Tuesday, May 3, 2011

Markets soft on weaker earnings reports

Dow was flattish (actually down 7), decliners over advancers 2-1 & NAZ fell 17. Bank stocks were a little higher but the Financial Index can not make headway.

S&P 500 FINANCIALS INDEX

Value	220.22
Change	0.55 (0.2%)

MLPs sold off again, taking the index down 5 to 379. But the REIT index was off only a fraction in the 248s. Junk bond funds were off a penny or so & Treasuries were slightly higher taking yields near the lowest levels in 3 months. Oil dropped for a 2nd day on signs growth in the US may slow, while price swings intensified on concern the death of Osama bin Laden will lead to retaliatory attacks by terrorists. Gold was weak but silver is adjusting to $43 after major selling yesterday.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.01%
U.S. 2-year		0.60%
U.S. 10-year		3.27%

CLM11.NYM

...Crude Oil Jun 11

...112.63

...

0.89

(0.8%)

GCK11.CMX

...Gold May 11

...1,543.50

...

13.30

(0.9%)

Orders placed with US factories rose more than forecast last month on increasing demand for machinery & computers. Bookings for manufacturer goods climbed 3%, a 5th consecutive increase, after a 0.7% Feb advance, according to the Commerce Dept. The report also revised up estimates for capital equipment bookings issued last week. Manufacturing continues strong along with high unemployment.

Orders Placed With U.S. Factories Increase More Than Forecast

Pfizer Profit Beats Analyst Estimates on Lower Costs

Lipitor
Photo: Bloomberg

Pfizer, a Dow stock, Q1 profit rose 10%, despite flat revenue, due to lower costs for production & research & a smaller tax bill. EPS was 28¢, up from 25¢ last year. Excluding one-time items, EPS was 60¢, 1% below last year. Revenue was $16.5B, essentially even with the prior year. PFE maintained its forecast given in Jan for 2011 EPS of $2.16-2.26, excluding just over $1 in one-time items. But it reduced the revenue forecast, to $66.2B from $67B & for a 2nd time reduced its 2012 revenue forecast, this time to $63.5B from $64.25B. 2012 is crucial, because Lipitor, the world's top-selling drug with nearly $11B in annual sales, loses US patent protection at the end of Nov. Chief Executive Ian Read said he was pleased "with our solid financial performance during the quarter despite the loss of (patent) exclusivity of several products in the U.S." & other countries. "I believe we are well positioned to succeed in fixing our innovative core, which, if successful, can lead to greater value in both the near and longer term," he added. The stock fell 57¢.

Pfizer First-Quarter Profit Beats Analysts’ Estimates on Declining Costs

Pfizer, Inc. (PFE)

Clorox Q3 net income fell 8% as it wrestled with higher costs & a fall-off in some of its well-known brands. As a result, it trimmed the top end of its earnings outlook. Revenue rose 1.3% over last year, an improvement from the 3% decrease it saw in the previous 2 qtrs. But EPS fell to $1.09 from $1.16 per share. Excluding one-time items, EPS was $1.03, just below expectations of $1.04 but revenue was $1.3B, in line with expectations. CLX faces rising costs for raw materials & has raised prices. The stock dropped 3 to 67.

Clorox 3Q net falls as it deals with higher costs AP

Clorox Company (The) (CLX)

Markets are pausing again with a downward bias as earnings are less exciting. Sears Holdings (SHLD) is down $7 (almost 10%) after predicting a Q1 loss. While Sears is not one of the stronger performers, this suggests retailers could disappoint. Apr auto sales should be out later today & expectations are not clear. Considering a lack of pickup from earnings & the state of world events, the rest of the week could be sideways while waiting for the jobs report on Fri.