Dow dropped 42, decliners ahead of advancers almost 2-1 & NAZ fell 14 (hurt by weak earnings from Dell). Bank stocks led the selling, taking the Financial Index down 2 to the 196s (backing off from highs over 199 last week).
The MLP index dropped 3+ to the 405s on profit taking & the REIT index was off 2 to the 242s. Junk bond funds were higher as investors were attracted by their relatively high yields & Treasuries rose on confusion about the Greek debt deal. Oil fluctuated near a 9-month high as reports showed manufacturing activity slowed in Europe & China & UN inspectors in Iran were denied access to a military base. Gold was also little changed.
Photo: Bloomberg
The Greek parliament scrambled to pass laws needed to secure payment of a 2nd bailout. Lawmakers are working on a series of measures demanded in exchange for a €130B rescue. There are plenty of doubts about Greece's ability to meet its reform commitments. Credit ratings agency Fitch downgraded Greece further ahead of a planned bond swap under which it will enforce sharp losses on private creditors as part of the bailout program. It was the first of widely expected cuts from all rating agencies because Greece will pass into technical default on its liabilities once the transaction is completed. "The exchange, if completed, would constitute a 'distressed debt exchange'," Fitch said when it downgraded Greece to C from CCC. When the bond swap is finished, the Greek sovereign rating will drop further to 'restricted default' & then will be re-rated again "at a level consistent with the agency's assessment of its post-default structure & credit profile," Fitch said. Under the terms of the revised agreement, private holders of just over €200B of Greek bonds will take a loss of 53.5% in the face value of their holdings to ease the debt burden. Laws to enact the debt swap are set to be adopted tomorrow. The Greek drama drones on as it has for months.
Greece Rushes to Pass Bailout Laws Amid Protests
Photo: Bloomberg
Home resales surged in Jan to a 1½ year high & the supply of properties on the market was the lowest in almost 7 years, pointing to a nascent housing recovery. The National Association of Realtors said existing home sales increased 4.3% to an annual rate of 4.57M last month, the highest since May 2010. However, the tenor of the report was weakened somewhat by a sharp downward revision of Dec sales to show only a 4.38M-unit rate rather than the previously reported 4.61M-unit pace. That followed an annual revision of the seasonal factors for the series going back 3 years. Sales in Dec actually fell 0.5% from Nov, instead of the 5% increase reported last month. Expectations were for sales to rise to a 4.65M-unit sales pace. Last month, there were 2.3M unsold homes on the market (lowest since Mar 2005), representing a 6.1 months supply, the lowest since Apr 2006 & down from 6.4 months in Dec. A supply of 6 months is generally considered ideal. But the median sales price fell 2% to $154K in Jan from a year ago. Somewhat mixed data, but generally favorable.
Dell has slim prospects for additional margin expansion in the near term & the company may see more volatility in operating margins & earnings. DELL said sales would be down 7% in Q1 2012 from Q4 2011, when it posted revenue of $16B. Sluggish sales, coupled with shrinking profit in Q4, have raised concerns about its comeback plan, which has relied on streamlining operations to boost earnings. After an almost 25% gain in the stock before today, it looks like investors may have been overly optimistic about the company’s ability to turn around its operations. DELL said revenue in Q1 (ending in Apr) will decrease to $14.9B, trailing the $15.1B estimate. Q4 EPS declined to 43¢ from 48¢ a year earlier & sales rose 2% to $16B, in line with estimates. Excluding some items, EPS will be at least $2.13 in fiscal 2012, DELL said. DELL is suffering from competition with Apple (AAPL) at the high end & Lenovo & Acer at the low end. The stock fell 1.16 (6%).
Dell Shares Fall After Forecast Misses Estimates
Drab performance by the stock market after the Greek bailout was approved is not what the bulls wanted to see. In truth, the bailout is still in a fuzzy state, needing more approvals by various parties. Bank stocks have been strong since late Nov with the Financial Index rising almost 25% (off depressed lows). But there has been selling in the last few days, a negative signal for the markets following the Greek bailout announcement. The US economy is doing good, but not great (as has been the case for 3 years). 13K is proving a tough ceiling for the Dow to break thru. If Greek bailout doesn't do the trick, what will?
