Markets Mixed, Closing News 2/21/12

The Dow and S&P closed higher encouraged by the resolution of the Greek debt deal that was reached over the weekend which lead to the Dow briefly touching 13,000.  The exuberance was offset by the continued rise in the price of oil as tensions in Iran continue to threaten supply from the country. 


European finance ministers agreed to a 130 billion Euro bailout for Greece to avoid a default in March; however, there is still a lot of talk about how Greece will fix its debt to GDP ratio as well as what officials will do to heal the country’s economy. 


Oil (brent crude) prices settled at a 9-month high, crossing over $120 per barrel, amid supply disruptions. 


Market Indices/Statistics:



  • Dow closed up 15.82 pts/+0.12% to 12,965.69

  • S&P closed up 0.98 pts/+0.07% to 1,362.21

  • Nasdaq closed down 3.21 pts/-0.11% to 2,48.57

  • 19 of the 30 Dow stocks closed higher

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

  • Energy was the most positive sector (+0.83%);  Healthcare was the biggest laggard (-0.65%)

  • The VIX was up 0.41 to 18.19

  • Oil is up $2.45 to $106.05

  • Nat Gas is down $0.037 to $2.889

  • Gold is up $34.80 to $1,760.60

  • Euro vs. Dollar is down $0.0009 to $1.3236

  • Dollar vs. Yen is up $0.06 at $79.70

Companies in the News:


The upward march in oil prices took its toll on airlines today.  U.S. Airways (LCC, -$1.01/-11.4% to $7.89), Delta (DAL, -$0.78/-7.2% to $10.05), Southwest Airlines (LUV, -$0.33/-3.5% to $9.10), and JetBlue Airways (JBLU, -$0.49/-8.5% to $5.30) were among the biggest decliners today.


Wynn Resorts (WYNN, +$6.34, +5.6% to $119.40) shares were up today on news that the company’s Compliance Committee found several instances in which co-founder, Kazuo Okada and his associates engaged in improper activities for their own benefit in apparent violation of U.S. anti-corruption laws and gross disregard for the Company’s Code of Conduct.   Okada had accused Steve Wynn of making improper payments and forcibly buying out his 20% stake in the company at a steep discount; Okada’s case was determined to be unsuitable, and the Wynn Resorts board asked Mr. Okada to resign from the board.
 


Earnings:


Reporting after the close, Dell Inc. announced EPS of $0.51 vs. expectations of $0.52; revenue was $16.0 billion, 2.2% higher than the $15.7 billion reported in the year ago period.  Shares are under continued pressure, trading down 4.7% from the 4:00 price of $18.21 in late night trading.


Home Depot Inc. (HD, +$0.21/+0.5% to $46.92) reported EPS of $0.50 vs. expectations of $0.42; revenue was $16.0 billion, 5.9% higher than the $15.1 billion reported in the year ago period.  The warm weather helped the company’s results as Spring projects are drawing customers earlier than normal; same store sales were up 2-2.5%.  Outlook was positive as well thanks to the recovering homebuilder industry; FYE EPS is expected to be about $2.79 a share vs. analysts’ estimates of $2.77.


Kraft Foods Inc. (KFT, +$0.56/+$1.5% to $38.57) announced EPS of $0.57, in line with expectations; revenue was $14.7 billion, 6.6% higher than the $13.8 billion reported in the year ago period.  Higher prices helped drive revenue growth as the company plans to split its businesses into one focused on snacks like Oreo and another focused on grocery brands like Maxwell House.  The company said it expects to deliver organic net revenue growth of approximately 5% in 2012.


Macy's Inc. (M, +$0.44/+1.2% to $36.69) returned EPS of $1.70 vs. expectations of $1.65; revenue was $8.7 billion, 5.5% higher than the $8.3 billion reported in the year ago period.  Macy’s earnings beat expectations after a strong holiday season, increasing online sales and region-specific in-store inventory.  The company expects fiscal 2012 earnings of $3.25-$3.30 per share vs. expectations of $3.27 per share.


Medco Health Solutions Inc. (MHS, -$0.82/-1.3% to $63.19) reported EPS of $1.25 vs. expectations of $1.17; revenue was $19.0 billion, 12.2% higher than the $16.9 billion reported in the year ago period.  The company’s profits were boosted by an increase in the dispensing of more profitable generic drugs.  The company did agree to a takeover bid by Express Scripts (ESRX, +$0.08/+0.2% to $52.31) which will create the largest pharmacy benefits manager in the U.S. and has drawn requests for more information by the Federal Trade Commission.  The Food Marketing Institute, representing the biggest grocery chains, has objected to the merger, claiming that the combined company would be able to unfairly cut its payments to supermarket pharmacies.


Medtronic Inc. (MDT, -$0.95/-2.4% to $38.99) announced EPS of $0.84, in line with expectations; revenue was $3.918 billion, 1.1% lower than the $3.961 billion reported in the year ago period.


RadioShack (RSH, -$0.62/-7.9% to $7.26) returned EPS of $0.12, in line with expectations; revenue was $1.39 billion, 1.4% higher than the $1.368 billion reported in the year ago period. The company had already warned earlier in January that earnings would be disappointing year over year as the company’s margins are being pressured by the cost of its mobile phone business; the company’s outlook for Q1 was gloomy as well though management is hopeful for the rest of the year.


Saks Inc. (SKS, +$0.36/+3.3% to $11.23) announced Q4 EPS of $0.17 vs. expectations of $0.14; revenue was $925.1 million, 6.8% higher than the $866.3 million reported in the year ago period.  Robust online sales helped the company’s results as it predicts continued sales growth at its luxury department stores. 


Wal-Mart Stores Inc. (WMT,-$2.41/-3.9% to $60.07) reported EPS of $1.44 vs. expectations of $1.45; revenue was $123.2 billion, 5.9% higher than the $116.4 billion reported in the year ago period.  Wal-Mart’s profit was negatively affected by holiday promotional price cuts.  This strategy, employed to attract shoppers moving to dollar stores, is expected to continue, further affecting margins.  Although Wal-Mart stores did see more customers, they did not spend as much as anticipated.   The company forecasted first-quarter earnings per share of $1.01-$1.06 vs. estimates of $1.05 per share.


Coming Wednesday:


Economic Reports: Weekly Mortgage Applications at 7:00 a.m., Jan. Existing Home Sales (4.66 mil. expected) at 8:30 a.m.  Earnings:  Boston Beer Co. (est: $1.12), Donaldson Co. Inc. (est: $0.71), MGM Resorts Intl (est: $-0.19), Rogers Commun Inc. (est: $0.65), TJX Cos. (est: $0.62), Toll Brothers Inc. (est: $0.02), Zale Corp. (est: $0.77), Analog Devices Inc. (est: $0.48), Continental Resources Inc. Oklahoma (est: $0.77), Flowserve Corp. (est: $2.27), Fluor Corp. (est: $0.82), Hertz Global Hldgs Inc. (est: $0.21), Hewlett-Packard Co. (est: $0.87), Limited Brands Inc. (est: $1.46), Whiting Petroleum Corp. (est: $0.96), Williams Companies Inc (est: $0.40)


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