Markets Higher, Closing News 2/23/12

Markets closed higher largely encouraged by lower than expected U.S. jobless claims which remained unchanged week over week in a day that offered little new news out of Europe.


Lending some subtle encouragement to U.S. markets, a German index of the country’s business climate showed that business sentiment rose to the strongest level in seven months.  The survey consists of 7,000 companies and had a reading of 109.6 vs. expectations for 108.8.  Although this news was tempered by an EU official comment suggesting that the euro zone economy is headed for its second recession in just three years.


In other economic news, the Federal Housing Finance Agency reported that December home prices climbed 0.7%, higher than the 0.1% expected and after a 1% rise in November.


Market Indices/Statistics:



  • Dow closed up 46.02 pts/+0.36% to 12,984.69

  • S&P closed up 5.80 pts/+0.43% to 1,363.46

  • Nasdaq closed up 23.81 pts/+0.81% to 2,956.98

  • 20 of the 30 Dow stocks closed higher

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

  • Financials was the most positive sector (+0.96%);  Utilities was the only laggard (-0.20%)

  • The VIX was down 1.39 to 16.80

  • Oil is up $2.27 to $108.55

  • Nat Gas is down $0.026 to $2.856

  • Gold is up $10.50 to $1,781.80

  • Euro vs. Dollar is down $0.0007 to $1.3366

  • Dollar vs. Yen is up $0.01 at $80.00

Companies in the News:


Darden Restaurants Inc. (DRI, -$0.32/-0.6% to $49.80) provided Q3 guidance of $1.23-$1.35, ahead of average analyst expectations of $1.19.  The company cited an earlier start to the Lenten season and warmer weather which both helped draw diners to the company’s restaurant chains, allowing for a blended 4% increase in same store sales.   The company confirmed its previous full year EPS guidance of $3.55 to $3.65 per share and sales of between $8.03 billion and $8.06 billion vs. an expected range of $3.38 to $3.66 and sales between $7.88 billion and $8.09 billion.


Vivus (VVUS, +$8.26/+78.4% to $18.73) soared after receiving backing from an FDA advisory committee for Qnexa, a new diet pill that would be the first drug approved to treat obesity in 13 years.


Earnings:


Kohl's Corp. (KSS, -$3.08/-5.9% to $49.11) reported EPS of $1.81 vs. expectations of $1.80; revenue was $6.018 billion, 0.3% lower than the $6.038 billion reported in the year ago period.  Kohl’s raised prices in an effort to combat lower margins which resulted in a loss of customers in their stores.  The company said it would earn FYE EPS of $4.75 in 2012, below analysts’ estimates of $4.95 and same store sales are expected to rise only 1% in the first quarter.


Hormel Foods Corp. (HRL, -$0.65/-0.0% to $28.39) returned Q1 EPS of $0.48, in line with expectations; revenue was $2.04 billion, 6.1% higher than the $1.922 billion reported in the year ago period and slightly above expectations of $2.03 billion.  The company’s operating profit fell 9% in the grocery products segment, hurt by lower volumes and higher raw material costs – especially pork prices.  The company did affirm its FYE outlook of $1.79-$1.89 per share.


Hewlett Packard Co (HPQ, -$1.89/-6.5% to $27.05) announced Q1 EPS of $0.92 vs. expectations of $0.87; revenue was $30 billion, 7.1% lower than the $32.3 billion reported in the year ago period. The company cited weak PC and printer sales as a drag on its revenue and outlook.  The company will be re-strategizing to take advantage of HP’s technology leadership as it finds ways to improve execution, increase effectiveness and find new product lines.  Q2 earnings are expected to be between $0.88-$0.91 vs. expectations of $0.95.


Target Corp. (TGT, +$1.53/+2.9% to $54.50) reported EPS of $1.43 vs. expectations of $1.40; revenue was $21.3 billion, 3.0% higher than the $20.7 billion reported in the year ago period.  The company was able to return a higher than expected profit even in a holiday environment of heavy discounting.  Target was able to control damage to its gross margins through sales transacted through its credit and debit card rewards. The company forecasted 3% growth in same store sales with earnings expected to be between $4.05-$4.25 vs. expectations of $4.27. 


Sears (SHLD, +$9.95/+19.2% to $61.80) reported EPS of $0.54 vs. expectations of $0.78; revenue was $12.5 billion, 5% lower than the $13.1 billion reported in the year ago period.


Earnings After the Bell:


American Intl Grp Inc. (AIG, +$0.32/+$1.2% to $27.99) reported EPS of $0.82 vs. expectations of $0.61; revenue was $9.0 billion, 4.8% higher than the $8.6 billion reported in the year ago period. AIG shares are trading up 3.1% in after-market trading.


Coming Friday:


Economic Reports:  U. of Michigan Confidence (73.0 expected) at 9:55 a.m.; Jan. New Home Sales (315k expected) at 10:00 a.m.  Earnings:  Alpha Natural Resources Inc. (est: $0.26), Eldorado Gold Corp. (est: $0.19), Interpublic Grp Of Cos. (est: $0.39), J.C. Penney Co. Inc. (est: $0.68), Newmont Mining Corp. (est: $1.26), Pepco Hldgs Inc. (est: $0.18), Telefonica S.A. ADS (est: $0.51)


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