Tuesday, July 19, 2011

Earnings reports push stocks higher

Dow rose 118, advancers ahead of decliners better than 3-1 & NAZ added 44. But bank stocks were mixed from earnings reports that were not encouraging.

S&P 500 Financials Sector Index

Value	197.86
Change	0.69 (0.3%)

The MLP index rose 2+ to the 374s & the REIT index gained 3 to the 247s. Junk bond funds edged higher & Treasuries weakened. Oil is heading back for $100 & gold continues its winning streak, reaching new record highs on all the turmoil in global financial markets.

JPMorgan Chase Capital XVI (AMJ)

Get the latest daily market update below:

Treasury yields:

U.S. 3-month	0.010%
U.S. 2-year	0.367%
U.S. 10-year	2.940%

CLQ11.NYM

...Crude Oil Aug 11

...98.32

...

2.39 (2.5%)

GCN11.CMX

...Gold Jul 11

.......1,605.40

...

3.30

(0.2%)

Photo: Yahoo

Bank of America, the nation's largest bank, reported a loss of $9.1B in Q2, largely due to an $8.5B settlement with investors. That agreement settled claims that the bank had sold the investors poor-quality mortgage bonds. In Q2, the bank set aside an additional $1.9B to fight litigation bringing the total mortgage-related charges in Q2 to $20.7B. The reported loss for common shareholders was 90¢, worse than the 85¢ expected. Excluding charges, BAC earned 33¢, above 27¢ last year. Revenue declined 54% to $13.2B from $29.1B last year. While several of the bank's businesses reported positive earnings, almost all of them saw declines in revenue. Loan losses in its consumer businesses dropped for the 5th consecutive qtr. More customers paid on time, which led to a 60% decline in the amount the bank puts aside for credit losses from last year. The credit card division reported income of $2B, up $1.2B last year as customers paid on time, but revenue declined by $1.4B. Commercial banking was another bright spot, reporting net income of $1.4B, up $566M from last year. But its revenue decreased $73M. The Merrill Lynch investment banking unit reported fees of $1.6B, a 28%. The stock fell 21¢ at 2 year lows.

Bank of America Has Record Loss on Bad Loans

Bank of America Corporation (BAC)

Photo: Yahoo

Johnson & Johnson Q2 profit fell nearly 20% due to restructuring, recall & litigation costs along with higher spending on product launches, manufacturing & research. But results topped expectations. Q2 EPS was $1, down from $1.23 last year & revenue rose 8.3% to $16.6B. Excluding one-time items, EPS was $1.28, beating estimates of $1.24 & sales of $16.2B. JNJ, which recently got 3 new prescription drugs approved, noted recent product launches have gone well & maintained its profit forecast for 2011, at $4.90-$5, excluding the impact of one-time items. Analyst expect $4.95. Sales were up in all 3 businesses, led by prescription drugs, which saw sales jump 12% to $6.2B from higher drug sales overseas & a big benefit from favorable currency exchange rates. US revenue was flat at $7.5B while intl sales jumped 16% to $9.1B (mainly on an 11% benefit from exchange rates). The stock fell 84¢.

J&J Profit Beats Analyst Estimates on Boost From New Drugs

Johnson & Johnson (JNJ)

Coca-Cola net income rose 18% as it sold more drinks around the world & offset higher ingredient costs by raising some prices. Q2 EPS was $1.20, up from $1.02 last year & revenue climbed 47% to $12.7B from $8.6B, partly because of Coke's acquisition of its largest North American bottler. Analysts forecasted $1.15 on revenue of $12.4B. KO sold 4% more of its 500 Coca-Cola brand drinks globally. It sold 5% more carbonated drinks globally, while beverages such as juices, sports drinks, energy drinks, water & tea saw a 7% increase. "Even as consumers around the world continue to feel the impact of a slow economic recovery, they increasingly choose our brands to refresh themselves at a rate of over 1.7 billion servings each and every day," said CEO Muhtar Kent. KO saw strength across all of its regions, led by 7% volume increases in Eurasia & Africa while North America reported a 4% rise. The stock gained $2.03.

Coca-Cola 2Q net income rises on overseas growthAP

Coca-Cola Company (The) (KO)

Earnings reports from 3 Dow stocks above got mixed reception, but other reports are bringing out buyers. Banks are not generating excitement & this sentiment should continue with the remaining reports. The financial mess in DC & Europe drone on with no resolutions in sight. Even with today's higher markets, Dow is little changed since earnings season began a week ago. The debt ceiling for the US Treasury must be increased & we're told the deadline is Fri so they can write the legislation. Under this kind of pressure, the result will be a mish mash of who knows what!!