The MLP index dropped 3+ to the 405s on profit taking & the REIT index was off 2 to the 242s. Junk bond funds were higher as investors were attracted by their relatively high yields & Treasuries rose on confusion about the Greek debt deal. Oil fluctuated near a 9-month high as reports showed manufacturing activity slowed in Europe & China & UN inspectors in Iran were denied access to a military base. Gold was also little changed.
JPMorgan Chase Capital XVI (AMJ)
Treasury yields:
U.S. 3-month | 0.081% | |
U.S. 2-year | 0.297% | |
U.S. 10-year | 2.033% |
| CLJ12.NYM | ....Crude Oil Apr 12 | ...106.36 | ... 0.11 | (0.1%) |
| GCG12.CMX | ...Gold Feb 12 | .......1,755.10 | ... 2.00 | (0.1%) |
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The Greek parliament scrambled to pass laws needed to secure payment of a 2nd bailout. Lawmakers are working on a series of measures demanded in exchange for a €130B rescue. There are plenty of doubts about Greece's ability to meet its reform commitments. Credit ratings agency Fitch downgraded Greece further ahead of a planned bond swap under which it will enforce sharp losses on private creditors as part of the bailout program. It was the first of widely expected cuts from all rating agencies because Greece will pass into technical default on its liabilities once the transaction is completed. "The exchange, if completed, would constitute a 'distressed debt exchange'," Fitch said when it downgraded Greece to C from CCC. When the bond swap is finished, the Greek sovereign rating will drop further to 'restricted default' & then will be re-rated again "at a level consistent with the agency's assessment of its post-default structure & credit profile," Fitch said. Under the terms of the revised agreement, private holders of just over €200B of Greek bonds will take a loss of 53.5% in the face value of their holdings to ease the debt burden. Laws to enact the debt swap are set to be adopted tomorrow. The Greek drama drones on as it has for months.
Greece Rushes to Pass Bailout Laws Amid Protests
Home resales surged in Jan to a 1½ year high & the supply of properties on the market was the lowest in almost 7 years, pointing to a nascent housing recovery. The National Association of Realtors said existing home sales increased 4.3% to an annual rate of 4.57M last month, the highest since May 2010. However, the tenor of the report was weakened somewhat by a sharp downward revision of Dec sales to show only a 4.38M-unit rate rather than the previously reported 4.61M-unit pace. That followed an annual revision of the seasonal factors for the series going back 3 years. Sales in Dec actually fell 0.5% from Nov, instead of the 5% increase reported last month. Expectations were for sales to rise to a 4.65M-unit sales pace. Last month, there were 2.3M unsold homes on the market (lowest since Mar 2005), representing a 6.1 months supply, the lowest since Apr 2006 & down from 6.4 months in Dec. A supply of 6 months is generally considered ideal. But the median sales price fell 2% to $154K in Jan from a year ago. Somewhat mixed data, but generally favorable.
Photo: Bloomberg
Dell has slim prospects for additional margin expansion in the near term & the company may see more volatility in operating margins & earnings. DELL said sales would be down 7% in Q1 2012 from Q4 2011, when it posted revenue of $16B. Sluggish sales, coupled with shrinking profit in Q4, have raised concerns about its comeback plan, which has relied on streamlining operations to boost earnings. After an almost 25% gain in the stock before today, it looks like investors may have been overly optimistic about the company’s ability to turn around its operations. DELL said revenue in Q1 (ending in Apr) will decrease to $14.9B, trailing the $15.1B estimate. Q4 EPS declined to 43¢ from 48¢ a year earlier & sales rose 2% to $16B, in line with estimates. Excluding some items, EPS will be at least $2.13 in fiscal 2012, DELL said. DELL is suffering from competition with Apple (AAPL) at the high end & Lenovo & Acer at the low end. The stock fell 1.16 (6%).
Dell Shares Fall After Forecast Misses Estimates
Dell Inc. (DELL)
Drab performance by the stock market after the Greek bailout was approved is not what the bulls wanted to see. In truth, the bailout is still in a fuzzy state, needing more approvals by various parties. Bank stocks have been strong since late Nov with the Financial Index rising almost 25% (off depressed lows). But there has been selling in the last few days, a negative signal for the markets following the Greek bailout announcement. The US economy is doing good, but not great (as has been the case for 3 years). 13K is proving a tough ceiling for the Dow to break thru. If Greek bailout doesn't do the trick, what will?
Dow Industrials
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