June 23, 2009

More Homes Being Sold, But For Less

Continuing with the previous week’s sell-off, the major indices traded sporadically, venturing into and out of positive ground throughout the session. Tuesday’s trading witnessed cautious investors remaining on the sidelines following Monday’s loss in the Dow of more than 200 points.

On the economic front, the National Association of Realtors announced early Tuesday morning that sales of previously occupied houses increased moderately in May, marking the third increase in sales of existing homes thus far this year.

In May, sales increased 2.4% to a seasonally adjusted rate of 4.77M units. May’s numbers come on the heels of April’s adjusted rate of 4.66M units. Prices for existing home sales receded from $207,900 to $173,000, a drop of nearly 17%, yet higher than April’s price of $166,600.

With a small docket of company earnings, automotive dealer America’s Car-Mart Inc. (CRMT) announced before the opening bell that the company’s profit declined year-over-year, as consumers are reluctant to make big-ticket purchases. For the 4Q, CRMT booked net earnings of $5.1M, or $0.43 per share, versus a gain of $6M, or $0.51 per share a year ago.

Quarterly revenues advanced from $76.5M to $77.9M, an increase of 1.7%. On average, analysts were looking for earnings of $0.38 per share on total revenues of $75.54M. By the sound of the closing bell, shares of CRMT surged 11%, adding $1.95 to end the session at $19.61 per share.

Also announcing before the bell was Steelcase Inc. (SCS), which posted a profit in the 1Q versus the previous year due largely to cost cutting measures taken after the company’s 4Q. As the world’s largest office furniture maker, Steelcase posted net income at breakeven, compared to a profit of $22.1M, or $0.16 per share a year ago.

Excluding certain one-time charges, Steelcase posted a profit of $0.02 per share. Results compare with analysts’ expectations of a $0.13 loss per share. Meanwhile, revenues plummeted 33% to $545.6M, but still managed to come in higher than the $543.4M estimated.

Looking ahead to the upcoming 2Q, Steelcase is looking to record net income at breakeven, while analysts are looking for a loss of $0.04 per share. With a better-than-expected earnings release, shares of SCS jumped more than 5% by the close of Tuesday’s trading, adding $0.27 to end the day at $5.33 per share.

Operating in three distinct business segments, manufacturing, recycling, and marketing and trading, Commercial Metals Co. (CMC) made it known before the opening bell that the company booked a net loss in the 3Q of $13.1M, or $0.12 per share, versus a profit of $59.5M, or $0.51 per share from a year ago. On average, analysts were looking for the metals company to post a quarterly loss of $0.14 per share.

Meanwhile, the company’s net sales came in at $1.34B, down more than 53% from last year’s sales of $2.91B. Analysts, within the industry, were looking for CMC to post revenues of $1.49B. Looking ahead to the 4Q, CMC projects similar results as the 3Q, while analysts are predicting earnings of $0.12 per share. At the close of trading, shares of CMC were up $0.60, or 4.2%, to $14.81 per share.

Traders continue to invest in a volatile oil market as concerns over the global economy have recanted demand for crude, thus pushing the price lower. At the close of trading, the price for a barrel of light, sweet crude for August delivery surged by $1.74 to settle at $69.24. Tuesday’s closing price followed the previous session’s closing price of $67.50, after falling $2.52 throughout the session.

In additional NYMEX trading, the price of gasoline for July delivery advanced $0.0335 to $1.8932 a gallon, while heating oil gained $0.0415 to $1.769. Natural gas for July delivery decreased $0.064 to $4.007 per 1,000 cubic feet.

Within the bond markets, the Treasury auctioned off nearly $60B worth of 2-year notes on Tuesday, in efforts to continue to raise capital in order to finance the government’s bailout and stimulus programs. By the close, the benchmark 10-year note was up 10/32 to 95 22/32 while yielding 3.63%, down from Monday’s yield of 3.68%.

Additionally, the 30-year note was higher as well, adding 1 1/32 to 97 29/32 with a yield of 4.37%, down from yesterday’s 4.43%. Lastly, the 2-year note, following today’s auction, was up marginally, adding 1/32 to 99 17/32 while yielding 1.10%, down from the previous yield of 1.13%.

As for the Forex markets, the U.S. Dollar was trading lower for the most part against the major currencies on Tuesday, with the 16-nation Euro increasing in value versus the greenback, buying $1.4074 up from the previous day’s price of $1.3865. Furthermore, the British pound traded higher against the Dollar as well, buying $1.6453, up from Monday’s price of $1.6246.

In additional Forex trading, the greenback slipped against the Japanese yen, falling from 95.93 to 95.22. Versus the Swiss franc, the Dollar lost ground as well, slipping to 1.0672, down from last night’s price of 1.0862. Lastly, the Dollar lost ground on the Canadian dollar, buying 1.1501, down from Monday’s price of 1.1520.

With the June 23 trading session concluding, the Dow Jones Industrial average slipped 16.10 points, or 0.2%, to end the day at 8,322.91, while the broader market indicators concluded the session mixed.

The S&P 500 index advanced 2.05 points, or 0.2%, to end the session at 895.10, while the NASDAQ composite index fell 1.27 points, or 0.1%, to close the day at 1,764.92.

2009 Better Trades Article

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BRIAN MULLIN