Markets pare early gains after G20 meeting ends

Dow lost some of its early gains, finishing up 65, advancers over decliners 2-1 & NAZ fell 7 (led by a 14 drop to 573 at Apple).  Bank stocks sold off, taking the Financial Index down 1 to the 204s.  The MLP index rose 1+ to the 394s & the REIT index gained 3 to 255, flirting with its yearly highs.  Junk bond funds had a good day & Treasuries pared losses as the G-20 met to address the European sovereign-debt crisis.  Encouraging news about business confidence in Germany helped drive oil prices higher.  Gold continued to slosh around the mid 1600s.

JPMorgan Chase Capital XVI (AMJ)

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Treasury yields:

U.S. 3-month	0.066%
U.S. 2-year	0.266%
U.S. 10-year	1.966%

CLK12.NYM

...Crude Oil May 12

...102.94

... 0.67  (0.7%)

Britain's top finance official said the IMF will exceed $400B in its drive to significantly bolster its resources to deal with the European debt crisis & other financial emergencies.  The Chancellor of the Exchequer George Osborne expects total pledges will surpass the $400B target set by IMF Managing Director Christine Lagarde.  That would more than double the resources the IMF has available to make new loans to roubled nations.  Britain was committing around $15B.  The effort to increase IMF resources was a key item as officials of the G-20 major countries convened in DC for talks that were part of the spring meetings of the IMF & its sister lending agency, the World Bank.  More money for more mischief.

IMF projected to top $400 billion in pledges AP

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Photo:   Yahoo

Microsoft, a Dow stock beat the profit forecast as personal computer sales held up better than expected.  Q1 EPS was 60¢ compared with 61¢ last year when it posted a one-time tax gain.  The forecast was for 57¢.  Sales rose 6% to $17.4B, driven by strong demand for its server software products & Office application & beat the forecast of $17.2B.  Worldwide personal computer sales rose a modest 1.9% according to tech research firm Gartner.  That was better than expected in a market facing hard-drive shortages from Thailand & the onslaught of the new iPad.  MSFT jumped $1.43.

Microsoft Shares Advance After Profit Exceeds Estimates on Business Sales

Microsoft Corporation (MSFT)

SanDisk EPS was 46¢ in Q1, dropping in half from 92¢ last year.  Excluding one-time items, EPS was 63¢ , down from $1.03 last year & shy of the 67¢ forecasted.  Revenue fell 7% to $1.2B (matching expectations).  License & royalty revenue rose, but product revenue fell.  Demand for flash memory was unexpectedly weak, while prices were depressed.  Demand is expected to rise, but not until H2.  The market for flash memory is a volatile one, & recovery is uncertain but prices remain lower which will cut into profits. The stock plunged $4.56 (11%) on the news.

SanDisk Drops After Sales Forecast Falls Short of Estimates

SanDisk Corporation (SNDK)

Rising markets early in the week were good enough to give Dow an almost 200 weekly gain, but its still down 180 in Apr.  Earnings season is not getting a warm reception by investors.  Markets have roared ahead from the lows in early Oct, but have hit overhead resistance.  Dow can't break thru 13K in a meaningful way.  MLPs have come back recently.  The index is up 13 in the last 9 days, helped by regulations on fracking which shouldn't hurt too much.  Apple (AAPL) is down 71 from its highs only last week, not a good sign for the markets,  Dow had a modest amount of selling in the PM & will probably be playing defense next week when the last round of big earnings reports are released. 

Dow Industrials

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Markets fall on weak Spanish debt auction and stimulus doubts

Buying in the PM reduced losses.  Dow fell 124, decliners over advancers 4-1 & NAZ was off 45 in a weak tech sector.  Bank stocks led the selling, taking the Financial Index down 3+ to 210.

The MLP index fell a very big 4+ to just above 390 (about even YTD) & the REIT index was off 2½ to the 252s (still near its recent highs).  Junk bond funds were lower, but Treasuries gained as the stock market retreated.  Oil tumbled after the Energy Dept said US stockpiles surged the most since 2008 as domestic crude output climbed to the highest level in 12 years.  Gold had a very bad day, down $48, on a strong dollar.

