in February and by sharing the expectation that sales would rise 10% in the second half of the year.

Costco Wholesale Corp (COST, +$0.61/+0.7% to $86.06) reported EPS of $0.90 vs. estimates of $0.87; revenue was $23.0 billion, 10.0% higher than the $20.9 billion reported in the year ago period.  Profit was higher thanks to increased gasoline prices which drove members to the company’s discounted gas stations which in turn drew customers inside the stores.  In February, same store sales rose 8%, better than the +7.6% expected by analysts.

Staples Inc. (SPLS, -$1.44/-9.0% to $14.66) announced EPS of $0.41 vs. estimates of $0.40; revenue was $6.5 billion, 1% higher than the $6.4 billion reported in the year ago period.  The office supply store benefitted from a recovering jobs market as it saw increased traffic in North America.  However, the company did warn that US growth would be slow and demand in Europe would be weak

Coming Thursday:

Economic Reports:  Personal Income & Spending (+0.4% for each expected), Jobless Claims (355k expected) at 8:30 a.m.; Jan. Construction Spending (+1.0% expected) and Feb. ISM Manufacturing (54.5 expected) at 10:00 a.m.; Feb. Vehicle Sales (14.0 mil. expected) at 5:00 p.m. Earnings:  Big Lots Inc. (est: $1.73), Dresser-Rand Grp Inc. (est: $0.94), Foot Locker Inc (est: $0.51), Kroger Co. (est: $0.49), Royal Bank of Canada (est: $1.13), Toronto-Dominion Bank (est: $1.76)

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