February 20, 2009

Better Trades US News

Further adding to a six-year low in the Dow Jones, the markets remained in the red for the last trading session of the week, With disappointing earnings from Lowe’s and JCPenney, investors are flooded with doubts about the economy, thus the sellers remain in the markets.

On top of that, the financial sectors, which lead the downward trek, saw shares of Citigroup (C) and Bank of America (BAC) establish new 52-week lows at $1.61 and $2.53 per share respectfully. Economists now believe that the financial troubles within our banking industry are so bad, that the government should step in and take control, something they previously resisted.

As a whole, the financial sector lost more than 3.4% of its value today, as other companies such as Wells Fargo (WFC) fell more than 9%, PNC Financial (PNC) dropping nearly 4%, and Oriental Financial Group (OFG) slipping nearly 20%.

The only economic report released today, came from the Labor Department, showing consumer prices advanced in January, bolstered by an increase in energy costs. As a key indicator of inflation, the CPI moved higher by 0.3%, its largest increase since a 0.7% jump back in July.

With the recession in full swing, economists believe that prices will remain in-check, as inflation has stayed flat over the past year, sitting at its lowest reading in more than 50 years. The yearly inflation number was at zero. Not since 1955, with a decline in inflation of 0.4%, has an annual reading been so low.

Further into the report, the core CPI, which excludes the prices of food and energy, inched higher as well, posting an increase of 0.2%, double what economists were anticipating. On a yearly basis, core inflation has increased only 1.7%, its lowest reading since August 2004, when inflation moved at the same pace.

Throughout January, energy prices increased 1.7%, with the advance in the price of gasoline, up 6%, leading the way. Food costs, however, were only up a modest 0.1%, and for the year, food costs are up 5.2%.

Reporting before the opening bell on Friday, JCPenney Inc. (JCP), one of the country’s leading retailers, announced their quarterly results for the 4Q in which the company posted a huge decline in profits as consumers continue to tighten their spending habits. For the period, JCP recorded net earnings of $211M, or $0.95 per share, down more than 50% from last year’s earnings on total sales of $5.76B, which was down nearly 10%. Analysts were looking for the retailer to post earnings of $0.92 per share on sales of $5.76B. With JCPenney meeting expectations, shares were up $0.18 to close at $15.10 per share.

The nation’s second largest home improvement retailer, Lowe’s Cos. Inc. (LOW), made it known early Friday morning that the company’s 4Q profits plummeted as buyers were selective as to exactly how much they were willing to spend. Forced to discount items, Lowe’s was hurt by lower prices, which cut into their profit margins but reduced their inventories. For the quarter, Lowe’s booked a profit of $162M, or $0.11 per share, down more than 60% year-over-year, with sales coming in 4% lower at $9.98B. Analysts were looking for earnings to come in at $0.12 per share on total revenues of $10.1B. Shares of LOW slipped nearly 7% by the close, losing $1.12 to $15.86 per share.

Within the oil markets, investors watched as crude followed the markets lower today, following yesterday’s inventory report. by the end of trading, the price for a barrel of light, sweet crude for March delivery, which expires today, dropped $0.54 to settle at $39.97 a barrel, while the more heavily traded April contract declined as well, falling $0.15 to settle at $40.03 a barrel.

In additional NYMX trading, gasoline futures slipped $0.024 to $1.0746 a gallon. Heating oil declined $0.0071 to $1.1967 a gallon, while natural gas for March delivery fell $0.07 to $4.01 per 1,000 cubic feet.

In the Forex trade, the U.S. Dollar was lower against foreign currencies heading into the evening hour, as the 16-nation Euro traded at $1.2841, down from yesterday’s price of $1.2632, but falling as low as $1.2555 before advancing. Additionally, the British pound advanced on the greenback, buying $1.4442, higher than Thursday’s price of $1.4302. Versus the Japanese yen, the Dollar traded lower as well, buying 93.10, down from last night’s price of 94.40.

The bond markets rebounded today, following the previous two-day slide that the markets were in, as investors placed their capital back into the safety of government-backed securities. By the close of trading today, the benchmark 10-year note jumped 20/32 to 99 23/32 as its yield decreased to 2.78%, down from the precious session’s yield of 2.86%.

Additionally, the 30-year note surged in trading today as well, advancing 1 26/32 to 99 24/32 with its yield slipping to 3.56% from Thursday’s yield of 3.68%. Finally, the 2-year note also gained on the day, adding 2/32 to 99 27/32, while its yield dropped to 0.94%, down from yesterday’s 0.99%.

Stumbling into the close, the markets were trading off their lows of the day, as the Dow Jones Industrial average fell by 100.28 points, or 1.34%, to close the week at 7,365.67, down more than 6% for the week. Additionally, the broader market indicators concluded the day and the week in the red as well.

At the close, the S&P 500 index lost 8.90 points, or 1.14%, to conclude the session at 770.05, down nearly 7% for the week, while the NASDAQ composite index retreated by 1.59 points, or 0.11%, to finish at 1,441.23, losing more than 6% since the start of the week.

2009 Better Trades Article

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BRIAN MULLIN