JPMorgan Chase Capital XVI (AMJ)

Click below for the latest market update:

Treasury yields:

U.S. 3-month	0.071%
U.S. 2-year	0.349%
U.S. 10-year	2.238%

CLK12.NYM

...Crude Oil May 12

...101.77

... 2.24

(2.2%)

Photo:   Bloomberg

Best Buy, the world’s largest electronics retailer, may have its credit rating lowered to junk status by S&P as it plans to close stores to improve its performance.  Currently it has a BBB- rating, the lowest level of investment grade, & was placed on credit watch with negative implications.  BBY is closing 50 big-box stores & cutting staff jobs, generating savings to spend on promotions & training store employees. The company plans to add 100 smaller-format Best Buy Mobile stores in the US in the current fiscal year.  A downgrade would indicate how serious its problems are.  The stock fell 60¢ & has a dreary chart.

Best Buy May Be Cut to Junk at S&P as Closings Show Weakness

Best Buy Co., Inc. (BBY)

Photo:   Bloomberg

SanDisk, a maker of memory chips, fell after it cut its revenue guidance for Q1.  It now expects to report revenue of $1.2B, down from an earlier forecast of $1.3-$1.35B which is also below the analyst forecast of $1.34B.  It lowered its forecast for gross margin to below 39%, rather than 39-42%.  Little detail was provided on what's behind the shortfall, beyond saying that demand was weaker than expected.  Several analysts cut full-year forecasts to match the Q1 outlook & reduced price targets.  However, some said they expect demand to come back in H2.  SanDisk's flash memory goes into smartphones & camera memory cards, & increasingly into laptops.  Flash memory prices are volatile although suppliers have been careful about adding capacity.  The stock sank $5.54 (11%).

SanDisk Declines Most Since January on Lower Sales Forecast

SanDisk Corporation (SNDK)

Monsanto said that a strong & early US seed selling season drove its fiscal Q2 income up 19% & it raised its earnings outlook for the full year.  Increased corn seed sales in Latin America also boosted results.  EPS was $2.24, above $1.88 a year earlier.  Revenue rose 15% to $4.75B from $4.13B.  Results topped expectations for EPS of $2.11 on revenue of $4.53B.  Q2 is important because it sells seeds ahead of the planting season in the Northern hemisphere.  Sales of corn seeds, by far the biggest segment, rose 17% to $2.82B.  Soybean seeds, its next largest segment, rose 12% to $698M.  The company boosted expectations for full-year adjusted EPS by 10¢ to $3.49-$3.54.  Including all one-time gains & losses, it expects to report EPS of $3.45-$3.50, a little below expectations of $3.51. The Dept of Agriculture just said that corn supplies are down 6%, indicating supplies will remain tight & prices high in the near term.  The USDA predicted that farmers will plant more corn this spring, the highest level since 1937.  The stock dropped 1.22.

Monsanto Raises Forecast as Profit Tops Estimates on Corn

Monsanto Company (MON)

The corp news was not good today.  MON is doing well as business from farmers is strong.  But BBY & SNDK disappointed with earnings season approaching.  Alcoa (AA), the first Dow stock to report, will announce on Tues with big banks right behind it.  Price for gas at the pump is just under $3.93, very troubling for the economy.  Sluggish stock action this week suggests markets are very nervous about earnings results.  Dow is down about 140 this week but has been able to hang in above the 13K floor & that floor has become very important to hold

Dow Industrials

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Mixed finish again

Mixed finish again for stocks. Stocks started the day on a good footing, with Dow gaining more than 150, but pulled back largely in the last hour. Dow ended up only 41, decliners slightly ahead of advancers while NAZ pulled back 13. The day started a good thought that a 2nd month of increases for leading economic indicators suggested a better than expected economy. Later, comments from San Disk (SNDK), down 2.42, hurt stocks, especially tech stocks on NAZ. SNDK gave a a negative outlook for the economy & said their sales were sluggish in Apr.

Dow closed above 13K, but just barely. Bulls were hoping for a higher close, near its high for the day, which would have been the highest close for the year. Oil continues at 127.05. Oil continues strong, aided by disasters in China. First they had the worst winter in half a century followed by the recent earthquake which is said to have done major damage to their hydroelectric plants. Oil bulls are betting this will lead to more oil purchases from China.