Thursday, April 9, 2009

Stocks surge on Wells Fargo announcement

Wells Fargo (WFC) spoke & the markets listened. Dow is up almost 200, taking it over 8K for the first time in 5 trading days. Advancers are over decliners 8-1 & NAZ jumped 48. Banks are very strong on the Wells Fargo pre earnings announcement, the S&P 500 FINANCIALS INDEX rose 10 to 138. The next stop will be the 138 interim peak set over 2 months ago.

Wells Fargo, a major bank less troubled by recent problems at other banks, announced it expects earnings of $3B in Q1, greatly surpassing expectations. The stock is up almost 4 to 18.83. WFC estimated Q1 EPS of 55¢, more than double the average forecast. Mortgage applications were up 64% from the prior year although 75% were for refinancing mortgages to take advantage of lower interest rates. WFC also said that Wachovia accounts for 40% of their revenues & that business has been steadily improving. Their loan loss provision will be $4.6B in Q1. But they did warn it's premature to say the economy has bottomed.

Wells Fargo Quarterly Profit Beats Estimates, Helped by Wachovia Purchase


Today's rally is taking just about every security with it. The Alerian MLP Index is up 1.73, pushing 198. Dow Jones REIT index is up a strong 5 to 113 & junk bonds funds are very strong. The VIX, volatility index, dropped 2 to 37, a low for the year (although still elevated relative to prior standards). Even oil is up 2½.


New jobless claims of 654K fell slightly from prior week's revised number of 674K. Although down from the prior week, it's still very troubling. The 4 week average, a less volatile number, was 657K. The number receiving unemployment benefits is approaching 7M, the 11th straight week the number has increased.

New jobless claims fall more than expected to 654K- AP


Wal-Mart (WMT), Dow stock, reported same-store sales for 5 weeks ending ending Apr 3 rose only 1.4%, below expectations of 3.2%. The stock fell 2.35 to 50.26. When WMT feels the effects of the economic slowdown, that's worth worrying about.

Wal-Mart's March Sales Rise Less Than Some Analysts Expected; Shares Drop


Bulls are happy as 8K Dow is being tested again.

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