Markets Lower, Closing News 4/10/12

Markets experienced their biggest decline of the year today on concern over the global economic recovery and pessimism over the upcoming earnings season.  Pressure also came from a big decline in European markets as traders there reacted to rising bond yields as well as to Friday’s U.S. employment results after an extended holiday closure in the European markets.

Yields on 10-year Spanish bonds jumped to the highest level of the year, while Italian 10-year yields gained near the highest level in almost two months; this added to concerns over the financial health of the region and the fate of its recovery.

The S&P 500 fell below the important support level of 1,370, while the Nasdaq closed under 3,000.

Rick Santorum announced that he would be suspending his campaign for the Republican presidential nomination.  Most of his comments centered on a need to focus on his family, and he made no mention of Mitt Romney who has more than twice as many delegates as Santorum and is expected to reach the number needed to secure the nomination by June.

President Obama spoke today seeking support for the “Buffett Rule,”  that states individuals making more than $1 million a year should pay more in taxes than middle class people.  His speech definitely sounded campaign-ish as President Obama plans to establish fairness in the tax code as a key hallmark of his re-election campaign.

Dow Futures have moved into positive territory and are on the rise (+20) after positive earnings from Alcoa were released.

Market Indices/Statistics:

  • Dow closed down 213.66 pts/-1.65% to 12,715.93

  • S&P closed down 23.61 pts/-1.71% to 1,358.59

  • Nasdaq closed down 55.86 pts/-1.83% to 2,991.22

  • 1 of the 30 Dow stocks closed higher

  • All 10 S&P 500 sectors closed down

  • Consumer Staples was the least negative sector (-0.94%); Consumer Discretionary was the most declining sector (+2.44%)

  • The VIX was up 1.58 to 20.39

  • Oil is down $1.24 to $101.22

  • Nat Gas is down $0.080 to $2.027

  • Gold is up $15.70 to $1,659.60

  • Dollar vs. Euro is up $0.001 to $1.312

  • Dollar vs. Yen is up $0.310 to $81.830

Companies in the News:

Best Buy Co. (BBY, -$1.33/-5.9% to $21.32) shares traded lower today after its CEO, Brian Dunn, announced his intention to resign from the company acknowledging the fact that the company needs new leadership to address the challenges facing the company.  The company has been under pressure as its business model, big box retailer of home entertainment electronics, has been called into question, especially in the face of Amazon’s business model – largely as it relates to pricing power and tax treatment.  Late breaking reports from the WSJ are claiming that Brian Dunn resigned in the midst of a personal conduct probe unrelated to the business.

Hewlett Packard Co (HPQ, +$0.13/+$0.56 to $23.27) was the lone positive Dow component after announcing that it has developed “Converged Cloud” which “enables enterprises to incorporate a blend of public, private and managed cloud services with their existing IT to create a seamless hybrid environment that rapidly adapts to their changing requirements."


Alcoa Inc. (AA, -$0.28/-2.9% to $9.32) announced Q1 adjusted EPS of $0.10 vs. expectations of (-$0.04); revenue was $6.0 billion, higher than analysts’ expectations of $5.77 billion. Earnings were stronger on higher productivity and despite a 9% drop in aluminum prices.  The company forecasted global growth in all business segments and an increased demand for aluminum.  CEO has improving confidence in the U.S., China and even Europe.  Shares are trading up 5% in the after-market.

SUPERVALU Inc. (SVU, +$0.81/+15.2% to $6.13) reported Q4 EPS of $0.38 vs. expectations of $0.35; revenue was $8.2 billion, 5.0% lower than the $8.66 billion reported in the year ago period and slightly lower than the $8.3 billion estimated by analysts.  Earnings were better than expected as the company had been trying to cut costs in order to lower prices and attract competitors’ customers.  Those strategies, coupled with a positive report that is reshaping a broad view that the company is heading for financial distress, has the stock reacting positively.  The company gave a strong FYE outlook of $1.27-$1.42 above estimates of $1.19.

Coming Wednesday:

Economic Reports:  Weekly Mortgage Applications (+4.8% previously) at 7:00 a.m.; Feb. Import Price Index (+0.8% expected) at 8:30 a.m.; Fed Beige Book and Monthly Budget Statement at 2:00 p.m.  Earnings: Progressive Corp. (est:$0.39)

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