Markets rise on Q1 earnings expectations

Dow gained 65, advancers 2-1 ahead of decliners & NAZ was up 9.  Bank stocks had modest gains although Citigroup (C) was up 11¢ following no movement yesterday when it reported drab earnings.

S&P 500 FINANCIALS INDEX

Value   215.10

Change     0.79    (0.4%)

The MLP index was up almost 1 to the 379s & the REIT index gained 2¼ to the 237s.  Junk bond funds moved little & Treasuries also were flattish.  Oil increased for the 4th time in 5 days on speculation that the European Central Bank will further raise interest rates to strengthened the € against the dollar.  Gold rose to a record just above $1,500 on US debt concerns weighed on the dollar, boosting demand for the precious metal as an alternative investment.

JPMorgan Chase Capital XVI (AMJ)



Treasury yields:

U.S. 3-month        0.05

U.S. 2-year            0.64

U.S. 10-year          3.36

CLK11.NYM ...Crude Oil May 11 ...108.15  ....1.03  (1.0%)

GCJ11.CMX ....Gold Apr 11 .........1,496.50   ...4.20  (0.3%)

Photo:   Bloomberg

The Treasury will wait for General Motors (GM) Q1 earnings before deciding whether to sell more of its investment.   The Treasury still has 500M shares (33% ownership).  The stock has dropped 20% this year & is 10% off from its IPO price. While the Treasury may be willing to take a loss on the shares, the administration is looking to sell at least in the range of the $33 IPO price. The Treasury needs to sell at about $53 to break even.

U.S. Treasury Said to Wait for GM Results Before Decision on Selling Stake


Intel (INTC), a Dow stock, just reported Q1 sales & profits well ahead of estimates & forecasted Q2 higher as well.  Revenue for the quarter ended in Mar rose 25% to $12.9B (on a non-GAAP basis) & EPS was 59¢. Analysts were forecasting $11.6B in revenue & 46¢ for EPS.   For Q2, INTC is guiding revenue of $12.4-13.4B, with a midpoint of $12.9B, well ahead of the average $11.9B estimate.  EPS is expected at 32-35¢, above the 28¢ estimate.  Gross margins in Q1 were 62% on a non-GAAP basis, down 1 percentage point from last year.  They will be about the same in Q2, but are expected to average 64% for the full year.  CEO Paul Otellini said the jump in revenue was, “fueled by double digit annual revenue growth in every major product segment and across all geographies.”  Revenue in its “PC Client” division rose 17%, while “Data Center” revenue was up 32%.  Revenue in the category of “other Intel architecture group revenue” was up 70%, while revenue from the “Atom” line of low-power microprocessors came in at $370M (up 4%).  The stock rose $1.14 to $21 during regular trading & is up another 24¢ in after hours trading.

Intel Q1 Blows Away Estimates; Q2 View Beats; Stock Up 6%


IBM (IBM), another Dow stock, just reported good Q1 earnings but the stock dropped 54¢ during regular trading & is down another $1.15 after hours.  Earnings season is starting to heat up & continues to give inconclusive results.  Dow has been lumbering along in sideways trading for the last 4 weeks.  Stay tuned for more earnings tomorrow.

Dow Industrials (INDU)

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